C-441/05, Palacios de la Villa

In this case, Mr Palacios claimed that his dismissal on the ground that he had attained the compulsory retirement age laid down in a collective agreement was unlawful.

Mr Palacios, born on 3 February 1940, was an organisational manager who worked for the undertaking Cortefiel Servicios SA since 17 August 1981.

On 18 July 2005, Cortefiel Servicios SA informed Mr Palacios by letter of his dismissal on the basis that he satisfied all the requirements laid down in Article 19 of the Collective Agreement, which provided:

“In the interests of promoting employment, it is agreed that the retirement age will be 65 years unless the worker concerned has not completed the qualifying period required for drawing the retirement pension, in which case the worker may continue in his employment until the completion of that period.’

If Mr Palacios had retired on 18 July 2005, he would have been entitled to receive from the social security scheme a retirement pension amounting to 100% of his contribution base of EUR 2 347.78, without prejudice to the maximum limits laid down in law.

Mr Palacios claimed that his dismissal was void for breach of fundamental rights. He argued that he was discriminated against because he had reached the age of 65 and challenged directly the letter of dismissal.

The referring Court asked whether the prohibition of discrimination on the grounds of age as laid down, in particular, in Article 2(1) of Council Directive 2000/78 establishing a general framework for equal treatment in employment and occupation, precluded a national law allowing compulsory retirement clauses to be included in collective agreements.

In the event of an affirmative answer, the referring court also wished to know if it was required to disapply the national law concerned.

The Court first of all found that Directive 2000/78 was applicable to the present situation, because the legislation at issue in the main proceedings affected the duration of the employment relationship between the parties and, more generally, the engagement of the worker concerned in an occupation, by preventing his future participation in the labour force.

The Court pointed out that the aim of Directive 2000/78 was to combat certain types of discrimination, including discrimination on grounds of age, as regards employment and occupation with a view to putting into effect in the Member States the principle of equal treatment.

It held that the national legislation at issue directly imposed less favourable treatment for workers who had reached that age as compared with all other persons in the labour force.

Such legislation therefore established a difference in treatment directly based on age, as referred to in Article 2(1) and (2)(a) of Directive 2000/78.

The Court, however, reiterated that encouragement of recruitment constituted a legitimate aim of social policy. (see, in particular, Case C‑208/05, ITC [2007], paragraph 39).

It argued that that assessment must evidently apply to instruments of national employment policy designed to improve opportunities for entering the labour market for certain categories of workers.

Therefore, an objective such as that referred to by the legislation at issue must, in principle, be regarded as ‘objectively and reasonably’ justifying ‘within the context of national law’, as provided for by the first subparagraph of Article 6(1) of Directive 2000/78, a difference in treatment on grounds of age laid down by the Member States.

The Court furthermore reiterated that Member States and, where appropriate, the social partners at national level enjoyed broad discretion in their choice, not only to pursue a particular aim in the field of social and employment policy, but also in the definition of measures capable of achieving it (see, to that effect, Case C‑144/04 Mangold [2005], paragraph 63).

The Court held that it did not appear unreasonable for the authorities of a Member State to take the view that a measure such as that at issue in the main proceedings might be appropriate and necessary in order to achieve a legitimate aim in the context of national employment policy, consisting in the promotion of full employment by facilitating access to the labour market.

In the light of those factors, it could not reasonably be maintained that national legislation such as that at issue in the main proceedings was incompatible with the requirements of Directive 2000/78.

The Court found that there was no further need to give a ruling in relation to Article 13 EC – also referred to in the preliminary questions – on the basis of which that directive was adopted.


Text of Judgment

New Draft of the Reform Treaty

Here is the link to the drafts of the texts which emerged from the proceedings of the Working Party of the Legal Experts.

They will be discussed in the “margins” of the GAERC on October 15-16 (see this agenda (in pdf)) and, as is well known, at the Lisbon Informal Summit October 18-19 (see this link).

C‑443/06, Hollmann v Ministério Público

Mrs Hollmann had resided in Germany since the time of the facts in the case in the main proceedings.

Following the death of her husband, in 1998 Mrs Hollmann inherited immovable property situated in Portugal.

She was taxed on the basis of tax on inheritance and donations on the value of that asset. Article 43(2) of the Personal Income Tax Code limitted the incidence of the tax to 50% of capital gains realised by persons residing in Portugal.

