Case C-231/12, Vodafone Omnitel – does the Authorisation Directive authorise not paying AgCom?

Does the EU’s Authorisation Directive 2002/20 mean that Vodafone Omnitel, Sky and other companies can avoid paying millions of euro to the Italian regulatory body, AgCom?

Facts
The Italian telecoms and broadcasting sector has a regulatory body known as AgCom (Autorità per le Garanzie nelle Comunicazioni).

AgCom is funded in part by charges levied on companies that are operating in the sector. AgCom’s charges are regulated by administrative decrees, which set down a rate expressed in ‘per thousandths’ (per mille) of a company’s turnover. In light of the company’s accounts, AgCom works out the amount due.

The reason for the litigation is that Vodafone Omnitel, Sky and several other telecoms companies have refused to pay their AgCom dues.

AgCom therefore brought an action before the TAR Lazio administrative court in order to claim the monies. AgCom explained to the court that the way in which the rate had been set was by a method that was designed to cover AgCom’s costs, ‘which are not borne by the government’. The system of self-financing was set down in primary law. Primary law also set a cap on the maximum amount of charge. And primary legislation also allowed the precise rate of contribution to be set down in secondary, administrative rules.

To support its submissions, AgCom referred to the EU’s ‘Authorisation’ Directive 2002/20 on the authorisation of electronic communications networks and services. In particular, it relied on Article 12 of the Authorisation Directive.

Article 12 provides:

Administrative charges
1. Any administrative charges imposed on undertakings providing a service or a network under the general authorisation or to whom a right of use has been granted shall:
(a) in total, cover only the administrative costs which will be incurred in the management, control and enforcement of the general authorisation scheme and of rights of use and of specific obligations as referred to in Article 6(2), which may include costs for international cooperation, harmonisation and standardisation, market analysis, monitoring compliance and other market control, as well as regulatory work involving preparation and enforcement of secondary legislation and administrative decisions, such as decisions on access and interconnection; and
(b) be imposed upon the individual undertakings in an objective, transparent and proportionate manner which minimises additional administrative costs and attendant charges.
2. Where national regulatory authorities impose administrative charges, they shall publish a yearly overview of their administrative costs and of the total sum of the charges collected. In the light of the difference between the total sum of the charges and the administrative costs, appropriate adjustments shall be made.

In order to assist the interpretation of what Article 12 of the Directive meant, AgCom also referred the TAR Lazio to Recital 30:

Administrative charges may be imposed on providers of electronic communications services in order to finance the activities of the national regulatory authority in managing the authorisation system and for the granting of rights of use. Such charges should be limited to cover the actual administrative costs for those activities. For this purpose transparency should be created in the income and expenditure of national regulatory authorities by means of annual reporting about the total sum of charges collected and the administrative costs incurred. This will allow undertakings to verify that administrative costs and charges are in balance.

AgCom then referred the TAR Lazio to a later ‘amending’ Directive (Directive 2009/140/EC amending Directives 2002/21/EC on a common regulatory framework for electronic communications networks and services, 2002/19/EC on access to, and interconnection of, electronic communications networks and associated facilities, and 2002/20/EC on the authorisation of electronic communications networks and services).

AgCom pointed to the wording of Recital 13 of the amending Directive, which states:

The independence of the national regulatory authorities should be strengthened in order to ensure a more effective application of the regulatory framework and to increase their authority and the predictability of their decisions. To this end, express provision should be made in national law to ensure that, in the exercise of its tasks, a national regulatory authority responsible for ex-ante market regulation or for resolution of disputes between undertakings is protected against external intervention or political pressure liable to jeopardise its independent assessment of matters coming before it. Such outside influence makes a national legislative body unsuited to act as a national regulatory authority under the regulatory framework. For that purpose, rules should be laid down at the outset regarding the grounds for the dismissal of the head of the national regulatory authority in order to remove any reasonable doubt as to the neutrality of that body and its imperviousness to external factors. It is important that national regulatory authorities responsible for ex-ante market regulation should have their own budget allowing them, in particular, to recruit a sufficient number of qualified staff. In order to ensure transparency, this budget should be published annually.

On hearing this, the TAR Lazio carefully noted that what in fact emerged from these two regulatory systems was that (i) administrative charges could be levied on market participants for all of the costs not borne by government, and (ii) that the charges could be linked to net turnover so that contributions would be proportionate to the actor’s capacity. However, the EU legislature had taken the view that the levying of administrative charges could be only be justified for the purposes of covering costs actually borne by the national authorities for ex-ante regulatory activities when issuing permits and licences but this did not extend to every type of activity. Therefore, the TAR Lazio expressed its view that it would seem reasonable for there to be a relationship between AgCom’s charges and the costs of AgCom’s ex-ante regulatory activity.

Question Referred
According to the Curia website, the TAR Lazio has asked:

Are the Community provisions in the sector, and in particular the provisions of Directive No 2002/20/EC, to be interpreted as precluding the national rules referred to, in particular Law No 266 of 2005, as those provisions are actually applied by regulation included?