CJEU Case C-254/23 / Judgment
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CJEU Case C-254/23 / Judgment
Key facts of the case:
Reference for a preliminary ruling – Freedom of establishment and freedom to provide services – Articles 49 and 56 TFEU – Protocol (No 26) on services of general interest, annexed to the EU and FEU Treaties – Services in the internal market – Directive 2006/123/EC – Scope – Monopolies and services of general economic interest – Requirements to be evaluated – Article 15 – Waste – Directive 2008/98/EC – Extended producer responsibility schemes – Articles 8 and 8a – Creation of a monopoly on the market for collective fulfilment of extended producer responsibility obligations – Non-profit-making single organisation – Article 106(2) TFEU – Concept of an ‘undertaking’ – Detailed rules for establishment and operation – Transitional arrangements – Obligation on producers subject to extended responsibility to comply with that scheme – Articles 16 and 17 of the Charter of Fundamental Rights of the European Union – Right to conduct a business and right to property – Principles of legal certainty and protection of legitimate expectations – Proportionality.
Outcome of the case:
On those grounds, the Court (Grand Chamber) hereby rules:
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Article 106(2) TFEU
must be interpreted as meaning that a legal person that, first, has the exclusive right to exercise, in accordance with Articles 8 and 8a of Directive 2008/98/EC of the European Parliament and of the Council of 19 November 2008 on waste and repealing certain Directives, as amended by Directive (EU) 2018/851 of the European Parliament and of the Council of 30 May 2018, an activity consisting of the fulfilment, for a given category of products and throughout the territory of a Member State, of extended producer responsibility obligations on behalf of the producers concerned, and that, second, is required to carry out that activity on a non-profit-making basis, must be regarded as an undertaking entrusted with the operation of a service of general economic interest, within the meaning of that Article 106(2), provided that that legal person has actually been entrusted with the discharge of public service obligations and that the nature, duration and scope of those obligations are clearly defined in national law.
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Articles 8 and 8a of Directive 2008/98, as amended by Directive 2018/851, Article 15 of Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market, Articles 49, 56 and 106 TFEU, Articles 16 and 17 of the Charter of Fundamental Rights of the European Union and the principles of legal certainty and protection of legitimate expectations
must be interpreted as meaning that, subject to compliance with the principle of proportionality, they do not preclude national legislation which:
- establishes a monopoly situation through the creation of an organisation entrusted with the collective fulfilment of extended producer responsibility obligations that has the exclusive right to carry out that activity for a given category of products, while providing for both the revocation by operation of law of the authorisations which enabled economic operators to carry on that activity up until that point and the termination by operation of law of all the contracts concluded by those operators in the exercise of the same activity, provided, however, first, that that legislation is accompanied by the establishment of a legislative framework capable of ensuring that the holder of that monopoly will in fact be able to pursue, in a consistent and systematic manner, the objectives of protection of the environment and public health which the Member State concerned has set itself by means of a supply that is quantitatively measured and qualitatively planned by reference to those objectives and subject to strict control by the public authorities, and, second, that it provides for adaptations to the application of the new rules to prevent any excessive burden being placed on the economic operators concerned, in particular a transitional period of sufficient duration to enable them to adapt to the changes or a system of reasonable compensation for the damage suffered by them;
- requires that organisation to carry on its activity on a non-profit-making basis;
- provides that producers subject to extended producer responsibility obligations that place on the market at least 51% of the total quantity of products of the same category, to which that extended responsibility obligation applies, must set up such an organisation and hold shares in it;
- provides that shareholders in that organisation must be producers on the market concerned;
- prohibits those producers from carrying out the activity of waste collection and treatment and prohibits capital or family ties between, on the one hand, that organisation, the members of its management body and those producers and, on the other hand, the persons who collect and treat waste and persons who have voting rights in the governing body or supervisory body of that organisation;
- makes the collective fulfilment of extended producer responsibility obligations compulsory for the producers of products subject to that extended producer responsibility and requires them to contract with that same organisation, provided, however, that such obligations are accompanied by sufficient procedural safeguards, in particular with regard to possible conflicts of interest or competitive disadvantages, in order to prevent any excessive burden being placed on the producers concerned in the course of carrying out their economic activity as a result of arbitrary or unforeseeable effects on their contractual relationships.