According to the tax authorities, Mrs Hollmann was not entitled to rely on the favourable tax provisions of Article 43(2) of the CIRS on the ground that she was residing in a Member State of the European Union which was not Portugal.

The referring Court thus asked whether Article 43(2) of the Personal Income Tax Code infringed Articles 12, 18, 39, 43 and 56 EC by excluding from that limitation capital gains realised by a person residing in another Member State of the European Union?

The Court held that as regards Article 39 EC and 43 EC, it was apparent from the decision to refer that Mrs Hollmann sold her immovable property situated in Portugal, the transaction which gave rise to the taxation in dispute in the case in the main proceedings, neither with the aim of carrying out a professional activity in the territory of the Community nor with a view to establishing herself in a Member State other than Germany to carry out an economic activity.

In relation to Article 18 EC, there was no evidence in that decision to support the conclusion that the applicant in the case in the main proceedings sold her immovable property with a view to exercising the right which she is granted under that provision.

Consequently, she could not rely on Articles 18 EC, 39 EC and 43 EC in the present case (see also Case C‑345/05 Commission v Portugal (2006)).

The Court furthermore held that Article 12 EC applied independently only to situations governed by Community law for which the Treaty lays down no specific rules of non-discrimination (see, inter alia, Joined Cases C‑397/98 and C‑410/98 Metallgesellscahft and Others (2001), and Case C‑422/01 Skandia and Ramstedt (2003)).

It pointed out that Article 56 EC, in particular, contained a specific rule of non‑discrimination in relation to the free movement of capital (see also Case C‑222/04 Cassa di Risparmio di Firenze [2006], paragraph 99).

The Court held that Article 56 EC must be interpreted as precluding national legislation, such as that in dispute in the main proceedings, which subjected capital gains resulting from the transfer of immovable property situated in a Member State, in this case Portugal, where that transfer was made by a resident of another Member State, to a tax burden greater than that which would be applicable for the same type of transaction to capital gained realised by a resident of the State in which that immovable property was situated.

The Court held that that legislation could not be justified under Article 58 EC.

The Court reiterated that the need to maintain the coherence of a tax system could justify a restriction on the exercise of the fundamental freedoms guaranteed by the Treaty. However, for an argument based on such reasoning to succeed, a direct link must be established between the tax advantage concerned and the offsetting of that advantage by a particular tax levy (see Case C‑471/04 Keller Holding [2006] and Case C‑347/04 Rewe Zentralfinanz [2007]

The Court held that there was no such link in the present case.

Text of judgment

C-117/06, Möllendorf and Others

In this case, the referring Court asked for an interpretation of Council Regulation 881/2002, which imposed certain specific restrictive measures directed against certain persons and entities associated with Usama bin Laden, the Al‑Qaida network and the Taliban.

Essentially, the Court was asked whether, in a situation where both the contract for the sale of immovable property and the agreement on transfer of ownership of that property had been concluded before the date on which the buyer was included in the list in Annex I to Regulation 881/2002 and where the sale price had also been paid before that date, Articles 2(3) and 4(1) of that regulation must be interpreted as prohibiting the final registration, in performance of that contract, of the transfer of ownership in the Land Register subsequent to that date.

The Court held that a transaction such as final registration of transfer of ownership of immovable property in the Land Register was prohibited under Article 2(3) of Regulation 881/2002 if, in consequence of that transaction, were it to be allowed, an economic resource was made available to a person listed in Annex I to that regulation, which would enable the latter to obtain funds, goods or services.

The Court held that the alleged infringement of the right to property concerned indirect effects, on the property rights of persons other than those so listed, brought about by the obligation to repay which might arise, in accordance with the applicable national law, as a result of the fact that, pursuant to Article 2(3) of Regulation 881/2002 it was not possible to proceed with final registration of the transfer of ownership of the immovable property in the Land Register.

Consequently, the question whether, in view of the special features of the case before the referring court, such an obligation to make repayment was a disproportionate infringement of the right to property could have any effect on the question whether Article 2(3) of Regulation 881/2002 applied to a situation such as that in the case before the referring court.

That question was therefore a matter of national law and could not be examined in the context of the present reference for a preliminary ruling.

