Case C-390/12, Pfleger – on-line fruit machines, proportionality and the EU freedom to provide services in Austria [judgment 2014, ECLI:EU:C:2014:281]

The Austrian Gambling Act gives the Austrian state its monopoly to grant gambling licences and the state restricts the numbers of licences available. Is this compatible with the freedom to provide services under EU law?

Facts

In March 2012, the Austrian financial police raided a pub. Although it found 6 on-line (virtual) fruit machines, it did not find the appropriate gambling licences for those devices. The police therefore attempted to prevent a further infringement of the Austrian Gambling Act and seized the machines, 7 ‘keys’, and 2 chip cards.

The first claimant, Robert Pfleger, explained that he was neither the owner nor the possessor of the impounded machines. He did not organise gambling. He did not supply the gaming machines to the owner of the pub.

The second claimant was the alleged owner of the impounded gaming machines. It was a company registered in the Czech Republic. It too claimed to have no legal relationship to the gaming machines – it submitted that it was not the owner of the machines, nor had it lent, bailed, rented or distributed them. Accordingly, it denied the allegation that was made in the seizing order that it ran the machines commercially.

In March 2012, there was a raid on another bar in Austria. This time, 8 on-line fruit machines were impounded together with 28 keys. The presumed owner of 2 of the machines was a citizen of Serbia. He admitted to having bought the establishment concerned but denied gaining ownership over the impounded gaming machines.

The fourth claimant in this reference was drawn into it because of a police raid that had taken place on a petrol-station shop back in 2010. She was named in the confiscation order that related to 2 on-line fruit machines, 2 keys and 4 telephone jacks. The fourth claimant was also a Germany citizen, and she contested the confiscation order on the basis of procedural irregularities under Austrian law.

The fifth claimant also runs a petrol-station and was fined for having 3 gaming machines on his premises. The claimant contested the decision in part on the basis of the Austrian Gambling Act and pointed out that EU freedom to provide services law should have been given priority with the effect that provisions of national criminal law should not have been applied.

The referring court noted that there were about 200 similar cases involving either seizures or confiscations, and a further 100 similar cases involving administrative criminal law. The Austrian court added that, in its view, the Austrian measures did not comply with the proportionality test inherent in the EU freedom to provide services.

Questions Referred

According to the Curia website, the Austrian Unabhängiger Verwaltungssenat des Landes Oberösterreich has asked:

1. Does the principle of proportionality laid down in Article 56 TFEU and in Articles 15 to 17 of the Charter of Fundamental Rights preclude national legislation like the relevant provisions in the main proceedings, Paragraphs 3 to 5 and Paragraphs 14 and 21 of the GSpG, which permits the organisation of games of chance using machines only on the condition – which may be enforced by both criminal penalties and direct intervention – of the prior issue of a licence, which is available only in limited numbers, even though – as far as can be seen – the State has not shown thus far in a single judicial or administrative procedure that associated crime and/or addiction to gambling actually constitute a significant problem which cannot be remedied by a controlled expansion of authorised gaming activities to a large number of individual providers, but only by a controlled expansion, coupled with only moderate advertising, by one monopoly holder (or a small number of oligopolists)?

2. In the event that the first question is to be answered in the negative: Does the principle of proportionality laid down in Article 56 TFEU and in Articles 15 to 17 of the Charter of Fundamental Rights preclude national legislation like Paragraphs 52 to 54 of the GSpG, Paragraph 56a of the GSpG and Paragraph 168 of the StGB by which, as a result of imprecise legal definitions, there is almost complete criminal liability, even for various forms of only very remotely involved (possibly resident in other European Union Member States) persons (such as the mere sellers or lessors of gaming machines)?

3. In the event that the second question is also to be answered in the negative: Do the requirements relating to democracy and the rule of law on which Article 16 of the Charter of Fundamental Rights is clearly based and/or the requirement of fairness and efficiency under Article 47 of the Charter of Fundamental Rights and/or the obligation of transparency under Article 56 TFEU and/or the right not to be tried or punished twice under Article 50 of the Charter of Fundamental Rights preclude national rules like Paragraphs 52 to 54 of the GSpG, Paragraph 56a of the GSpG and Paragraph 168 of the StGB, the delimitation between which is not really foreseeable or predictable ex ante for a citizen, in the absence of clear legislative provision, and can be clarified in each specific case only through an expensive formal procedure, but which are associated with extensive differences in terms of competences (administrative authority or court), powers of intervention, the connected stigmatisation in each case and procedural position (e.g. reversal of the burden of proof)?

4. In the event that one of the first three questions is to be answered in the affirmative: Does Article 56 TFEU and/or Articles 15 to 17 of the Charter of Fundamental Rights and/or Article 50 of the Charter of Fundamental Rights preclude the punishment of persons who have one of the close connections with a gaming machine mentioned in Paragraph 2(1)(1) and Paragraph 2(2) of the GSpG and/or the seizure or confiscation of such machines and/or the closure of the entire undertaking owned by such persons?