OPINION OF ADVOCATE GENERAL
COLLINS
delivered on 6 October 2022(1)
Case C‑339/21
Colt Technology Services SpA,
Wind Tre SpA,
Telecom Italia SpA,
Vodafone Italia SpA
v
Ministero della Giustizia,
Ministero dello Sviluppo Economico,
Ministero dell’Economia e delle Finanze,
Procura della Repubblica presso il Tribunale di Cagliari,
Procura della Repubblica presso il Tribunale di Roma,
Procura Generale della Repubblica presso Corte d’appello di Reggio Calabria,
Procura della Repubblica presso il Tribunale di Locri
(Request for a preliminary ruling from the Consiglio di Stato (Council of State, Italy))
(Reference for a preliminary ruling – Directive (EU) 2018/1972 – Article 13 – Conditions attached to a general authorisation – Principle of non-discrimination, proportionality and transparency – Enabling of legal interception ordered by competent judicial authorities – Compensation – Full reimbursement of the costs borne by electronic communications service providers)
I. Introduction
1. Are Member States required to provide full compensation to electronic communications service providers for the costs they incur in enabling the interception of electronic communications by the competent national authorities? The Consiglio di Stato (Council of State, Italy) asks that question with reference, in particular, to Directive (EU) 2018/1972 of the European Parliament and of the Council of 11 December 2018 establishing the European Electronic Communications Code. (2)
II. Relevant legal provisions
A. European Union law
2. The preamble of Directive 2018/1972 sets out, inter alia, the following objectives:
‘(5) This Directive creates a legal framework to ensure freedom to provide electronic communications networks and services, subject only to the conditions laid down in this Directive and to any restrictions in accordance with Article 52(1) of the Treaty on the Functioning of the European Union (TFEU), in particular measures regarding public policy, public security and public health, and consistent with Article 52(1) of the Charter of Fundamental Rights of the European Union (the “Charter”).
(6) This Directive is without prejudice to the possibility for each Member State to take the necessary measures to ensure the protection of its essential security interests, to safeguard public policy and public security, and to permit the investigation, detection and prosecution of criminal offences, taking into account that any limitation to the exercise of the rights and freedoms recognised by the Charter, in particular in Articles 7, 8 and 11 thereof, such as limitations regarding the processing of data, are to be provided for by law, respect the essence of those rights and freedoms and be subject to the principle of proportionality, in accordance with Article 52(1) of the Charter.’
3. Article 1(3) of Directive 2018/1972 provides:
‘This Directive is without prejudice to:
…
(c) actions taken by Member States for public order and public security purposes and for defence;
…’
4. Under Article 13(1) of Directive 2018/1972, entitled ‘Conditions attached to the general authorisation and to the rights of use for radio spectrum and for numbering resources, and specific obligations’:
‘The general authorisation for the provision of electronic communications networks or services and the rights of use for radio spectrum and rights of use for numbering resources may be subject only to the conditions listed in Annex I. Such conditions shall be non-discriminatory, proportionate and transparent. …’
5. Annex I is entitled ‘List of conditions which may be attached to general authorisations, rights of use for radio spectrum and rights of use for numbering resources’. Part A of Annex I, which contains the ‘general conditions which may be attached to a general authorisation’, states:
‘…
(4) Enabling of legal interception by competent national authorities in accordance with Regulation (EU) 2016/679 and Directive 2002/58/EC.
…’
B. Italian law
6. Article 96 of decreto legislativo n 259 – Codice delle comunicazioni elletroniche, of 1 August 2003 (Gazzetta ufficiale della Repubblica italiana No 214 of 15 September 2003; Decree-Law No 259 on Electronic Communications Code; ‘Decree-Law No 259/2003’), entitled ‘Mandatory services’, provides:
‘(1) Services for judicial purposes performed on the basis of requests for interception and information made by the competent judicial authorities shall be mandatory for operators; the times and methods shall be agreed with those authorities until the decree described in paragraph 2 is approved.
