JUDGMENT OF THE COURT (Fifth Chamber)

9 September 1999 (1)

(Freedom of establishment — Freedom to provide services — Organisation ofurban waste collection service)

In Case C-108/98,

REFERENCE to the Court under Article 177 of the EC Treaty (now Article 234EC) by the Tribunale Amministrativo Regionale della Campania, Italy, for apreliminary ruling in the proceedings pending before that court between

RI.SAN. Srl

and

Comune di Ischia,

Italia Lavoro SpA, formerly GEPI SpA,

Ischia Ambiente SpA,

on the interpretation of Articles 55 and 90(2) of the EC Treaty (now Articles 45EC and 86(2) EC),

THE COURT (Fifth Chamber),

composed of: J.-P. Puissochet, President of the Chamber, P. Jann (Rapporteur),C. Gulmann, D.A.O. Edward and L. Sevón, Judges,

Advocate General: S. Alber,

Registrar: H. von Holstein, Deputy Registrar,

after considering the written observations submitted on behalf of:

—    the Comune di Ischia, by Roberto Montemurro, of the Naples Bar,

—    Italia Lavoro SpA, by Francesco Castiello and Giuseppe Ricapito, of theRome Bar,

—    the Italian Government, by Professor Umberto Leanza, Head of the LegalAffairs Department of the Ministry of Foreign Affairs, acting as Agent,assisted by Pier Giorgio Ferri, Avvocato dello Stato,

—    the Commission of the European Communities, by Michel Nolin and LauraPignataro, of its Legal Service, acting as Agents,

having regard to the Report for the Hearing,

after hearing the oral observations of RI.SAN. Srl, represented by Arcangelod'Avino, of the Naples Bar; of Italia Lavoro SpA, represented by Antonio Tizzanoand Francesco Sciaudone, of the Naples Bar; of Ischia Ambiente SpA, representedby L. Bruno Molinaro, of the Naples Bar; of the Italian Government, representedby Pier Giorgio Ferri; and of the Commission, represented by Michel Nolin andLaura Pignataro, at the hearing on 4 February 1999,

after hearing the Opinion of the Advocate General at the sitting on 18 March 1999,

gives the following

Judgment

1.

    By orders of 19 November and 11 December 1997, received at the Court on 9April 1998, the Tribunale Amministrativo Regionale della Campania (GeneralAdministrative Court for Campania) referred to the Court for a preliminary rulingunder Article 177 of the EC Treaty (now Article 234 EC) two questions on theinterpretation of Articles 55 and 90(2) of the EC Treaty (now Articles 45 EC and86(2) EC).

2.

    Those questions have been raised in proceedings between RI.SAN. Srl (hereinafter'RI.SAN.‘) and the Municipality of Ischia, Italia Lavoro SpA (hereinafter 'ItaliaLavoro‘), formerly GEPI SpA (hereinafter 'GEPI‘), and Ischia Ambiente SpA(hereinafter 'Ischia Ambiente‘) concerning the organisation by the Municipality ofa solid urban waste collection service.

The national legislation

3.

    Article 22(3) of Law No 142/90 of 8 June 1990 on local autonomy (GURI No 135of 12 June 1990) provides that municipalities and provinces may use the followingmanagement forms for local public services for which they are responsible underthe law:

'(a)    public management, where, owing to the small size or the characteristics ofthe service, it is not expedient to create an institution or an undertaking;

(b)    concessions to third parties, where there are technical, economic or socialexpediency reasons;

(c)    by special undertakings, inter alia for the management of several services ofeconomic and commercial interest;

(d)    by institutions, for the provision of social services not having any commercialinterest;

(e)    by mixed-capital limited companies with a majority public holding, whereparticipation by other public or private persons appears expedient owing tothe nature of the service to be provided.‘

4.

    Article 4(6) of Law No 95/95 of 29 March 1995 on mixed-capital public servicecompanies (GURI No 77 of 1 April 1995), amending Decree-Law No 26/95 of 31January 1995 (GURI No 26 of 31 January 1995), provides:

'In order to promote employment or re-employment of workers, the municipalitiesand the provinces may form limited companies with GEPI SpA, inter alia for thepurpose of operating local public services.‘

5.

