Joined Cases C‑72/10 and C‑77/10

Criminal proceedings

against

Marcello Costa and Ugo Cifone

(References for a preliminary ruling from the

Corte suprema di cassazione)

(Freedom of establishment — Freedom to provide services — Betting and gaming — Collection of bets on sporting events — Licensing requirement — Consequences of an infringement of European Union law in the awarding of licences — Award of 16 300 additional licences — Principle of equal treatment and the obligation of transparency — Principle of legal certainty — Protection of holders of earlier licences — National legislation — Mandatory minimum distances between betting outlets — Whether permissible — Cross-border activities analogous to those engaged in under the licence — Prohibition under national legislation — Whether permissible)

Summary of the Judgment

1.        Freedom to provide services — Freedom of establishment — Restrictions — Betting and gaming — National legislation prohibiting, on pain of criminal penalties, the collecting of bets without a licence or authorisation — Licence or authorisation refused in breach of Union law

(Arts 43 EC and 49 EC)

2.        Freedom to provide services — Freedom of establishment — Restrictions — Betting and gaming — National legislation prohibiting, on pain of criminal penalties, the collecting of bets without a licence or police authorisation — Operator excluded from a tendering procedure concerned with the allocation of such a licence, in breach of Union law

(Arts 43 EC and 49 EC)

3.        Freedom to provide services — Freedom of establishment — Betting and gaming — National legislation prohibiting, on pain of criminal penalties, the collecting of bets without a licence or authorisation — Conditions for withdrawal of licences granted at the end of a tendering procedure

(Arts 43 EC and 49 EC)

1.        Articles 43 EC and 49 EC and the principles of equal treatment and effectiveness must be interpreted as precluding a Member State which, in breach of Union law, has excluded a category of operators from the award of licences for undertaking a particular economic activity and seeks to remedy that breach by putting out to tender a significant number of new licences, from protecting the market positions acquired by the pre-existing operators, by providing, inter alia, for minimum distances between the establishments of new licence holders and those of pre-existing operators.

A system of minimum distances between outlets can be justified only if those rules, which it is for the national court to determine, do not have as their true objective the protection of the market positions of the pre-existing operators, rather than the objective of channelling the activities of betting and gaming into controlled systems. Moreover, it is for the referring court to determine whether the obligation to observe minimum distances, which precludes the establishment of additional outlets in densely-populated areas, is really appropriate for the purposes of attaining the purported objective and whether it indeed results in new operators choosing to set up in less populated areas, thereby ensuring nationwide coverage.

(see paras 65, 66, operative part 1)

2.        Articles 43 EC and 49 EC must be interpreted as precluding the imposition of penalties for engaging in the organised activity of collecting bets without a licence or police authorisation on persons linked to an operator which was excluded, in breach of Union law, from an earlier tendering procedure, even following the new tendering procedure intended to remedy that breach of Union law, in so far as that tendering procedure and the subsequent award of new licences have not in fact remedied the unlawful exclusion of that operator from the earlier tendering procedure.

This is the case when criminal proceedings against an operator, which were subsequently revealed to be unfounded, were pending at the time of the tendering procedure intended to remedy the shortcomings of the first tendering procedure, making it impossible in practice for such an operator to participate in a second tendering procedure without immediately having its licence withdrawn as a result of those proceedings. Although it may therefore, in certain circumstances, prove justifiable to take preventive measures against a gaming operator suspected, on the basis of reliable evidence, of being implicated in criminal activities, exclusion from the market through withdrawal of the licence should in principle be regarded as proportionate to the objective of combating criminality only if it is based on a judgment having the force of res judicata and concerning a sufficiently serious offence. Furthermore, national legislation providing for operators to be excluded, even temporarily, from the market can be regarded as proportionate only if it provides for an effective legal remedy and compensation for any loss suffered if such exclusion should subsequently prove to be unjustified.

(see paras 81, 84, 91, operative part 2)

3.        It follows from Articles 43 EC and 49 EC, the principle of equal treatment, the obligation of transparency and the principle of legal certainty that the conditions and detailed rules of a tendering procedure in respect of betting and gaming other than horse racing, and, in particular, the provisions concerning the withdrawal of licences granted at the end of such a tendering procedure must be drawn up clearly, precisely and unambiguously, a matter which it is for the referring court to verify.

(see paras 89, 92, operative part 3)