(2) For the purposes of adopting the fixed annual charge for the mandatory services described in paragraph 1, a decree shall be issued before 31 December 2017 by the Minister of Justice and the Minister of Economic Development, in agreement with the Minister of Economic Affairs and Finance, to implement the revision of the items in the list laid down in the Decree of the Minister of Communications of 26 April 2001, published in the Official Journal of the Italian Republic No 104 of 7 May 2001. The Decree:
(a) shall lay down the types of mandatory services and shall determine the corresponding rates, taking into account changes in costs and services, so as to achieve a cost saving of at least 50% compared with the rates applied. The rate shall include the costs for all services simultaneously activated or used by each network identity;
(b) shall identify the parties required to perform mandatory interception services, including among service providers, where their infrastructures permit network access or the distribution of information or communication content, and those that provide electronic communications services or applications on any basis, even if these are used through non-own access or transport networks;
(c) shall establish the obligations of parties required to perform mandatory services and the procedures for performance of those services, including compliance with uniform IT procedures in the transmission and management of administrative communications, with regard also to the stages prior to the payment of those services.
(3) Non-compliance with the obligations laid down in the decree described in paragraph 2 shall result in the application of Article 32(2), (3), (4), (5) and (6).
(4) Until the decree described in paragraph 2 is issued, information relating to telephone traffic shall be released free of charge. Services provided for judicial purposes other than those listed in the first sentence shall continue to be subject to the list adopted by Decree of the Minister of Communications of 26 April 2001, published in the Official Journal of the Italian Republic No 104 of 7 May 2001.
(5) For the purposes of enabling payment for the services covered by paragraph 2, the operators must negotiate interconnection arrangements among themselves to guarantee the supply and interoperability of the services. The Ministry may intervene if necessary at its own initiative or, if no agreement is reached among the operators, at the request of one of their number.’
7. In accordance with Article 96(2) of Decree-Law No 259/2003, the decreto interministeriale del Ministro della giustizia e del Ministro dello sviluppo economico di concerto con il Ministro dell’economia e delle finanze – Disposizione di riordino delle spese per le prestazioni obbligatorie di cui all’articolo 96 del decreto legislativo n 259 del 2003, of 28 December 2017 (Gazzetta ufficiale della Repubblica italiana No 33 of 9 February 2018; Inter-ministerial Decree of the Minister of Justice and the Minister of Economic Development in agreement with the Minister of Economy and Finance – Provisions for the reorganisation of expenses for the mandatory services referred to in Article 96 of Decree-Law No 259/2003; ‘Inter-ministerial Decree of 28 December 2017’) establishes the conditions for the provision of the mandatory services and sets out in its annex the fees payable by the Italian authorities for such services.
III. The dispute in the main proceedings and the request for a preliminary ruling
8. Colt Technology Services SpA, Wind Tre SpA, Telecom Italia SpA and Vodafone Italia SpA are electronic communications service providers supplying, inter alia, internet, fixed and mobile telecommunications in Italy. By separate actions, they challenged the Inter-ministerial Decree of 28 December 2017. In particular, they claimed that the fees payable by the Italian authorities thereunder do not cover in full the cost of providing mandatory services relating to the interception of electronic communications ordered by competent national judicial authorities.
9. The Tribunale amministrativo regionale per il Lazio (Regional Administrative Court of Lazio, Italy) dismissed the actions taken by Colt Technology Services, Wind Tre, Telecom Italia and Vodafone Italia. Those providers thereafter lodged appeals with the Consiglio di Stato (Council of State), which joined the appeals.
10. In order to rule on the appeals, on 13 July 2020 the Consiglio di Stato (Council of State) made a reference for a preliminary ruling to the Court of Justice concerning the interpretation of Articles 18, 26 and 102 TFEU.
11. On 26 November 2020, the Court rejected that reference for a preliminary ruling as manifestly inadmissible. (3) The Court considered that the referring court had confined itself, in essence, to repeating the arguments put forward by the applicants in the main proceedings. It had thus failed to state either the reasons which had led it to inquire about the interpretation of Articles 18, 26 and 102 TFEU or the relationship between those provisions and the national legislation applicable to the dispute in the main proceedings, contrary to the requirements of Article 94(c) of the Rules of Procedure of the Court of Justice. (4) The Court also observed that the referring court could submit a new request for a preliminary ruling that included the information that would enable it to give a useful answer thereto. (5)
12. On 31 May 2021, in the context of the same proceedings, the Consiglio di Stato (Council of State) made the present reference for a preliminary ruling. It observed that, in accordance with Directive 2018/1972, a general authorisation to provide electronic communications services may be subject to an obligation to provide mandatory services such as the interception of electronic communications ordered by judicial authorities. While Article 13 of Directive 2018/1972 requires that the conditions attached to a general authorisation be non-discriminatory, proportionate and transparent, EU law does not explicitly require full compensation to be paid to electronic communications service providers for the costs they incur in complying with judicial orders to intercept such communications.