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Paragraphs referring to EU Charter
105. It is settled case-law that where a Member State argues that a measure of which it is the author and which restricts a fundamental freedom guaranteed by the FEU Treaty is justified by an overriding reason in the public interest recognised by EU law, such a measure must be regarded as implementing EU law within the meaning of Article 51(1) of the Charter, such that it must comply with the fundamental rights enshrined in the Charter (see, to that effect, judgment of 18 June 2020Commission v Hungary (Transparency of associations), C‑78/18, EU:C:2020:476, paragraph 101 and the case-law cited). The same applies where a Member State relies, pursuant to Article 15(3)(b) of Directive 2006/123, on an overriding reason in the public interest in order to justify a requirement coming within the scope of Article 15(2) (see, by analogy, judgment of 6 October 2020, Commission v Hungary (Higher education), C‑66/18, EU:C:2020:792, paragraph 214).
106. It follows that, where national legislation constitutes a restriction on the freedom of establishment and/or the freedom to provide services, the compatibility of that legislation with EU law and, therefore, its justification, must be examined not only in the light of the exceptions provided for in Directive 2006/123 and the Court’s case-law, but also in the light of the rights and freedoms guaranteed by the Charter (see, to that effect, judgments of 21 May 2019, Commission v Hungary (Usufruct over agricultural land), C‑235/17, EU:C:2019:432, paragraph 66 and the case-law cited, and of 6 October 2021, ECOTEX BULGARIA, C‑544/19, EU:C:2021:803, paragraph 89).
107. The requirement that a measure must comply with the rights and freedoms guaranteed by the Charter entails ascertaining whether the national provisions concerned impose limitations on those rights and freedoms and, if they do, whether those limitations are justified in the light of the requirements set out in Article 52(1) of the Charter (see, to that effect, judgment of 18 June 2020, Commission v Hungary (Transparency of associations), C‑78/18, EU:C:2020:476, paragraph 103).
108. In that regard, it must be borne in mind that neither the freedom to conduct a business enshrined in Article 16 of the Charter nor the right to property guaranteed by Article 17 of the Charter are absolute (see, to that effect, judgment of 30 April 2024, Trade Express-L and DEVNIA TSIMENT, C‑395/22 and C‑428/22, EU:C:2024:374, paragraph 78 and the case-law cited), it being possible to impose limitations on their exercise, in accordance with Article 52(1) of the Charter, as long as those limitations are provided for by law, respect the essence of those rights and freedoms and, subject to the principle of proportionality, are necessary and genuinely meet objectives of general interest recognised by the European Union or the need to protect the rights and freedoms of others.
109. In that respect, it must be pointed out that objectives of general interest, such as the protection of the environment and the protection of public health, may not be pursued by a national measure without having regard to the fact that they must be reconciled with the fundamental rights and principles affected by that measure, as set out in the Treaties and the Charter, by properly balancing those objectives of general interest against the rights and principles at issue, in order to ensure that the disadvantages caused by that measure are not disproportionate to the objectives pursued. Thus, the question whether a limitation on the rights guaranteed in Articles 16 and 17 of the Charter may be justified must be assessed by measuring the seriousness of the interference which such a limitation entails and by verifying that the importance of the objectives of general interest pursued by that limitation is proportionate to that seriousness (see, to that effect, judgment of 5 December 2023, Nordic Info, C‑128/22, EU:C:2023:951, paragraph 93 and the case-law cited).
