Case C-222/08

European Commission

v

Kingdom of Belgium

(Failure of a Member State to fulfil obligations – Directive 2002/22/EC (‘Universal Service’ Directive) – Electronic communications – Networks and services – Article 12 – Costing of universal service obligations – Social component of universal service – Article 13 – Financing of universal service obligations – Determination of whether an ‘unfair burden’ exists)

Summary of the Judgment

1.        Approximation of laws – Telecommunications sector – Universal service and users’ rights – Directive 2002/22 – Universal service obligations including social obligations – Costing – Unfair burden

(European Parliament and Council Directive 2002/22, Art. 12(1) and Annex IV)

2.        Approximation of laws – Telecommunications sector – Universal service and users’ rights – Directive 2002/22 – Universal service obligations including social obligations – Costing – Unfair burden

(European Parliament and Council Directive 2002/22, recital 21)

3.        Approximation of laws – Telecommunications sector – Universal service and users’ rights – Directive 2002/22 – Universal service obligations, including social obligations – Costing – Unfair burden

(European Parliament and Council Directive 2002/22, Art. 13(1))

4.        Approximation of laws – Telecommunications sector – Universal service and users’ rights – Directive 2002/22 – Universal service obligations, including social obligations – Costing – Unfair burden

(European Parliament and Council Directive 2002/22, Art. 12(1) and Annex IV)

1.        The second subparagraph of Article 12(1) and Annex IV of Directive 2002/22 on universal service and users’ rights relating to electronic communications networks and services lay down the rules for calculating the net costs of the provision of universal service where the national regulatory authorities have considered that such provision may represent an unfair burden. However, it is not apparent either from Article 12(1) or from any other provision of the directive that the Community legislature itself intended to prescribe the conditions in which those authorities are to consider, as a preliminary matter, that the provision of universal service may represent an unfair burden. In those circumstances, a Member State does not fail to fulfil its obligations under Article 12 of that directive by laying down the conditions by reference to which it must be determined whether or not that burden is unfair.

(see paras 44-45)

2.        It is apparent from recital 21 to Directive 2002/22 on universal service and users’ rights relating to electronic communications networks and services that the Community legislature intended to link the mechanisms for the recovery of net costs which an undertaking may incur as a result of the provision of universal service to the existence of an unfair burden on that undertaking. In that context, in concluding that the net cost of universal service does not necessarily represent an unfair burden for all the undertakings concerned, it intended to exclude the possibility that any net costs of universal service provision automatically give rise to a right to compensation. In those circumstances, the unfair burden which must be found to exist by the national regulatory authority before any compensation is paid is a burden which, for each undertaking concerned, is excessive in view of the undertaking’s ability to bear it, account being taken of all the undertaking’s own characteristics, in particular the quality of its equipment, its economic and financial situation and its market share.

(see para. 49)

3.        If the national regulatory authority finds that one or more undertakings designated as providers of universal service are subject to an unfair burden or if one or more of them requests compensation, it then falls to the Member State to establish the necessary mechanisms to that end, in accordance with Article 13(1)(a) of Directive 2002/22 on universal service and users’ rights relating to electronic communications networks and services, from which it is also clear that that compensation must coincide with the net costs, as calculated under Article 12 of the directive.

Consequently, a Member State fails to fulfil its obligations under Article 13(1) of Directive 2002/22 where it makes a general finding on the basis of the calculation of the net costs of the erstwhile sole provider of universal service that all undertakings now responsible for the provision of universal service are in fact subject to an unfair burden on account of that provision and does so without carrying out a specific assessment both of the net cost which the provision of universal service represents for each operator concerned and of all the characteristics particular to each operator, including the quality of its equipment or its economic and financial situation.

(see paras 51, 86, operative part 1)

4.        A Member State fails to fulfil its obligations under Article 12(1) of Directive 2002/22 on universal service and users’ rights relating to electronic communications networks and services where it fails to take into consideration, in the calculation of the net cost of provision of the social component of universal service, the market benefits, including intangible benefits, accruing to the undertakings responsible.

Indeed, it follows from Article 12(1)(a) in conjunction with Annex IV of Directive 2002/22 that the calculation of the net cost of universal service provision must include the assessment of the benefits, including intangible benefits, which the operator concerned derives from such provision. Since Article 12(1)(a) and Annex IV are part of the harmonised regulatory framework which the directive is intended to create, the onus is on Member States to take those benefits into account when they lay down the rules for calculating the net cost of universal service provision.

(see paras 84, 86, operative part 1)