13. In those circumstances, the Consiglio di Stato (Council of State) decided to stay the proceedings and referred the following question to the Court for a preliminary ruling:
‘Do Articles 18, 26, 49, 54 and 55 TFEU, Articles 3 and 13 of [Directive 2018/1972] and Articles 16 and 52 of the [Charter] preclude a provision of national law that delegates to the administrative authorities the task of determining the remuneration to be paid to telecommunications operators for the mandatory performance of activities ordered by the judicial authorities consisting in the interception of communication flows, where that provision does not require compliance with the principle of the full reimbursement of the costs actually incurred and duly documented by the operators in relation to those activities and, furthermore, requires that the administrative authorities achieve cost savings compared to previous criteria for calculating remuneration?’
14. Colt Technology Services, Wind Tre, Telecom Italia, Vodafone Italia, the Italian Government and the European Commission submitted written observations. At the hearing of 18 May 2022, the parties presented oral argument and replied to the Court’s questions.
IV. Assessment
A. Application of Directive 2018/1972
15. In line with the Court’s request, the present Opinion confines itself to an analysis of the application of Directive 2018/1972 in the context of the question referred for a preliminary ruling.
16. The referring court asks whether Directive 2018/1972 is to be interpreted so as to require Member States to provide full compensation to electronic communications service providers for the costs they incur in the mandatory interception of electronic communications ordered by competent national judicial authorities.
17. At the time of the adoption of the Inter-ministerial Decree of 28 December 2017, Directive 2002/20/EC of the European Parliament and of the Council of 7 March 2002 on the authorisation of electronic communications networks and services (Authorisation Directive) (6) was in force and had been duly transposed into Italian law. Pursuant to its Articles 124 and 126, Directive 2018/1972 came into operation on 20 December 2018, with a deadline of 21 December 2020 for its transposition into the laws of the Member States. Article 125 of Directive 2018/1972 repealed Directive 2002/20 with effect from 21 December 2020. As of the date of the order for reference, Directive 2018/1972 had entered into force, the date for its transposition into the laws of the Member States had expired and Directive 2002/20 had been repealed. The provisions of Directive 2002/20 (7) and Directive 2018/1972 relevant to this reference for a preliminary ruling are, in essence, identical. The written and oral observations of all of the parties that participated in the present procedure before the Court refer to the provisions of Directive 2018/1972, not to those of Directive 2002/20. Finally, the referring court seeks an interpretation of the provisions of Directive 2018/1972. For all of the above reasons, the present Opinion interprets the provisions of Directive 2018/1972.
B. Parties’ observations
18. Colt Technology Services, Wind Tre, Telecom Italia and Vodafone Italia submit that the question from the referring court should receive an affirmative answer. They contend that the fees established by the Inter-ministerial Decree of 28 December 2017 are excessively low and cover only a small fraction of the costs they incur in the interception of electronic communications ordered by judicial authorities.
19. They further allege that the Inter-ministerial Decree of 28 December 2017 breaches Article 13 of Directive 2018/1972 in so far as it is discriminatory, disproportionate and not transparent. First, the Inter-ministerial Decree of 28 December 2017 discriminates against larger electronic communications service providers, which are likely to carry out more interception activities than their smaller-scale peers. It also discriminates against Italian electronic communications service providers, since those established in other Member States do not have to bear the costs of interception. Second, the Inter-ministerial Decree of 28 December 2017 is contrary to the principle of proportionality because it imposes considerable unrecoverable costs on electronic communications service providers. This may affect the adequate provision of electronic communications services in general and may compromise the economic viability of certain electronic communications service providers in particular. Vodafone Italia further claims that the absence of full compensation may reduce the quality of the interception services furnished by electronic communications service providers, which would be contrary to the general interest. Third, Wind Tre takes the view that the procedure that led to the adoption of the Inter-ministerial Decree of 28 December 2017 was not transparent.
