Case C-136/12, Consiglio Nazionale dei Geologi – professions and cartel law [judgment 2013, ECLI:EU:C:2013:489]

When a profession’s Code of Conduct lays down the parameters for working out a member’s pay is there an infringement of EU cartel law?

Facts

The statutory tariffs used for setting a geologist’s pay in Italy were abolished in 2006. However, the Italian National Council of Geologists then introduced a Code of Conduct, which included provisions setting out how to determine the rate at which a geologist should be paid. Furthermore, a failure to comply with the rules set down in the Code of Conduct could also lead to a sanction.

The Italian Competition Authority took the view that the Code’s rules breached EU competition law. Its reasoning ran as follows. Those who exercised a profession did so in a way that could fall within the definition of an undertaking. The regulatory body was an association of undertakings. The regulatory body had approved the rules in the Code. Thus, here was a decision of an association of undertakings, and the Code was an agreement that horizontally restricted competition. Furthermore, parameters for pay were likely to standardise pay or constrain economic behaviour. And an agreement which covered an entire Member State had by its nature the effect of consolidating the compartmentalisation of markets along national lines. Such an agreement had a potential effect on intra-community trade. And that would be contrary to EU cartel law. Therefore, the Italian Competition Authority required the Italian National Council of Geologists to change the rules in its Code of Conduct, and it fined them more than 14 000 euro to boot.

On appeal to the Administrative District Court of Lazio, the Italian National Council of Geologists pointed out that there were exceptions to EU competition law and that a distinction should be made between commercial undertakings, and an ‘intellectual’ profession, such as that of a geologist, since the latter did not act solely in the pursuit of profit. On hearing this, the Administrative District Court of Lazio considered the Italian Competition Authority’s decisions to be partly defective but, when seen in the round, the Administrative District Court upheld the decision of the Italian Competition Authority.

Both parties appealed to the Italian Council of State. The Council of State decided to make a preliminary reference to the CJEU. The first matter on which the Italian Council of State sought guidance from the CJEU was the duty incumbent upon it to actually ask questions of the CJEU, and the degree to which a reference had to observe the rules of Italian procedural law. It pointed out that the duty to refer, as laid out in Article 267, third paragraph, TFEU, must respect national rules of procedure. And Italian administrative law rested on the principle of judicial non-intervention. This meant that an Italian judge could not intervene to change a party’s petition. Italian law also required the grounds of appeal to be specified, which meant that generalised claims were inadmissible. And there was no possibility for the judge to alter the base of a claim. As such, the Questions which the National Council of Geologists wished to ask would, under Italian law, have been deemed inadmissible or irrelevant.

However, there was also the principle of the civil liability for judges and the Member State for manifest infringements of European Union law (Case C-224/01, Gerhard Köbler). Therefore, if the CJEU would be of the view that national procedural law was irrelevant, then the Council of State sought guidance on a second matter, namely, whether the rules in the Code of Conduct were compatible with cartel law, the freedom to provide services, and the recognition of professional qualifications. The Council of State therefore asked a series of Questions covering the complex inter-relationships that exist between these areas of EU law.

Questions Referred

According to the Curia website, the Council of State asked:

I.

(1) Do national procedural rules which provide for a system of procedural bars, such as time-limits for bringing proceedings, the requirement that the grounds relied on be specific, a bar on amending the claim in the course of the proceedings and a bar on the court amending the claim as formulated by the applicant, preclude the application of Article 267, third paragraph, TFEU with regard to the obligation on the court of final instance to refer to the Court of Justice for a preliminary ruling a question of interpretation of Community law raised by a party to the proceedings?

(2) Does the power of the national court to ‘filter’ as regards the relevance of the question and to assess the degree of clarity of Community law preclude the application of Article 267, third paragraph, TFEU with regard to the obligation on the court of final instance to refer to the Court of Justice for a preliminary ruling a question of interpretation of Community law raised by a party to the proceedings?

(3) If it is construed as imposing on the national court of final instance an unconditional obligation to refer to the Court of Justice for a preliminary ruling a question of interpretation of Community law raised by a party to the proceedings, is Article 267, third paragraph, TFEU consistent with the principle that proceedings must be concluded within a reasonable time, which is also enshrined in Community law?