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139. In accordance with the case-law cited in paragraphs 105 to 110 above, it remains necessary to examine the establishment of a monopoly over the collective fulfilment of extended producer responsibility obligations, by the extended producer responsibility scheme at issue in the main proceedings, in the light of the fundamental rights guaranteed by the Charter, in the present case Articles 16 and 17 thereof, and in the light of the general principles of EU law.
140. As regards, in the first place, Article 16 of the Charter, it provides that the freedom to conduct a business in accordance with EU law and national laws and practices is recognised. The protection afforded by that article includes, in particular, the freedom to exercise an economic or commercial activity and the freedom of contract (see, to that effect, judgments of 22 January 2013, Sky Österreich, C‑283/11, EU:C:2013:28, paragraph 42, and of 30 April 2024, Trade Express-L and DEVNIA TSIMENT, C‑395/22 and C‑428/22, EU:C:2024:374, paragraph 76).
141. Having regard to the wording of Article 16 of the Charter, which provides that the freedom to conduct a business is recognised in accordance with EU law and national laws and practices and thus differs from the wording of the other fundamental freedoms laid down in Title II of the Charter, yet is similar to that of certain provisions of Title IV of the Charter, that freedom may therefore be subject to a broad range of interventions on the part of public authorities which may, in the public interest, limit the exercise of economic activity. That circumstance is reflected, in particular, in the way in which EU legislation and national legislation and practices should be assessed in the light of the principle of proportionality under Article 52(1) of the Charter (see, to that effect, judgment of 21 December 2021, Bank Melli Iran, C‑124/20, EU:C:2021:1035, paragraphs 81 and 82 and the case-law cited).
142. In that regard, it is sufficient to note that, in so far as the provisions of the extended producer responsibility scheme at issue in the main proceedings establishing a monopoly over the collective fulfilment of extended producer responsibility obligations constitute, as stated in paragraph 116 above, a restriction on the freedom of establishment, they also constitute, in principle, a limitation on the exercise of the freedom to conduct a business, enshrined in Article 16 of the Charter, of the operators concerned (see, to that effect, judgment of 8 May 2019, PI, C‑230/18, EU:C:2019:383, paragraph 65).
143. In the second place, under Article 17(1) of the Charter, everyone has the right to own, use, dispose of and bequeath his or her lawfully acquired possessions and no one may be deprived of his or her possessions, except in the public interest and in the cases and under the conditions provided for by law, subject to fair compensation being paid in good time for his or her loss. The use of property may be regulated by law in so far as is necessary for the general interest.
144. Article 17(1) of the Charter contains three distinct rules. The first rule, which appears in the first sentence of that provision, is of a general nature and gives concrete expression to the principle of respect for property. The second rule, set out in the second sentence of that provision, refers to a person being deprived of property and makes that deprivation subject to certain conditions. The third rule, which is contained in the third sentence of that provision, recognises that the Member States have the power to regulate the use of property in so far as is necessary for the general interest. Those rules are not, however, unrelated to each other. Indeed, the second and third rules relate to specific examples of infringements of the right to property and are to be interpreted in the light of the principle enshrined in the first rule (see, to that effect, judgments of 10 September 2024, Neves 77 Solutions, C‑351/22, EU:C:2024:723, paragraph 81 and the case-law cited, and of 4 October 2024, Aeris Invest v Commission and SRB, C‑535/22 P, EU:C:2024:819, paragraph 214).
145. The protection afforded by Article 17(1) of the Charter concerns rights with an asset value creating an established legal position under the legal system concerned, enabling the holder to exercise those rights autonomously and for his or her own benefit (judgments of 21 May 2019, Commission v Hungary (Usufruct over agricultural land), C‑235/17, EU:C:2019:432, paragraph 69 and the case-law cited, and of 5 May 2022, BPC Lux 2 and Others, C‑83/20, EU:C:2022:346, paragraph 39).
