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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Telefonica O2 Czech Republic (Industrial policy) [2007] EUECJ C-64/06 (14 June 2007) URL: http://www.bailii.org/eu/cases/EUECJ/2007/C6406.html Cite as: [2007] EUECJ C-64/6, [2007] EUECJ C-64/06, EU:C:2007:348, ECLI:EU:C:2007:348

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(Electronic communications Networks and services Common regulatory framework Dominant undertaking Obligation of interconnection with other operators Transitional provisions Directive 97/33)

In Case C-64/06,

REFERENCE for a preliminary ruling under Article 234 EC from the l'Obvodní soud pro Prahu 3 (Czech Republic), made by decision of 24 November 2005, received at the Court on 6 February 2006, in the proceedings

Telefónica O2 Czech Republic as, formerly Český Telecom as,

v

Czech On Line as,

composed of C.W.A. Timmermans, President of the Chamber, P. Klūris (Rapporteur), K. Schiemann, J. Makarczyk and L. Bay Larsen, Judges,

Advocate General: D. Ruiz-Jarabo Colomer,

Registrar: J. Swedenborg, Administrator,

having regard to the written procedure and further to the hearing on 1 February 2007,

after considering the observations submitted on behalf of:

Telefónica O2 Czech Republic as, by J. Procházková, právnička,

Czech On Line as, by V. Horáček, advokát,

the Czech Government, by T. Boček, acting as Agent,

the Netherlands Government, by H.G. Sevenster and C. ten Dam, acting as Agents,

the Commission of the European Communities, by M. Shotter and P. Ondrůšek, acting as Agents,

after hearing the Opinion of the Advocate General on 27 February 2007,

gives the following

1. The reference for a preliminary ruling relates to the interpretation of Directive 2002/19/EC of the European Parliament and of the Council of 7 March 2002 on access to, and interconnection of, electronic communications networks and associated facilities (OJ 2002 L 108, p. 7, the 'Access Directive') and also of Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (OJ 2002 L 108, p. 33, the 'Framework Directive').
2. This reference has been made in the context of proceedings where the opposing parties are Telefónica O2 Czech Republic as, formerly Český Telecom as ('TO2'), and Czech On Line as ('COL') on the subject of the rejection by TO2 of a request, made by COL, for an extension of existing collaboration to broadband high-speed internet services (Asymmetric Digital Subscriber Line, 'ADSL').

Legal context

Community Law

3. Article 27 of the Framework Directive sets out transitional measures as follows:

'Member States shall maintain all obligations under national law referred to in Article 7 of [the Access Directive] and Article 16 of Directive 2002/22/EC (Universal Service Directive) until such time as a determination is made in respect of those obligations by a national regulatory authority in accordance with Article 16 of this Directive.

Operators of fixed public telephone networks that were designated by their national regulatory authority as having significant market power in the provision of fixed public telephone networks and services under Annex I, Part 1 of directive 97/33/EC [of the European Parliament and of the Council of 30 June 1997 on interconnection in telecommunications with regard to ensuring universal service and interoperability through application of the principles of Open Network Provision (OJ 1997 L 199, p. 32) as amended by Directive 98/61/EC of the European Parliament and of the Council of 24 September 1968 (OJ 1998 L 268, p. 37, 'Directive 97/33')], or under Directive 98/10/EC [of the European Parliament and of the Council of 26 February 1998 on the application of open network provision (ONP) to voice telephony and on universal service for telecommunications in a competitive environment (OJ 1998 L 101, p. 24)], shall continue to be considered 'notified operators' for the purposes of Regulation (EC) No 2887/2000 until such a time as the market analysis procedure referred to in Article 16 has been completed. Thereafter they shall cease to be considered 'notified operators' for the purposes of the Regulation.'