(4) In what factual and legal circumstances does a failure on the part of the national court to comply with Article 267, third paragraph, TFEU constitute a “clear breach of Community law”, and can that concept differ in its scope and application with regard to special proceedings against the State, under Law No 117 of 13 April 1988 for “compensation for damage caused in the exercise of judicial functions and the civil liability of judges”, and general proceedings against the State for infringement of Community law?

II

Should the Court of Justice accept the argument of the ‘large-mesh filter’ … precluding the application of the national procedural rules concerning the specific nature of the grounds relied on in the application, the questions for a preliminary ruling must be submitted to the Court of Justice of the European Union in exactly the same terms in which they were formulated by the appellant [in the main proceedings], as set out [below].

(1) ‘… the European Court of Justice is asked for a preliminary ruling on the interpretation of Article 101 of the Treaty (formerly Article 81) in relation to the statutory provisions and rules of conduct regulating the profession of geologist and the institutional responsibilities and rules of procedure of the National Council of Geologists, applicable to the case, as set out below, in order to establish whether they are compatible with and lawful in the light of European Union law (the abovementioned Article 101) concerning the rules on competition …

Article 9, with particular reference to Article 9(g), of Law 112/1963, “the National Council of Geologists shall have the following responsibilities, in addition to those conferred on it by other provisions: (a) it shall ensure compliance with the law regulating the profession and all other provisions concerning the profession; (b) it shall ensure that the register and special list are maintained and be responsible for registering members and removing members from the register; (c) it shall ensure that the professional qualification is protected and take measures to prevent the unlawful exercise of the profession; (d) it shall adopt disciplinary measures; (e) it shall, if requested, determine fees; (f) it shall administer the material assets of the National Association and draw up annually the provisional budget and the final balance sheet; (g) it shall establish, within the limits strictly necessary to cover the operating costs of the National Association, by resolution to be approved by the Ministry of Justice, the amount of the annual contribution to be paid by those entered in the register or the special list, as well as the amount of the registration fee for entry in the register or list [and] the charge for issuing certificates and opinions on the determination of fees”.

Article 14, first paragraph, of Law 616/1966, which provides that “[a] person entered in the register or special list who fails to act in a manner consistent with the integrity or dignity of the profession may be subject, depending on the seriousness of the offence, to one of the following disciplinary measures: (1) reprimand; (2) suspension from professional activity for a period of not more than one year; (3) removal from the register”.

Article 17 of Law 616/1966, which provides that “[t]he scale of professional fees and emoluments and the criteria for the reimbursement of costs shall be established by decree of the Minister of Justice (“Ministro per la Grazia e Giustizia” [now the “Ministro della Giustizia”], after consultation of the Minister for Industry and Commerce [now the “Minister for the Production Sector”], acting on a proposal from the National Council of Geologists”.

Article 6 of the New Code of Conduct of 19 December 2006 (Resolution No 143/2006), amended by Resolution No 65 of 24 March 2010 on “professional services”, according to which, “[t]he efficiency and effectiveness of the service shall, in essence, be determined by: the intrinsic technical difficulty; the extent of the responsibility undertaken; the novelty of the request; whether or not existing technical solutions may be applied to the case; the significance of the technical aspects to be assessed; the scale of the technical aspects requiring coordination; the originality of the solution; the amount of time and the level of commitment demanded; the capacity for interaction with the client and with other persons, including undertakings, involved in providing the service; the value of the work”.

Article 7 of the New Code of Conduct of 19 December 2006 (Resolution No 143/2006), amended by Resolution No 65 of 24 March 2010 on “[p]rofessional conduct”, according to which “appropriate professional conduct consists, in essence, in the propriety and completeness of the professional service provided; in the capacity to take on responsibility; in having available effective technical and professional equipment; in the ready availability of up-to-date tools; in the organisation of an efficient office and professional team; in the care shown in executing tasks; in having available resources and structures for continuing education and training, including for staff and employees; in the ability to communicate promptly and effectively with the client, and with private and public institutions and bodies and the wider public”.