20. Relying by analogy on the rules governing the provision of universal services, Vodafone Italia adds that Directive 2018/1972 establishes the principle of full compensation for costs that electronic communications service providers incur in furnishing mandatory services such as the interception of electronic communications ordered by judicial authorities.
21. The Italian Government submits that the question from the referring court should receive a negative answer. It observes that Directive 2018/1972 merely requires that the conditions attached to a general authorisation to provide electronic communications networks or services be non-discriminatory, proportionate and transparent. It does not provide for full compensation for the interception of electronic communications ordered by judicial authorities. Whilst it is a matter for the referring court to determine, the Italian Government claims that the order for reference does not indicate that costs that electronic communications service providers bear as a result of enabling such interception may compromise their financial viability. There is no factual basis for the assertion that the Inter-ministerial Decree of 28 December 2017 breaches the principle of proportionality.
22. The Commission observes that Article 13 of Directive 2018/1972 does not explicitly envisage that electronic communications service providers receive compensation for the costs they incur in providing mandatory services under a general authorisation. Member States have a certain margin of appreciation to regulate the availability of compensation, provided they respect the principles of non-discrimination, proportionality and transparency.
23. The Commission contests the argument that the absence of full compensation constitutes a breach of the principle of equal treatment. As far as the principle of proportionality is concerned, the Commission submits that, in the absence of an explicit provision in the applicable legislation, EU law does not contain a general requirement to provide full compensation to economic operators for costs incurred as a consequence of obligations imposed in the general interest. Moreover, even in those circumstances where it may be appropriate to provide for fair compensation, since the obligations imposed on economic operators are not inherent in the exercise of the economic activity in which they are engaged, the Commission observes that there is no requirement for full compensation to be paid. An obligation to do so may even reduce the incentives for electronic communications service providers to supply mandatory services efficiently.
C. Analysis of relevant provisions of Directive 2018/1972
24. In accordance with settled case-law, the interpretation of EU law requires consideration of the text of those provisions, the context in which they appear and the objectives pursued by the rules of which they form part. (8)
25. Article 1(3)(c) of Directive 2018/1972 provides that that directive is without prejudice to actions that Member States take for, inter alia, the purposes of public order and public security. It follows that national measures which Directive 2018/1972 would not otherwise permit in principle may nevertheless be justified in order to protect public order or public security.
26. Article 13(1) of Directive 2018/1972 establishes that the general authorisation for the provision of electronic communications services may be subject only to the conditions listed in Annex I thereto. Such conditions must be non-discriminatory, proportionate and transparent.
27. Condition 4 in Part A of Annex I to Directive 2018/1972, which contains the general conditions that may be attached to a general authorisation, allows Member States to make such an authorisation conditional upon the ‘enabling of legal interception by competent national authorities in accordance with [data protection rules]’.
28. It appears from the text of the abovementioned provisions that Member States may require electronic communications service providers to enable the interception of electronic communications when the competent national authorities order them to do so. Having regard to Article 13(1) of and condition 4 in Part A of Annex I to Directive 2018/1972, the public security exception provided for by Article 1(3)(c) thereof thus appears to be irrelevant for the purposes of this reference for a preliminary ruling. Directive 2018/1972 itself explicitly allows the Member States to require electronic communications service providers to enable the interception of electronic communications as a condition for being authorised to provide those services. Moreover, that directive does not explicitly require Member States to provide compensation for the costs that electronic communications service providers incur in enabling the interception of those communications.
29. In view of the foregoing, there appear to be two issues before the Court. First, what does ‘enabling of legal interception by competent national authorities’ consist of? Second, can the absence of full compensation to electronic communications service providers for the costs they incur by enabling the legal interception by competent national authorities be contrary to the principles of non-discrimination, proportionality and transparency?
30. As far as the first issue is concerned, it seems that condition 4 is open to two possible interpretations. In the first place, it might be argued that ‘enabling of legal interception’ is to be interpreted to mean that electronic communications service providers may be required to make that interception possible without necessarily intercepting those communications themselves. According to that approach, electronic communications service providers might be required to put in place the indispensable technical infrastructure and human resources to facilitate the interception of electronic communications by competent national authorities. Obliging electronic communications service providers to carry out interception themselves thus demands more from them than the act of simply enabling legal interception, thereby imposing a burden that goes beyond what the conditions attached to a general authorisation may include.