4. Article 7 of the Access Directive headed 'Review of former obligations for access and interconnection' provides:

1. Member States shall maintain all obligations on undertakings providing public communications networks and/or services concerning access and interconnection that were in force prior to the date of entry into force of this Directive under Articles 4, 6, 7, 8, 11, 12, and 14 of Directive 97/33/EC, Article 16 of Directive 98/10/EC, and Articles 7 and 8 of Directive 92/44/EEC, until such time as these obligations have been reviewed and a determination made in accordance with paragraph 3.

2. The Commission will indicate relevant markets for the obligations referred to in paragraph 1 in the initial recommendation on relevant product and service markets and the Decision identifying transnational markets to be adopted in accordance with Article 15 of [the Framework Directive].

3. Member States shall ensure that, as soon as possible after the entry into force of this Directive, and periodically thereafter, national regulatory authorities undertake a market analysis, in accordance with Article 16 of [the Framework Directive] to determine whether to maintain, amend or withdraw these obligations. An appropriate period of notice shall be given to parties affected by such amendment or withdrawal of obligations.'

National law

5. Article 37 of Law No 151/2000 on telecommunications and amendment of other legislation (Zákon č. 151/2000 Sb. O telekomunikacích) ('Law No 151/2000') provides:

'1. The operators of public telephone networks and the suppliers of telecommunications services by means of the leasing of telecommunications circuits which have significant power in the market concerned are obliged to satisfy all requests from authorised suppliers of telecommunications services for access to the network operated by them ('access to the network').

2. The operators of public telephone networks and the suppliers of public telecommunications services which control access to at least one network termination point which is identified by one or more numbers in the national numbering plan and the suppliers of public telecommunications services by means of leasing of telecommunications circuits connected to the premises of the user, are obliged, if another operator or supplier running a telecommunications business makes the request of them, to allow the party so requesting direct or indirect interconnection to the telecommunications networks which they operate ('interconnection of the networks'). Access to the network is granted at the expense of the requesting party and must be paid for.

3. Access to the network is secured by a written agreement between the operator of a public telecommunications network and the supplier of public telecommunications services; interconnection of networks is secured by written agreement between the operators of public telecommunications networks.

...'

The dispute in the main proceedings and the questions referred for a preliminary ruling

6. TO2 and COL are operators of telecommunications services having on 29 January 2001 entered into a contract for the interconnection of their fixed telecommunications networks. On 3 February 2003, the latter of those companies proposed to the former that the agreement should be amended so that their networks should also be interconnected for the provision of ADSL. TO2 however published in the official telecommunications journal only an offer of access to the infrastructure of its own network which used this technology, when Law No 151/2000 obliged it to publish an offer of network interconnection.
7. In the absence of agreement, COL brought the matter before the Czech telecommunications regulatory authority (Český telekomunikační ú�'ad, 'the regulatory authority') which upheld the request on 30 April 2004 on the basis of Law No 151/2000. Following an appeal to the president of that authority, that decision was annulled on general factual grounds and the case was referred back to the regulatory authority. On 14 September 2004, the regulatory authority issued a fresh decision, which was in COL's favour and which required the parties to the proceedings to agree an amendment to the interconnection contract which would include ADSL services.
8. By decision of 20 January 2005 the president of the regulatory authority dismissed the further appeal which was brought by TO2. The decision has become final and enforceable.
9. The Czech Code of Civil Procedure allows in those circumstances an appeal to be brought before the courts of law, in this case before the Obvodní soud pro Prahu 3 (Prague 3 District Court (Court of first instance)).
10. According to that court, TO2 submits that the decision of the regulatory authority contravenes the Europe Agreement establishing an association between the European Communities and their Member States, of the one part, and the Czech Republic, of the other part, approved by Decision 94/910/ECSC, EC, Euratom of the Council and the Commission of 19 December 1994 (OJ 1994 L 360, p. 1), the Framework and Access Directives and also Directive 97/33.
11. In those circumstances, the Obvodní soud pro Prahu 3 has decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling

'(1) Did the [national telecommunications regulator] ... have the power, by an administrative decision made after 1 May 2004, and thus after the date of the Czech Republic's accession to the European Communities, to impose on a telecommunications company with significant (dominant) market power in the telecommunications market an obligation to conclude a contract for the interconnection of its networks with those of another operator?