146. In that regard, it is apparent from the case-law of the European Court of Human Rights relating to Article 1 of Protocol No 1 to the European Convention for the Protection of Human Rights and Fundamental Freedoms, signed in Paris on 20 March 1952, which must be taken into account pursuant to Article 52(3) of the Charter for the purpose of interpreting Article 17 of the Charter as the minimum threshold of protection (see, to that effect, judgments of 21 May 2019, Commission v Hungary (Usufruct over agricultural land), C‑235/17, EU:C:2019:432, paragraph 72 and the case-law cited and of 10 September 2024, Neves 77 Solutions, C‑351/22, EU:C:2024:723, paragraph 80), that interests associated with the exploitation of a licence constitute property interests attracting the protection of that Article 1 of Protocol No 1 (see, to that effect, ECtHR, 7 June 2012, Centro Europa 7 S.r.l. and Di Stefano v. Italy, CE:ECHR:2012:0607JUD003843309, § 178). Consequently, the revocation by operation of law of a licence entitling its holder to pursue an economic activity amounts to a limitation of the right to property guaranteed by that article which, as a measure controlling the use of property, comes within the second paragraph of that article (see, to that effect, ECtHR, 13 January 2015, Vékony v. Hungary, CE:ECHR:2015:0113JUD006568113, §§ 29 and 30, and ECtHR, 5 April 2022, NIT S.r.l. v. The Republic of Moldova, CE:ECHR:2022:0405JUD002847012, §§ 235 and 236).
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148. In the present case, it is apparent from the information brought to the Court’s attention that, subject to verification by the referring court, the establishment of a monopoly for the single organisation by the extended producer responsibility scheme at issue in the main proceedings entails both the revocation by operation of law of the environmental authorisations and the decisions approving the existing common plans, issued to the ZVO-1 operators for the purpose of carrying out the collective fulfilment of extended producer responsibility obligations, and the termination by operation of law of all the contracts concluded between those operators and the producers, and with the providers of waste management services. Such consequences may be regarded as a limitation on the exercise of the right to property relating to how the use of property is governed for the purposes of the third sentence of Article 17(1) of the Charter.
149. As regards the justification for such limitations on the freedom and right provided for in Articles 16 and 17 of the Charter, first, it is common ground that those limitations, relating to the establishment of a monopoly and to the transitional arrangements provided for by the Slovenian legislature in that context, figure in the extended producer responsibility scheme at issue in the main proceedings, as established by the ZVO-2.
150. Second, those limitations respect the essence of Articles 16 and 17 of the Charter. As regards, first, the condition of respect for the essence of the freedom to conduct a business, it should be noted that the establishment of a monopoly over an economic activity to the detriment of existing operators does not prevent all business activity on the part of those operators as such, indeed, primary law expressly permits the grant of exclusive rights to one or more public or private operators in respect of a given economic activity and the conditions for the establishment of a monopoly over an activity resulting from the grant of such rights must be assessed, as follows from paragraph 141 of the present judgment, in the context of the examination of the proportionality of such a measure.
151. Second, since, as stated in paragraph 148 of the present judgment, that measure relates to how the use of property is governed for the purposes of the third sentence of Article 17(1) of the Charter, it is not capable of undermining the essential content of the right to property (see, to that effect, judgment of 10 September 2024, Neves 77 Solutions, C‑351/22, EU:C:2024:723, paragraph 88 and the case-law cited).
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160. In the light of the foregoing, it must be held that, subject to compliance with the principle of proportionality, Articles 8 and 8a of Directive 2008/98, Article 15 of Directive 2006/123, Articles 49 and 56 TFEU, Articles 16 and 17 of the Charter and the principles of legal certainty and the protection of legitimate expectations do not preclude national legislation which establishes a monopoly situation through the creation of an organisation entrusted with the collective fulfilment of extended producer responsibility obligations that has the exclusive right to carry out that activity for a given category of products, while providing for both the revocation by operation of law of the authorisations which enabled economic operators to carry on that activity up until that point and the termination by operation of law of all the contracts concluded by those operators in the exercise of the same activity, provided, however, that that legislation, first, is accompanied by the establishment of a legislative framework capable of ensuring that the holder of that monopoly will in fact be able to pursue, in a consistent and systematic manner, the objectives of protection of the environment and public health which the Member State concerned has set itself by means of a supply that is quantitatively measured and qualitatively structured in the light of those objectives and subject to strict control by the public authorities, and, second, provides for adaptations to the application of the new rules to prevent any excessive burden being placed on the economic operators concerned, in particular a transitional period of sufficient duration to enable them to adapt to the changes or a system of reasonable compensation for the damage suffered by them.
