Case C-64/08

Criminal proceedings

against

Ernst Engelmann

(Reference for a preliminary ruling from the

Landesgericht Linz (Austria))

(Freedom to provide services – Freedom of establishment – National rules establishing a system of concessions for the operation of games of chance in casinos – Concessions obtainable solely by public limited companies established in national territory – All concessions granted without any competitive procedure)

Summary of the Judgment

1.        Freedom of establishment – Restrictions

(Ars. 43 EC and 46 EC)

2.        Freedom to provide services – Freedom of establishment – National legislation on concessions to operate gaming establishments

(Arts 43 EC and 49 EC)

1.        Article 43 EC must be interpreted as precluding legislation of a Member State under which games of chance may be operated in gaming establishments only by operators whose seat is in the territory of that Member State. The obligation for persons holding concessions to operate gaming establishments to have their seat in national territory constitutes a restriction of freedom of establishment within the meaning of that provision inasmuch as it discriminates against companies which have their seat in another Member State and prevents those companies from operating gaming establishments in the territory of the Member State concerned by way of an agency, branch or subsidiary.

Without it being necessary to determine whether the objective of permitting effective control of operators in the gaming sector with a view to preventing those activities from being carried out for criminal or fraudulent purposes can fall within the definition of public policy, so as to render the restriction in question compatible with European Union law, it need merely be pointed out that the categorical exclusion of operators whose seat is in another Member State appears disproportionate, as it goes beyond what is necessary to combat crime. There are indeed various measures available to monitor the activities and accounts of such operators, such as, the possibility of requiring separate accounts audited by an external accountant to be kept for each gaming establishment of the same operator, the possibility of being systematically informed of the decisions adopted by the organs of the concession holders and the possibility of gathering information concerning their managers and principal shareholders. In addition, any undertaking established in a Member State can be supervised and have sanctions imposed on it, regardless of the place of residence of its managers.

(see paras 32, 34-38, 40, operative part 1)

2.        The obligation of transparency flowing from Articles 43 EC and 49 EC and from the principle of equal treatment and the prohibition of discrimination on grounds of nationality precludes the grant without any competitive procedure of all the concessions to operate gaming establishments in the territory of a Member State.

On the one hand, even though, as European Union law now stands, service concessions are not governed by any of the directives by which the European Union legislature has regulated public procurement, the public authorities which grant such concessions are nonetheless bound to comply with the fundamental rules of the Treaties, in particular Articles 43 EC and 49 EC, as well as the obligation of transparency which flows therefrom. Without necessarily implying an obligation to call for tenders, that obligation of transparency, which applies when the service concession in question may be of interest to an undertaking located in a Member State other than that in which the concession is granted, requires the concession-granting authority to ensure, for the benefit of any potential tenderer, a degree of publicity sufficient to enable the service concession to be opened up to competition and the impartiality of the award procedures to be reviewed.

On the other hand, the fact that the issue of licences to operate gaming establishments may not be the same as a service concession contract does not, in itself, justify any failure to have regard to the requirements arising from Article 49 EC, in particular the principle of equal treatment and the obligation of transparency. The obligation of transparency thus amounts to a condition that must be met before a Member State can exercise its right to award licences to operate gaming establishments, irrespective of the method of selecting operators, because the effects of the award of such licences on undertakings which are established in other Member States and potentially interested in engaging in that activity are the same as those of a service concession contract.

(see paras 49-50, 52-53, 58, operative part 2)