Case Law: Cases C-157-160/94, Commission v. the Netherlands, Italy, France and Spain, 23 October 1997, [1998] E.C.R. 1-5699

5 Colum. J. Eur. L. 486 (1999)

Gaëtan Verhoosel. Research fellow, Institute for Environmental & Energy Law, K.U.Leuven, and associate, Jones Day Reavis & Pogue, Brussels

Lennart Deridder, research fellow, Institute for Environmental & Energy Law, K.U. Leuven.

National monopolies of a commercial character-Exclusive rights to import and/or export electricity and/or gas-Article 90(2) of the Treaty

I. Facts and Setting: the Internal Energy Market

By application lodged on the basis of Article 169 of the Treaty, the Commission asked the Court to declare that, by granting exclusive rights to import and/or export electricity and/or gas, the defendant Member States had failed to fulfill their obligations under Article 30, 34 and 37 of the Treaty. According to the Commission, the Netherlands, Italy, France and Spain had indeed granted such rights to public energy companies, SEP, ENEL, EDF/GDF and Redesa, respectively. In a long-awaited decision, the Court ruled on a number of particularly thorny issues of Community law relating to the application of Articles 37 and 90 of the Treaty. As adequately framed by Advocate General Cosmas, the Court was asked essentially, to rule on whether the concept of public service which prevails in certain Member States (if not most of them) is, at least with regard to certain decisively important aspects, compatible with the fundamental principle of the free movement of goods.

These rulings must be read in the context of the Commission’s ten year old efforts to establish an internal energy market. The Commission had formally launched this project in 1988, with the publication of a working document entitled The Internal Energy Market, in which it forecasted strict application of the Treaty rules to the energy sector and adoption of secondary legislation removing obstacles to the establishment of such an internal market. Two important Directives dealing with price transparency and transit, characterized as “first phase,” were subsequently adopted. In 1992, the Commission submitted ambitious proposals for Directives concerning common rules for the internal market in electricity6 and gas, characterized as “second phase.” After prolonged and arduous negotiations resulting in substantial amendments to the proposals, these Directives were finally adopted in 19968 and 1998, respectively. They aim at opening thirty per cent of the electricity market within six years, and thirty-three per cent of the gas market within ten years, dealing inter alia with public service obligations, system access, unbundling and transparency of accounts. The rulings under consideration are closely connected to this project of an internal energy market. The Advocate General points out what role the Commission’s applications play in relation to the establishment of the internal energy market: One of the longer-term consequences of an outcome favorable to the Commission, and no doubt the most important, would be the imposition of an obligation on the defendant States to ensure, by one means or another, access to the respective transmission and distribution systems for distributors or final users who may wish to import or export electricity or natural gas. In the Commission’ opinion, this would remove one of the main obstacles (if not the main obstacle) to the establishment of the internal energy market.