        Article 4(8) of that Law provides that 'the shareholdings of GEPI SpA in thecompanies referred to in this article shall be transferred within five years by publictender‘.

6.

    GEPI is a financial company formed pursuant to Article 5 of Law No 184/71 of 22March 1971 (GURI No 105 of 28 April 1971). Its objects are to assist inmaintaining and increasing the level of employment. Its share capital is heldentirely by the Treasury Minister.

Facts and main proceedings

7.

    By decision of the municipal council of 19 March 1996, the Municipality of Ischiaformed a mixed-capital limited company under Article 22(3)(e) of Law No 142/90to run the solid urban waste collection service. Pursuant to Article 4(6) of Law No95/95, the share capital of the company was held as to 51% by the municipality andas to 49% by GEPI. By decision of 7 November 1996, the municipal councilentrusted to that company, Ischia Ambiente, the solid urban waste collectionservice which had previously been provided by RI.SAN., which held a contract dueto expire on 4 January 1997.

8.

    By two actions, RI.SAN. challenged the municipal council decisions claiming, inparticular, that the choice of private partner should have been made through publictender procedure and that the waste collection service should also have beenawarded under such a procedure.

9.

    The court which has made this reference has expressed doubts about thecompatibility with community law, more particularly with the principle of freedomto provide services and the principle of free competition, of Article 4(6) of Law No95/95, which allows a local authority to choose GEPI as a partner for themanagement of local public services without any prior invitation to tender.

10.

    It ruled, however, that Council Directive 92/50/EEC of 18 June 1992 relating to thecoordination of procedures for the award of public service contracts (OJ 1992L 209, p. 1) was not relevant in determining the case, since the case did notconcern the award of a public service contract but the award of a public serviceconcession.

11.

    In those circumstances the Tribunale Amministrativo Regionale della Campaniadecided to stay proceedings and to refer the following questions to the Court fora preliminary ruling:

'1    Must Article 55 of the Treaty (which is applicable inter alia to the servicessector by virtue of the reference in Article 66 of the Treaty), pursuant towhich ”[t]he provisions of this Chapter shall not apply, so far as any givenMember State is concerned, to activities which in that State are connected,even occasionally, with the exercise of official authority”, be interpreted sowidely as to include the activities of GEPI SpA (now Italinvest SpA) as aparticipant in local authorities' mixed companies for the management oflocal public services, within the meaning of Article 4(6) of Law No 95 of 29March 1995 (converting into law, with amendments, Decree-Law No 26 of31 January 1995), where that participation purports to be for the purposeof ”promoting employment or re-employment of workers” already assignedto the service the management of which is at issue, having regard to Article5 of Law No 184 of 22 March 1971 establishing GEPI SpA, which givesGEPI the task of ”contributing to the maintenance and growth of

employment levels facing temporary difficulties, such as to demonstrate thespecific possibility of reorganising the undertakings concerned”, in themanner set out therein?

2.    In view of the abovementioned legislation governing GEPI SpA (nowItalinvest SpA), may there be applicable to this case the derogationprovided for in Article 90(2) of the Treaty, according to which”[u]ndertakings entrusted with the operation of services of general economicinterest ... shall be subject to the rules contained in this Treaty, in particularto the rules on competition, in so far as the application of those rules doesnot obstruct the performance in law or in fact, of the particular tasksassigned to them”?‘

The subject-matter of the reference

12.

    The Municipality of Ischia, Italia Lavoro, Ischia Ambiente, the Italian Governmentand the Commission have submitted observations on the question whether theprocedure for choosing the entity entrusted with running the waste collectionservice may be covered by the provisions of Directive 92/50.

13.

    That directive applies to the award of public service contracts which are defined,in Article 1(a), as contracts for pecuniary interest concluded in writing between aservice provider and a contracting authority.

14.

    The national court has, however, expressly excluded the relevance of Directive92/50, on the ground that only a public service concession was involved, and not apublic service contract.

15.

    The definition of public service concession within the meaning of the Communityrules on public contracts and the question whether such a concession is excludedfrom the scope of Directive 92/50 are matters governed by Community law. Suchquestions may therefore be the subject of a reference for a preliminary ruling,under Article 177 of the Treaty, if a national court considers that a decision on oneof those questions is necessary in order to give judgment.