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191. In accordance with the case-law referred to in paragraphs 105 to 110 of the present judgment, it is still necessary to ascertain whether the extended producer responsibility scheme at issue in the main proceedings is compatible with the fundamental rights guaranteed by the Charter – here, the freedom to conduct a business guaranteed by Article 16 of the Charter.
192. For the same reasons as those set out in paragraphs 179 to 190 of the present judgment, there is nothing in the documents before the Court to suggest that the restrictions on the freedom to conduct a business are not capable of being justified in accordance with the requirements laid down in Article 52(1) of the Charter.
193. In the light of the foregoing, it must be concluded that, subject to compliance with the principle of proportionality, Articles 8 and 8a of Directive 2008/98, Article 15 of Directive 2006/123, Article 49 TFEU and Article 16 of the Charter do not preclude national legislation which:
- imposes on an organisation entrusted with the collective fulfilment of extended producer responsibility obligations an exclusive right to carry out its activity on a non-profit-making basis;
- provides that producers subject to extended producer responsibility obligations that place on the market at least 51% of the total quantity of products of the same category, to which that extended responsibility obligation applies, must set up such an organisation and hold shares in it
- provides that shareholders in that organisation must be producers on the market concerned;
- prohibits those producers from carrying out the activity of waste collection and treatment and prohibits capital or family ties between, on the one hand, that organisation, the members of its management body and producers who have a shareholding in it and, on the other hand, the persons who collect and treat waste and persons who have voting rights in the governing body or supervisory body of that organisation.
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210. In accordance with the case-law referred to in paragraphs 105 to 110 of the present judgment, it is still necessary to ascertain whether the extended producer responsibility scheme at issue in the main proceedings is compatible with the fundamental rights guaranteed by the Charter – here, the freedom to conduct a business guaranteed by Article 16 of the Charter.
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212. Second, the Court has held that the protection afforded by Article 16 of the Charter also includes, by virtue of freedom of contract, the freedom to choose with whom to do business (see, to that effect, judgments of 22 January 2013, Sky Österreich, C‑283/11, EU:C:2013:28, paragraph 43 and the case-law cited, and of 12 January 2023, TP (Audiovisual editor for public television), C‑356/21, EU:C:2023:9, paragraph 74), and that the imposition of an obligation to contract constitutes a substantial limitation on the freedom of contract enjoyed, in principle, by economic operators (see, to that effect, judgment of 28 April 2009, Commission v Italy, C‑518/06, EU:C:2009:270, paragraph 66).
213. In the present case, both the obligation on producers of products for household use to fulfil their obligations collectively and the obligation imposed on those producers to contract with the single organisation are liable, in so far as they constitute restrictions on the freedom to provide services and the freedom of establishment, to have a sufficiently direct and significant effect on the freedom of those producers to pursue their trade or business, with the result that they constitute limitations on the exercise of their freedom to conduct a business guaranteed in Article 16 of the Charter. As noted in paragraph 108 of this judgment, such limitations may, however, be justified.
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215. Second, those limitations on the freedom to conduct a business respect the essence of the freedom guaranteed in Article 16 of the Charter. Indeed, the requirements thus imposed do not prevent all business activity as such, but constitute measures regulating the professional or commercial activities of the operators concerned, the conditions of which must, as follows from paragraph 141 of the present judgment, be assessed in the context of the examination of their proportionality.