The Court however reiterated that the requirements flowing from the protection of fundamental rights within the Community legal order were also binding on Member States when they implemented Community rules, and that consequently they were bound, as far as possible, to apply the rules in accordance with those requirements. (see, inter alia, Joined Cases C-20/00 and C-64/00, Booker Aquaculture and Hydro Seafood (2003))

Therefore, it was for the referring court to determine whether, in view of the special features of the case before it, repayment of the sums received by the sellers would constitute a disproportionate infringement of their right to property and, if that is the case, to apply the national legislation in question, so far as is possible, in such a way that the requirements flowing from Community law were not infringed.

Text of Judgment

Interview Jaeger

Just came accross this interesting Bloomberg interview with the new President of the CFI, who states that tackling the backlog of cases is his top priority.

He also talks about the changes he made to the composition of the CFI: the tribunal's 27 judges will be spread among eight chambers, instead of five.

Furthermore, he is against creating a separate competition court, arguing that it would not significantly cut procedures.

New Court documents

The Court of Justice has issued this Code of Conduct for its Members (opens in pdf), which does not really entail anything new but still is worth reading. The Civil Service Tribunal, furthermore, has issued these instructions to the registrar (opens in pdf).

Jaeger new president CFI

Marc Jaeger of Luxembourg has been elected as new president of the CFI. See this press release (pdf).

Mr Jaeger was born in 1954; lawyer; attaché de justice, was delegated to the Public Attorney's Office; Judge, Vice-President of the Luxembourg District Court; teacher at the Centre Universitaire de Luxembourg (Luxembourg University Centre); member of the judiciary on secondment, and Legal Secretary at the Court of Justice from 1986.

He became Judge at the Court of First Instance in 1996

T-201/04, Microsoft v Commission

As I have written on this case before: in sum, this case was about Microsoft’s refusal to supply interoperability information and its bundling of Windows Media Player with the Windows client PC operating system.

Limited Review
The Court reiterated that it could only undertake a limited review, since this case involved a complex economic appraisal.

It held that judicial review was limited to checking whether the relevant rules on procedure and on stating reasons had been complied with, whether the facts had been accurately stated and whether there had been any manifest error of assessment or a misuse of powers.

Nevertheless, the Court stated that it could determine whether the evidence was factually accurate, reliable and consistent.

It could also determine whether that evidence contained all the relevant data that must be taken into consideration in appraising a complex situation and whether it was capable of substantiating the conclusions drawn from it.

This perhaps contradictory approach was used by the Court throughout its judgement. For instance, the Court first thoroughly assessed the accuracy of the facts on which the Decision of the Commission was based, to then find that the Commission correctly

- determined the degree of interoperability that should be attainable in the light of the objectives of Article 82 EC.

- found that the server operating systems were ‘optimised’ for the tasks which they were to perform.

- assessed the degree of interoperability by reference to what, in its view, was necessary in order to enabled developers of non-Microsoft work group server operating systems to remain viably on the market.

Intellectual property rights
The Court furthermore held that Microsoft’s communication protocols in question were protected by intellectual property rights.

It held that undertaking might refuse to third party a license to use product covered by intellectual property right except in exceptional circumstances, such as:

­- the refusal related to a product or service indispensable to the exercise of a particular activity on a neighbouring market;

- the refusal was of such a kind as to exclude any effective competition on that neighbouring market;

- the refusal prevented the appearance of a new product for which there was potential consumer demand.

Once it was established that such circumstances were present, the refusal by the holder of a dominant position to grant a licence might infringe Article 82 EC unless the refusal was objectively justified.

Correct analysis of Commission
The Court, however, found that the Commission’s analysis was not manifestly incorrect. The Court inter alia took into account that the Windows operating system was present on virtually all client PCs installed within organisations. Non-Windows work group server operating systems could not continue to be marketed if they were incapable of achieving a high degree of interoperability with Windows.

In sum, Microsoft’s dominant position was clear: Windows represented the ‘quasi-standard’ for those operating systems.

Non-Windows work group server operating systems could interoperate not only with Windows client PC operating systems but also, more generally, with the Windows domain architecture.

The absence of such interoperability with the Windows domain architecture had the effect of reinforcing Microsoft’s competitive position on the work group server operating systems market.

Microsoft had not demonstrated that the method which the Commission used when calculating market shares was vitiated by a manifest error of assessment or, consequently, that the estimates of market shares given at recitals 491 to 513 to the contested decision must be considered manifestly incorrect.

It was for the Commission to establish that the refusal to supply gave rise to a risk of the elimination of all effective competition. The Commission must base its assessment on accurate, reliable and coherent evidence which comprised all the relevant data that must be taken into consideration in order to assess a complex situation and which were capable of substantiating the conclusions drawn from them.

