Case C-26/14, Beaudout Père et Fils – repeatedly thinking the social dialogue takes the biscuit

If the social partners agree to award an undertaking the exclusive right to administer an insurance scheme that benefits employees in a particular sector of the French economy, then does Article 56 TFEU’s transparency obligation apply before the relevant French Minister can declare the collective agreement binding erga omnes?

Facts
French law allows collective agreements to be declared binding erga omnes. This means that the provisions of a collective agreement can, by ministerial decree, subsequently bind every company and employee throughout an entire sector of the French economy irrespective of whether an employee is a member of a union or whether the company took part in the collective bargaining.

Another feature of French social law is that when employees either fall ill or are injured, their costs are reimbursed in part by the basic social security scheme. But the portion of the costs which remains to be paid by the insured person may be reimbursed in part by supplementary health insurance.

This combination of French collective agreement law and French health care provision, means that workers in a sector of the French economy may find that they are entitled to benefit from a sectoral supplementary scheme that has been set up under a collective agreement, which has been declared binding erga omnes.

With this depiction of French social law in mind, the present dispute is rooted in the bakery sector of the French economy. In 2011, the social partners had concluded a collective agreement and they had asked the Minister for Social Affairs to declare it binding erga omnes. The collective agreement contained a clause relating to the reimbursement of healthcare costs and stipulated that for another five years, this task would be performed by AG2R Prévoyance.

AG2R Prévoyance is a ‘provident society’. It does not make a profit, and is an expression of the solidarity principle. Nevertheless, AG2R Prévoyance was freely chosen by the insurance companies, and healthcare funds. And under EU law, it would be considered to be an undertaking that performs an economic activity.

The claimant company, Beaudout Père et Fils, requested the French Conseil d’État to annul the ministerial decree that had made the collective agreement in the bakery sector binding erga omnes.

Beaudout Père et Fils claimed that EU cartel law applied; namely, Article 102 TFEU, about undertakings abusing their dominant positions, and Article 106(1) TFEU. They objected to the fact that the French state had not checked the choice of the social partners, and that the state had exercised only a limited amount of supervision over how the supplementary system, agreed to by the social partners, actually worked in practice. They also objected to the fact that AG2R Prévoyance had been chosen but without any public procurement tendering procedure – even though other institutions could have offered the same level of protection and some companies already enjoyed existing relationships with other insurers.

The French Conseil d’État was not minded to find for Beaudout Père et Fils on any of those points. But one of Beaudout’s claims posed a particularly difficult problem, and it related to Case C-203/08, Sporting Exchange Ltd. The case had concerned Article 49 EC, which is now Article 56 TFEU. The Treaty provision provides:

Within the framework of the provisions set out below, restrictions on freedom to provide services within the Union shall be prohibited in respect of nationals of Member States who are established in a Member State other than that of the person for whom the services are intended.
The European Parliament and the Council, acting in accordance with the ordinary legislative procedure, may extend the provisions of the Chapter to nationals of a third country who provide services and who are established within the Union.

Now the specific factual circumstances giving rise to the Sport Exchange dispute concerned national legislation that reserved a licence to a single operator, and where the renewal of that licence was not subject to competition. In the course of its reasoning, the CJEU discussed the principle of equal treatment and the obligation of transparency. The CJEU said:

47 As the Advocate General stated in points 154 and 155 of his Opinion, the obligation of transparency appears to be a mandatory prior condition of the right of a Member State to award to an operator the exclusive right to carry on an economic activity, irrespective of the method of selecting that operator. …

In light of this, the French Conseil d’État faced a serious difficulty when it came to dispensing with the current case involving Beaudout. Namely, did the transparency obligation apply in the context of a Member State’s right to declare a collective agreement binding erga omnes? Consequently, the French Conseil d’État decided to make a reference to the CJEU.

Question Referred
According to the Curia website, the French Conseil d’État has asked:

Is compliance with the obligation of transparency flowing from Article 56 TFEU a mandatory prior condition for the extension, by a Member State, to all undertakings within a sector, of a collective agreement under which a single operator, chosen by the social partners, is entrusted with the management of a compulsory supplementary social security scheme for employees?