Article 17 of the New Code of Conduct of 19 December 2006 (Resolution No 143/2006), amended by Resolution No 65 of 24 March 2010 on the “[c]riteria for charging”, according to which “[i]n determining professional remuneration, the geologist must comply with the provisions of Decree-law 223/2006 converted into Law 248/2006; the requirement that remuneration must be commensurate laid down in Article 2233, second paragraph, of the Civil Code and, in any event, all the provisions in force governing the subject-matter. The professional scale of fees approved by Ministerial Decree of 18 November 1971, as subsequently amended and supplemented, and the fees in respect of public works, approved by the Ministerial Decree of 4 April 2001 in so far as concerns geologists, constitute a legitimate and objective technical and professional reference criterion for the purpose of the consideration, determination and settlement of questions relating to fees as between the parties”. On that point, in particular, the Court of justice is requested to give a ruling on whether it is contrary to Article 101 of the Treaty to designate Decree-Law 223/2006, with the numerical-chronological system, being the only historically-based and lawful system, at both domestic and Community level, as the mandatory statutory provision in force in its entirety, which undoubtedly has no bearing on whether it is possible for those concerned to be aware of the rule of law or its mandatory effect.

Article 18 of the New Code of Conduct of 19 December 2006 (Resolution No 143/2006), amended by resolution No 65 of 24 March 2010 on the “[c]ommensurate nature of the fee”, according to which, “[u]nder the legislation in force, in order to ensure the quality of the services provided, a geologist engaging in professional activity in its various forms – as an individual, as a member of a company or a partnership – must always ensure that the fee charged is commensurate with the scale and difficulty of the task, appropriate professional conduct, technical knowledge and the commitment required. Having regard to the principles of competitiveness, the National Association shall monitor compliance with these requirements”.

Article 19 of the New Code of Conduct of 19 December 2006 (Resolution No 143/2006), amended by Resolution No 65 of 24 March 2010 on “[p]ublic tendering procedures”, according to which, “[i]n public tendering procedures, where the public authority legitimately refrains from applying the professional scale of fees as the criterion for remuneration, the geologist shall, in any event, ensure that his or her bid is commensurate with the scale and difficulty of the task, appropriate professional conduct and the technical knowledge and commitment required”.

As regards:

- Council Regulation (EEC) No 2137/85 2 of 25 July 1985 on the “European Economic Interest Grouping (EEIG) [designed] to facilitate or develop the economic activities of its members”, states, in the sixth recital in the preamble, that the provisions [contained therein] – are not to prejudice the application at national level of legal rules and/or ethical codes concerning the conditions for the pursuit of business and professional activities;

- Directive 2005/36/EC  of the [European] Parliament and of the Council on the “recognition of professional qualifications” states, in recital 43 that “[t]o the extent that they are regulated, this Directive includes also liberal professions, which are, according to this Directive, those practised on the basis of relevant professional qualifications in a personal, responsible and professionally independent capacity by those providing intellectual and conceptual services in the interest of the client and the public. The exercise of the profession might be subject in the Member States, in conformity with the Treaty, to specific legal constraints based on national legislation and on the statutory provisions laid down autonomously, within that framework, by the respective professional representative bodies, safeguarding and developing their professionalism and quality of service and the confidentiality of relations with the client”.

- Directive 2006/123/EC  of the European Parliament and of the Council on “services in the internal market”, known as the “services directive”, provides, in recital 115 that “[c]odes of conduct at Community level are intended to set minimum standards of conduct and are complementary to Member States’ legal requirements. They do not preclude Member States, in accordance with Community law, from taking more stringent measures in law or national professional bodies from providing for greater protection in their national codes of conduct”.

Finally, the Court of Justice is asked to rule on the compatibility with Article 101 of the Treaty of the distinction made, as a matter of law and in terms of the organisation of professional associations, between a professional undertaking and a commercial undertaking, as well as between professional competition and commercial competition”.

(2) “(a) Does Article 101 TFEU or any other provision of European Union law prohibit and/or restrict any reference to professional integrity and dignity – of geologists in this case – as factors to be taken into account for the purpose of professional remuneration?

(b) Under Article 101 TFEU or any other provision of European Union law, does the reference to factors pertaining to professional integrity and dignity give rise to effects which restrict professional competition?

(c) Does Article 101 TFEU or any other provision of European Union law establish that the requirements of integrity and dignity as factors to be taken into account for the purpose of determining professional remuneration in connection with minimum fees, in respect of which derogations are expressly stated to be permitted – given the express and formal reference in Article 17 of the New Code of Conduct for Geologists to the statutory provision which permits that derogation (Decree-Law No 223/2006, converted into Law 248/2006), may be regarded as conducive to conduct that restricts competition?