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220. In those circumstances, it must be held that, subject to compliance with the principle of proportionality, Articles 8 and 8a of Directive 2008/98, Article 56 TFEU and Article 16 of the Charter do not preclude national legislation which makes the collective fulfilment of extended producer responsibility obligations compulsory for the producers of products subject to that extended producer responsibility and requires them to contract with an organisation that has an exclusive right to carry out that activity, provided, however, that such obligations are accompanied by sufficient procedural safeguards, in particular with regard to possible conflicts of interest or competitive disadvantages, in order to prevent any excessive burden being placed on the producers concerned in the course of carrying out their economic activity as a result of arbitrary or unforeseeable effects on their contractual relationships.
221. If the referring court should consider, first, that, in the light of the answer given to the first question referred for a preliminary ruling, the collective fulfilment of extended producer responsibility obligations must be classified as a service of general economic interest, within the meaning of Article 15(4) of Directive 2006/123 and Article 106(2) TFEU, and, second, that one or more provisions of the extended producer responsibility scheme at issue in the main proceedings do not comply either with Article 15(1) to (3) of that directive or with Articles 49 and/or 56 TFEU, as interpreted, where appropriate, in the light of the rights and freedoms set out in Articles 16 and 17 of the Charter and the principles of legal certainty and the protection of legitimate expectations, it will be for the referring court next to ascertain whether those restrictions may be justified under Article 15(4) of Directive 2006/123 or Article 106(2) TFEU.
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226. In the light of all the foregoing considerations, the answer to the second to tenth questions referred is that Articles 8 and 8a of Directive 2008/98, Article 15 of Directive 2006/123, Articles 49, 56 and 106 TFEU, Articles 16 and 17 of the Charter and the principles of legal certainty and the protection of legitimate expectations must be interpreted as meaning that, subject to compliance with the principle of proportionality, they do not preclude national legislation which:
- establishes a monopoly situation through the creation of an organisation entrusted with the collective fulfilment of extended producer responsibility obligations that has the exclusive right to carry out that activity for a given category of products, while providing for both the revocation by operation of law of the authorisations which enabled economic operators to carry on that activity up until that point and the termination by operation of law of all the contracts concluded by those operators in the exercise of the same activity, provided, however, first, that that legislation is accompanied by the establishment of a legislative framework capable of ensuring that the holder of that monopoly will in fact be able to pursue, in a consistent and systematic manner, the objectives of protection of the environment and public health which the Member State concerned has set itself by means of a supply that is quantitatively measured and qualitatively planned by reference to those objectives and subject to strict control by the public authorities, and, second, that it provides for adaptations to the application of the new rules to prevent any excessive burden being placed on the economic operators concerned, in particular a transitional period of sufficient duration to enable them to adapt to the changes or a system of reasonable compensation for the damage suffered by them;
- requires that organisation to carry on its activity on a non-profit-making basis;
- provides that producers subject to extended producer responsibility obligations that place on the market at least 51% of the total quantity of products of the same category, to which that extended responsibility obligation applies, must set up such an organisation and hold shares in it;
- provides that shareholders in that organisation must be producers on the market concerned;
- prohibits those producers from carrying out the activity of waste collection and treatment and prohibits capital or family ties between, on the one hand, that organisation, the members of its management body and those producers and, on the other hand, the persons who collect and treat waste and persons who have voting rights in the governing body or supervisory body of that organisation;
- makes the collective fulfilment of extended producer responsibility obligations compulsory for the producers of products subject to that extended producer responsibility and requires them to contract with that same organisation, provided, however, that such obligations are accompanied by sufficient procedural safeguards, in particular with regard to possible conflicts of interest or competitive disadvantages, in order to prevent any excessive burden being placed on the producers concerned in the course of carrying out their economic activity as a result of arbitrary or unforeseeable effects on their contractual relationships.
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Paragraphs referring to EU Charter (original language)