31. An alternative interpretation of condition 4 is that the term ‘enabling of legal interception by competent national authorities’ is used because only competent national authorities have the power to direct the lawful interception of electronic communications. Irrespective of their involvement from a practical point of view, electronic communications service providers may only ever enable the legal interception of electronic communications since they do not themselves have the power to do so. Such an interpretation, which recognises that the competent national authorities are exclusively entrusted with the power to direct the lawful interception of electronic communications, is also consonant with the objectives that measure pursues. Condition 4 in Part A of that annex thus envisages competent national authorities requiring more than a minimum degree of cooperation from electronic communications service providers when it comes to the legal interception of such communications. A review of various language versions of Directive 2018/1972 also appears to support the idea that the legal interception of electronic communications is the prerogative of the competent national authorities. (9)
32. In addition to the considerations surrounding the concept of ‘legal interception’, there are pragmatic reasons to support the proposition that condition 4 in Part A of Annex I to Directive 2018/1972 is to be read as empowering Member States to require electronic communications service providers to intercept communications as a condition of an authorisation to provide those services. In order to ensure the effective and efficient interception of electronic communications when necessary, it would seem reasonable for Member States to rely on electronic communications service providers that know their own infrastructures and have personnel that are best placed to intercept communications on those networks. The effectiveness and efficiency of interception could be compromised were national authorities themselves required to intercept electronic communications made through the networks of the various telecommunications service providers using different technical methods and infrastructures.
33. As a result, I take the view that condition 4 in Part A of Annex I to Directive 2018/1972, which allows Member States to require electronic communications service providers to enable the legal interception of communications, includes the requirement that those service providers carry out that interception under the instructions of the competent national authorities.
34. I now turn to the second issue identified in point 29 of the present Opinion.
35. First, EU law prohibits any discrimination on grounds of nationality within the scope of application of the Treaties and without prejudice to any special provisions contained therein. (10) That prohibition covers not only direct discrimination on grounds of nationality but also all indirect forms of discrimination which, by the application of other criteria of differentiation, lead to the same result. (11) The case-law also establishes that the general principle of non-discrimination precludes the different treatment of comparable situations and the same treatment of different situations. (12)
36. As point 19 of the present Opinion explains in greater detail, the applicants in the main proceedings claim that the Inter-ministerial Decree of 28 December 2017 discriminates both against larger electronic communications service providers and against electronic communications service providers established in Italy.
37. There seems to be no evidence before the referring court to support the contention that, as a consequence of the Inter-ministerial Decree of 28 December 2017, larger electronic communications service providers suffer discrimination. In any event, whilst larger electronic communications service providers may, due to the size of their larger customer base, be required to enable the legal interception of communications more often than those with fewer customers, the former are likely to earn more revenue. So far as one can ascertain from the scanty material available to the Court, it seems likely that, in principle, the financial impact of the cost of legal interception relative to revenue may be similar for all electronic communications service providers.
38. As for the alleged discrimination on grounds of nationality, it is settled case-law that Article 18 TFEU is not concerned with any disparities in treatment, for persons and undertakings subject to the jurisdiction of the European Union, that may result from divergences between the laws of the various Member States, so long as they affect all persons subject to them in accordance with objective criteria and regardless of nationality. (13) Suffice to say that Italian electronic communications service providers, such as the applicants in the main proceedings, and electronic communications service providers established in other Member States are subject to the obligation to cooperate with the competent national authorities of the territory where they are respectively established. That electronic communications service providers established in other Member States are normally subject to an obligation to cooperate with the national authorities of the territory of their establishment, rather than with the Italian judicial authorities does not constitute discrimination.
39. Second, is the fact that the applicable national legislation provides financial compensation for the activity of legal interception, without guaranteeing that electronic communications service providers receive full compensation for the costs they incur in carrying out that activity, contrary to the principle of proportionality to which Article 13(1) of Directive 2018/1972 refers? That issue appears to lie at the heart of the present case.
40. At the outset, I would observe that the principle of proportionality has had many declinations in the case-law, depending upon the subject matter under consideration.