16.

    However, even supposing, contrary to the position taken here by the referringcourt, that Directive 92/50 is relevant in determining the case before it, it must beobserved that the reference and the questions raised relate only to the provisionsof the Treaty and that the referring court has not provided the factual informationwhich would be necessary for the Court to rule on the interpretation of thatdirective.

17.

    In those circumstances, the Court must confine its answer to the provisions of theTreaty expressly mentioned in the questions referred for a preliminary ruling.

The first question

18.

    By its first question, the referring court asks essentially whether Article 55 of theTreaty is to be interpreted as allowing a municipality to choose, without any priorinvitation to tender, a financial company as a partner in a mixed-capital companywith a majority public shareholding having as its object the running of the solidurban waste collection service.

19.

    As far as that question is concerned, it should be observed that the application ofArticle 55 of the Treaty, read in combination, where appropriate, with Article 66of the EC Treaty (now Article 55 EC), in so far as they form a derogation from theprovisions of the Treaty relating respectively to freedom of establishment and tothe freedom to provide services, presupposes that those latter provisions areapplicable in principle.

20.

    According to the referring court's analysis, the correctness of which the Court isunable to verify, the award of a public service contract is not at issue in the mainproceedings. However, that does not rule out the possibility that provisions of theTreaty on freedom of movement, which impose in particular on the Member Statesobligations to ensure equal treatment and transparency vis-à-vis economic operatorsfrom other Member States, may be relevant.

21.

    However, the case-file shows that RI.SAN., which challenges the legality of thechoice made by the municipality, has its seat in Italy and does not operate on theItalian market in reliance on freedom of establishment or freedom to provideservices.

22.

    Such a situation does not therefore have any connecting link with one of thesituations envisaged by Community law in the area of the free movement ofpersons and services.

23.

    The answer to be given to the first question must therefore be that Article 55 ofthe Treaty does not apply in a situation such as that in the main proceedings inwhich all the facts are confined to within a single Member State and which doesnot therefore have any connecting link with one of the situations envisaged byCommunity law in the area of the freedom of movement for persons and freedomto provide services.

The second question

24.

    By its second question, the national court asks essentially whether Article 90(2) ofthe Treaty is to be interpreted as allowing a municipality to choose, without anyprior invitation to tender, a financial company as partner in a mixed limitedcompany with a majority public shareholding having as its object the running of thesolid urban waste collection service.

25.

    It must be remembered that Article 90(2) constitutes a derogation from the rulesof the Treaty, in particular its competition rules, whose application it thereforepresupposes.

26.

    However, as indicated above, in paragraphs 19 to 22, the provisions relating tofreedom of movement for persons and freedom to provide services do not applyin a situation such as that existing in the main proceedings. Moreover, neither theorder for reference nor the written observations provide the Court with the factualand legal information which would enable it to interpret the other rules of theTreaty, in particular the competition rules, in relation to the situation created bythe choice, without a prior invitation to tender, of GEPI as partner in a companywith a majority public shareholding having as its object the running of the solidurban waste collection service.

27.

    In those circumstances, the Court is unable to provide a useful answer to thesecond question.

Costs

28.

    The costs incurred by the Italian Government and by the Commission, which havesubmitted observations to the Court, are not recoverable. Since these proceedingsare, for the parties to the main proceedings, a step in the action pending before thenational court, the decision on costs is a matter for that court.

On those grounds,

THE COURT (Fifth Chamber),

in answer to the questions referred to it by the Tribunale Amministrativo Regionaledella Campania by orders of 19 November and 11 December 1997, hereby rules:

Article 55 of the EC Treaty (now Article 45 EC) does not apply in a situation suchas that in the main proceedings in which all the facts are confined to within asingle Member State and which does not therefore have any connecting link withone of the situations envisaged by Community law in the area of the freedom ofmovement for persons and freedom to provide services.

PuissochetJann Gulmann             Edward                Sevón

Delivered in open court in Luxembourg on 9 September 1999.

R. Grass

J.-P. Puissochet

Registrar

President of the Fifth Chamber

1: Language of the case: Italian.