Network Ownership – Case C-375/14

"Now we await the conclusions of the advocate general on 29 November 2015 and the nth judgment, which will be particularly important in view of the imminent call for tenders, given that the natural expiry date of all the brick-and-mortar licences and a good part of the online licences is 30 June 2016. The judgment will certainly impact the entire public gaming network". 

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Once again, for the nth time, discussion turns to a judgment due from the European Court of Justice (Case C-375/14), which the Frosinone Court in central Italy addressed on 6 August 2014 with the following request for a preliminary ruling:

Are articles 49 et seq and 56 et seq of the Treaty on the Functioning of the European Union, as also expanded upon by the principles laid down in the judgement of the Court of Justice of 16 February 2012 in Case C-72/10, to be interpreted as precluding national legislation which imposes an obligation to transfer, free of charge, the right to use the tangible and intangible assets constituting the network for managing and collecting bets upon cessation of that activity due to the expiry of the relevant licence or as a result of measures disqualifying the licence-holder or withdrawing the licence?

The provision challenged is contained in article 25 of the template agreement for obtaining a public gaming licence pursuant to article 10, paragraph 9-octies, of Legislative Decree No. 16 of 2 March 2012, as converted with amendments into Law No. 44 of 26 April 2012 on Obligations of the licence-holder upon cessation of the activity or disqualification or withdrawal of the licence, which reads:

Following an express request from the Customs and Monopolies Agency (ADM) and for the period established therein, the licence holder agrees to transfer the right to use the tangible and intangible assets constituting the network for managing and collecting bets, free of charge, to the ADM or to another licence-holder identified by the ADM using competitive bidding criteria, free from third-party rights or claims, upon cessation of that activity due to the expiry of the relevant licence or as a result of measures disqualifying the licence-holder or withdrawing the licence [.]

In substance, if the licence holder ceases its activities (it is not clear if this happens upon natural expiry of the licence) or if the licence is revoked or withdrawn, the ADM may obtain for itself or transfer, again free of charge, to another licence holder (identified by the ADM) “the right to use the tangible and intangible assets constituting the network for managing and collecting bets” belonging to the licence holder that has ceased its activities.

The ADM would also be entitled to take over from the licence holder all supply contracts deemed useful for the full and complete operation of the bet collection network. The European Commission has recently filed memoranda for this case, which state that:

The freedom of establishment pursuant to article 49 TFEU and the freedom to provide services pursuant to article 56 TFEU may preclude national legislation that envisages, with regard to licences intended to remedy the consequences of the improper exclusion of a certain number of operators from previous tenders, a requirement to transfer the right to use the assets constituting the network for managing and collecting bets, free of charge, on cessation of the licensed activity. The national judge is responsible for making the related considerations. In order to ensure that this situation does not arise in the case under review, the national judge must check that the legal framework containing this obligation pursues legitimate objectives in the public interest and guarantees overall compliance with the principles of equivalence, effectiveness and proportionality.

As usual, the European Commission respects the roles of the various actors and identifies, the Frosinone Court as the natural judge to decide the matter (in this regard the European Commission notes that:

The referring court must therefore determine, in the light of the other related obligations contained in the same article 25 and in the Template Agreement as a whole, if the effect of the requirement to transfer free of charge is to strengthen improper exclusions, granting a further advantage to the operators already active, or to make it excessively difficult for improperly excluded operators to exercise their rights [see also the judgment dated 28 April 2009, Case C-518/06, Commission/Italy, points 70-71].

The comments made by the European Commission cannot be agreed since the clauses requiring licence holders to transfer their assets and network to the ADM are also included in other template agreements, even prior to that for the so-called “Monti concession”. In a previous antitrust case (I570 – Decision No. 13780/2004), the ADM’s director general at the time acted as the bearer of a market organisation plan in which the ADM would have been the sole owner of the sole network of multi-functional outlets for the commercialisation of betting games. As usual, the criticism, more or less valid, has arrived before the Court of Justice in an inconclusive manner (perhaps deliberately), without taking the history of our licensing system into account. Now we await the conclusions of the advocate general on 29 November 2015 and the nth judgment, which will be particularly important in view of the imminent call for tenders, given that the natural expiry date of all the brick-and-mortar licences and a good part of the online licences is 30 June 2016. The judgment will certainly impact the entire public gaming network, since if there is discrimination in the circumstances against the holders of public gaming licences pursuant to article 10, paragraph 9-octies, of Legislative Decree No. 16 of 2 March 2012, as converted with amendments into Law No. 44 of 26 April 2012, in reality this would also extend to all other operators that promote forms of gaming pursuant to article 110, paragraph 6 (a) and (b), TULPS (Consolidated Public Safety Laws) and otherwise. 

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