41. As to whether national legislation such as that at issue in the main proceedings is proportionate, it is for the referring court to carry out an overall assessment of all relevant facts and legal issues in order to determine whether that legislation is appropriate to attain the legitimate objectives pursued thereby and does not go beyond what is necessary for that purpose, in so far as those objectives are unattainable by less far-reaching measures. It is for the Court to provide the referring court with all of the points of interpretation of EU law that will enable it to conduct that analysis. (14)
42. In that context I would make two observations on the task before the referring court. The applicants in the main proceedings challenge the Inter-ministerial Decree of 28 December 2017 whereby the Italian authorities set the fees paid for the mandatory interception of communications below what they claim is the cost of performing that interception. The aim of that decree appears to be to limit the cost of that activity to the public purse by sharing that cost with the economic operators active in that sector. That goal appears to be a legitimate objective of general interest. (15) Moreover, whilst it is ultimately a matter for the referring court, it is not obvious that the Inter-ministerial Decree of 28 December 2017 is unsuitable to attain that objective.
43. As for whether the Inter-ministerial Decree of 28 December 2017 goes beyond what is necessary to attain the legitimate objective that it purports to pursue, the referring court might examine whether the burden that the decree places upon electronic communications service providers is manifestly excessive. In that respect, I would observe that the applicants in the main proceedings that attempted to quantify that financial burden, namely Telecom Italia and Vodafone Italia, referred to costs incurred of approximately EUR 6-7 million that had not been covered by fees received in 2017 and 2018. In response to the questions from the Court at the hearing, those two service providers admitted that their publicly available financial annual reports suggest that, in the same period, their turnover from the provision of internet, fixed and mobile telecommunication services in Italy amounted to several billion euros. Against that background, it seems unlikely that the financial burden that the Inter-ministerial Decree of 28 December 2017 places upon electronic communications service providers would compromise the provision of those services or the economic viability of those service providers, as some have claimed.
44. Third, the principle of transparency requires that all of the conditions and terms of a mechanism be made known by means of rules that are sufficiently accessible, clear, precise, unequivocal and predictable in their application so as to make it possible for all reasonably informed operators exercising ordinary care to understand their exact significance and to avoid any risk of arbitrariness. Such parameters must be set in accordance with objective criteria so as to enable operators to calculate their probable costs. (16)
45. The applicants in the main proceedings do not claim that the methodology for calculating compensation was based on criteria that were not accessible, clear, precise, objective or predictable or were ambiguous. In fact, the annex to the Inter-ministerial Decree of 28 December 2017, which sets out the fees payable by the Italian authorities for each category of interception activity, appears to respect those requirements. In reality, Wind Tre seems to criticise the fact that the electronic communications service providers did not have an opportunity to express their concerns in the course of the procedure that led to the adoption of the fees set out in that annex. Whilst that is a matter for the referring court, it is far from clear that the principle of transparency encapsulates a right for electronic communications service providers to participate actively in a procedure that led to fixing the contested fees.
46. Finally, for the sake of completeness, I would observe that the argument put forward by Vodafone Italia, according to which there is a principle of full reimbursement of the costs relating to the provision of universal services, is misconceived. The mandatory services at issue in the present case, namely the legal interception of electronic communications, are not universal services provided to end-users. They are rather a form of assistance to the public authorities in the performance of their duties to safeguard the general interest which, moreover, Member States are expressly allowed to impose as a condition for granting authorisations to provide electronic communications services. Irrespective of whether a principle of full reimbursement for the provision of universal services by electronic communications service providers exists, which is not at all evident, (17) there is no reason to apply such a principle by analogy.
V. Conclusion
47. In the light of the foregoing considerations, I propose that the Court answer the question referred for a preliminary ruling by the Consiglio di Stato (Council of State, Italy) as follows:
‘Directive (EU) 2018/1972 of the European Parliament and of the Council of 11 December 2018 establishing the European Electronic Communications Code
is to be interpreted to the effect that:
it does not require national legislation to provide full compensation to electronic communications service providers for the costs they incur in enabling the interception of electronic communications ordered by judicial authorities. In accordance with Article 13(1) of that directive, Member States may operate a mechanism to compensate for such costs provided that such a mechanism is non-discriminatory, proportionate and transparent.’