(2) If so:

Was the national regulatory authority entitled to impose such an obligation solely on the conditions set out in Article 8(2) of the [Access Directive] namely on the strength of a previous market analysis carried out in accordance with Article 16 of the [Framework Directive] and with the preliminary procedure prescribed in Article 6 and Article 7 of the Framework Directive, or could it, (for example, in accordance with recital 15 of the preamble, Article 3, Article 4(1), Article 5(1)(a) and Article 5(4), Article 10(1) and 10(2) of the Access Directive), act without that prior market analysis?

(3) Is the answer to the second question affected by the facts that the request of a particular operator for the compulsory interconnection of his network with the network of an operator with significant (dominant) market power was lodged with the national regulatory authority before 1 May 2004, and the proceedings relating to that request took place before that authority before 1 May 2004, i.e. before the date of the accession of the Czech Republic to the European Communities?

(4) To the extent that at the material time from 1 May 2004 to 30 April 2005 the Czech Republic had not adequately implemented the abovementioned directives, is it possible directly to apply the Framework and Access Directives, and consequently,

(4a) are those directives (or one at least of them) unconditional and sufficiently precise to be applied by a court in place of national law?

(4b) is an operator with significant (dominant) market power in the telecommunications market entitled to rely on (or has it the status to rely on), as a result of their incorrect transposition, the direct effect of the Access Directive and the Framework Directive (or one of them), and do those directives protect the interests of that operator in its refusal to conclude an agreement on interconnection (in the area of ADSL services) with other national companies (when, in the opinion of the national regulatory authority, which is subject to review by courts of law, that operator is not respecting the objectives of the new regulatory framework)?

(4c) Can that operator rely on the direct effect of directives that have not been sufficiently implemented (or of one of them), if (even where the conditions set out in the directives are met) the national regulatory authority comes to a decision based on specific conditions for interconnection of operators' sites, and imposes specific obligations on individuals?'

The reopening of the oral procedure

12. By application lodged at the Court Registry on 9 March 2007, TO2 requested that the oral procedure, which had been closed on 27 February 2007, should be reopened in response to the Advocate General's Opinion.
13. In support of its request, TO2 submits that in his Opinion, the Advocate General considered arguments which were not presented to the parties to the proceedings, in particular the argument as to the direct effect of the positive obligation to carry out a market analysis, when the dispute centred on a negative obligation, namely not to adjudicate on the obligation to connect unless such an analysis had been carried out.
14. In that regard, it should be recalled that the Court may of its own motion, on a proposal from the Advocate General or at the request of the parties, order that the oral procedure be reopened, in accordance with Article 61 of the Rules of Procedure, if it considers that it lacks sufficient information, or that the case must be dealt with on the basis of an argument which has not been debated between the parties (Case C-299/99 Philips [2002] ECR I-5475, paragraph 20).
15. The Court is of the view that the question of the direct effect of the provisions at issue in the main proceedings was raised by the fourth question submitted by the referring court and that it has available to it all the information necessary in order to give an answer.
16. The application by TO2 that the oral procedure be reopened must therefore be dismissed.