(d) Does Article 101 TFEU or any other provision of European Union law prohibit the reference to the professional scale of fees – established, in the case of geologists, by a State measure in the form of a Ministerial Decree of the Minister of Justice, after consultation with the Minister for the Production Sector, and which may be derogated from as regards minimum fees, it must be reiterated, as a result of the express and formal reference to Decree-Law No 223/2006 in Article 17 of the New Code of Conduct – as a purely technical and professional reference criterion for determining remuneration?

(e) Does Article 101 TFEU or any other provision of European Union law prohibit the correlation between the scale of the services to be provided and the requirements of integrity and dignity, as also defined in Articles 6 and 7 of the New Code of Conduct for Geologists on the one hand, and professional remuneration on the other, as provided for by Article 2233, second paragraph, of the Civil Code, according to which “in any event, the amount of the [professional] remuneration must be commensurate with the scale of work performed and the dignity of the profession”?

(f) Under Article 101 TFEU, therefore, can the reference to Article 2233, second paragraph, of the Civil Code be regarded as legitimate and not likely to have a restrictive effect on competition?

(g) Does Article 101 TFEU or any other provision of European Union law establish, in the context of the rules on competition, equality in law between a professional association, in this case for geologists, as regulated by specific State rules laid down for the pursuit of their objectives as an institution, and restrictive agreements, decisions or practices and concentrations of commercial undertakings constituting anti-competitive agreements?

(h) Does Article 101 TFEU or any other provision of European Union law make it possible to establish equivalence between a contribution to a professional association that is mandatory under the law – and is made for the pursuit of institutional functions and objectives – and the activity of selling goods or services and the financial profit accrued and obtained as a result of anti-competitive conduct on the part of concentrations of commercial undertakings?

(i) Does Article 101 TFEU or any other provision of European Union law justify the imposition of a penalty in this case?

(j) Does Article 101 TFEU or any other provision of European Union law justify making contributions to a professional association, which are mandatory under the law, subject to a compulsory levy, equating those contributions to profit and revenue deriving from an anti-competitive economic and commercial agreement?

…”.

III

“(1) In the alternative, should the Court answer the questions concerning the interpretation of Article 267, third paragraph, TFEU to the effect that the national rules of procedure are of no effect and the national court is under a duty to provide assistance, and the question for a preliminary ruling, as raised by the appellant, to the effect that the party’s question is of a general nature, the question for a preliminary ruling is whether Community law on competition and the professions, in particular the Community provisions relied upon by the appellant in its question, preclude the adoption of professional codes of conduct which make remuneration commensurate with professional integrity and dignity and the quality and scale of the work performed, with the result that remuneration which falls below the threshold of minimum fees (and is therefore competitive) may be penalised, at disciplinary level, as being in breach of the rules of professional conduct?

(2) In the alternative, should the Court answer the questions concerning the interpretation of Article 267, third paragraph, TFEU to the effect that the national rules of procedure are of no effect and the national court is under a duty to provide assistance, and the question for a preliminary ruling, as raised by the appellant, to the effect that the party’s question is of a general nature, the question for a preliminary ruling is whether Community competition law, in particular the rules prohibiting restrictive agreements, may be interpreted as meaning that a restrictive agreement may consist in rules of professional conduct established by professional associations, where, by referring to professional integrity and dignity, as well as the quality and scale of the work performed as criteria for determining professional remuneration, those rules have the effect of prohibiting derogations from minimum fees and, consequently, also of restricting competition because derogation is prohibited?

(3) In the alternative, should the Court answer the questions concerning the interpretation of Article 267, third paragraph, TFEU to the effect that the national rules of procedure are of no effect and the national court is under a duty to provide assistance, and the question for a preliminary ruling, as raised by the appellant, to the effect that the party’s question is of a general nature, the question for a preliminary ruling is whether, if national law lays down rules to safeguard competition which are more stringent than the Community rules, in particular by establishing the possibility of derogating from the minimum fees set by the scale of professional fees, when, in fact, Community law appears still to permit the prohibition on derogating from minimum fees in certain circumstances, and, consequently, if action taken by a professional association prohibiting derogation from minimum fees constitutes an agreement that is restrictive of competition according to national law, but may not be regarded as such under Community law, Community competition law, in particular the Community rules on agreements which restrict competition, preclude such an outcome whereby a particular form of conduct is regarded as punishable as a restrictive agreement under national law but not under Community law, whenever national rules for safeguarding competition are more stringent than the Community rules?”