The jurisdiction of the Court

17. First, the Czech Government maintains that the Court has no jurisdiction to answer any the questions referred on the ground that the factual background of the main proceedings occurred before the date of accession of the Czech Republic to the European Union.
18. At the hearing, TO2, COL and the Commission of the European Communities took the view that the Court had jurisdiction rationae temporis on the grounds firstly, that, while the main case certainly began in February 2003, it continued up to the taking of a decision by the president of the regulatory authority on 20 January 2005 and secondly, that, in accordance with the Czech legislation, the regulatory authority's decision of 30 April 2004 was annulled, while a new decision came into force on 20 January 2005. In addition, TO2 states that the purpose of that last decision which is constitutive and not declaratory in nature, is not to establish authoritatively the obligations engendered by previous events but rather to lay the foundations of future legal obligations.
19. It is clear from the order for reference that the request by COL lodged with the national regulatory authority, that TO2 be compelled to provide interconnection to the ADSL network, was considered and led to that authority issuing a decision on 30 April 2004, that is to say, before the date of accession of the Czech Republic to the Union.
20. However that decision was annulled on 9 September 2004 and was followed by a new decision on 14 September 2004. That decision was then confirmed on appeal by the president of the regulatory authority on 20 January 2005. It was considered by the parties to be final and enforceable as from that date.
21. Without there being any need to examine the consequences of annulment of a decision under Czech law, it must be observed, first, that the contested decision in the main proceedings was adopted after the Czech Republic acceded to the Union, that it is prospective in its regulatory effect and not retrospective, and secondly, that the national court asks the Court for an interpretation of the Community legislation applicable to the main proceedings.
22. Provided that the questions referred for preliminary ruling concern the interpretation of Community law, the Court gives its ruling without, generally, having to look into the circumstances in which national courts were prompted to submit the questions and envisage applying the provision of Community law which they have asked the Court to interpret (Case C-85/95 Reisdorf [1996] ECR I-6257, paragraph 15).
23. The matter would be different only if the provision of Community law which was submitted for interpretation by the Court was not applicable to the facts of the main proceedings, which had occurred before the accession of a new Member State to the Union (see, to this effect, Case C-302/04 Ynos [2006] ECR I-371, paragraphs 35 and 36) or if such provision was manifestly incapable of applying (see Reisdorf, paragraph 16).
24. That is not so in this case. Accordingly, the Court has jurisdiction to interpret the directives above referred to and an answer must be given to the questions submitted by the referring court.

The questions referred for a preliminary ruling

25. The first, second and third questions, in which the referring court asks in essence whether the regulatory authority was entitled, taking account of the provisions of Community law which were applicable after 1 May 2004, to impose on a telecommunications company with significant market power in the telecommunications market the obligation to conclude a contract for the interconnection of its network with that of another operator, must be examined together.
26. On that point, it must be stated, taking into consideration the provisions of Article 27 of the Framework Directive and Article 7(1) of the Access Directive relating to transitional provisions which can be implemented independently of transposition of those directives, that Directive 97/33, which it is accepted has been transposed into Czech law by the Law No 151/2000, remains effective so far as necessary.
27. Accordingly, and as the Commission rightly submits, the regulatory authority had the power to act within the framework of Directive 97/33.
28. It follows from the foregoing that the answer to be given to the first, second and third questions is that, in accordance with the transitional provisions of the Framework and Access Directives, the regulatory authority was entitled to consider the obligation, on the part of a telecommunications company with significant market power within the meaning of Directive 97/33, to conclude a contract for the interconnection of its networks with that of another operator, subsequent to 1 May 2004, within the framework of the provisions of Directive 97/33.
29. In the light of the answer given to the first, second and third questions, it is not necessary to give an answer to the fourth question.

Costs

30. Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Second Chamber) hereby rules:

In accordance with the transitional provisions of Directive 2002/19/EC of the European Parliament and of the Council of 7 March 2002 on access to, and interconnection of, electronic communications networks and associated facilities, the 'Access Directive') and Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (the 'Framework Directive'), the Český telekomunikační ú�'ad was entitled to consider the obligation, on the part of a telecommunications company with significant market power within the meaning of Directive 97/33/EC of the European Parliament and of the Council of 30 June 1997 on interconnection in telecommunications with regard to ensuring universal service and interoperability through application of the principles of Open Network Provision (ONP), as amended by Directive 98/61/EC of the European Parliament and of the Council of 24 September 1998, to conclude a contract for the interconnection of its networks with that of another operator, subsequent to 1 May 2004, within the context of the provisions of Directive 97/33, as amended.

[Signatures]

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* Language of the case: Czech.