Furthermore, the Commission did not make a manifest error of assessment when it concluded that the evolution of the market revealed a risk that competition would be eliminated on the work group server operating systems market.

There was a risk that competition would be eliminated on that market because the market had certain features which were likely to discourage organisations which had already taken up.

The Commission’s finding to the effect that Microsoft’s refusal limited technical development to the prejudice of consumers within the meaning of Article 82(b) EC was not manifestly incorrect.

Bundling infringing Article 82 EC
The Court furthermore held that the Commission’s analysis of the constituent elements of bundling was correct and that it was consistent both with Article 82 EC and with the case-law.

The Court argued that while it was true that neither that provision nor, more generally, Article 82 EC as a whole contains any reference to the anti-competitive effect of bundling, the fact remains that, in principle, conduct would be regarded as abusive only if it was capable of restricting competition.

The Commission was correct to conclude that client PC operating systems and streaming media players constituted two separate products for the purposes of Article 82 EC and that the condition relating to the imposition of supplementary obligations was satisfied in the present case.


Foreclosure of competition
The Commission was also correct to make the following findings:

- Microsoft used Windows as a distribution channel to ensure for itself a significant competitive advantage on the media players market.

- because of the bundling, Microsoft’s competitors were a priori at a disadvantage even if their products were inherently better than Windows Media Player.

- Microsoft interfered with the normal competitive process which would benefit users by ensuring quicker cycles of innovation as a consequence of unfettered competition on the merits.

- the bundling increased the content and applications barriers to entry, which protected Windows, and facilitated the erection of such barriers for Windows Media Player.

- Microsoft shielded itself from effective competition from vendors of potentially more efficient media players who could challenge its position, and thus reduces the talent and capital invested in innovation of media players.

– by means of the bundling, Microsoft might expand its position in adjacent media-related software markets and weaken effective competition, to the detriment of consumers.

- by means of the bundling, Microsoft sent signals which deterred innovation in any technologies in which it might conceivably took an interest and which it might tie with Windows in the future.


TRIPS obligations
The Court reiterated that it was only where the Community had intended to implement a particular obligation assumed under the WTO or where the Community measure referred expressly to specific provisions of the WTO Agreements that the Community judicature must review the legality of the Community measure in question in the light of the WTO rules.

As the circumstances of the present case clearly did not correspond to either of those two situations, Microsoft could not rely on the TRIPS Agreement in support of its application for annulment of the contested decision in so far as it concerned the bundling of Windows and Windows Media Player.

Article 7 of contested decision without legal basis
The Court did however hold that the Commission had no authority, in the exercise of its powers under Article 3 of Regulation 17, to compel Microsoft to grant to an independent monitoring trustee powers which the Commission was not itself authorised to confer on a third party. The second subparagraph of Article 7 of the contested decision was therefore without legal basis and was hence annulled, since it entailed the delegation to the monitoring trustee of powers of investigation which the Commission alone could exercise pursuant to Regulation 17.

The Court furthermore held that the Commission had correctly calculated the fines and had correctly established the duration of the infringement. It dismissed the argument of Microsoft that the Commission had infringement the duty to state reasons in that context. Finally, it held that in the main action, it was appropriate that the costs be shared.

Link to judgment

Microsoft loses antitrust case

The CFI has delivered its Microsoft judgment. It finds that Microsoft has abused its dominant position. Analysis following soon.

Press release (pdf)

Link to judgment

Microsoft Ruling next Monday

Next week, the Court of First Instance will deliver what is probably one of its most important judgments ever. As “predicted”, the Court will next Monday rule on the validity of the €497 million fine imposed by the Commission on Microsoft for its bundling of the Windows operating system with its Media Player. In April 2006, I wrote several posts on the hearings in this case.

So the Court of First Instance is in the news again. The International Business Times has an extensive chronology of “17 years of EU, U.S. tussles with Microsoft”.

Reuters reports that it is unclear whether internal memos quoting Bill Gates, first offered as evidence but later withdrawn, will be allowed as evidence in this case.

The IHT also has a nice story on the case, quoting Erich Andersen, vice president and associate general counsel for Microsoft in Europe, as saying that the judgment will set precedents that "will rule the behavior of market leaders across Europe for many years to come".

In another article of Reuters, an Commission official is quoted as saying that "if we lose this one, we're in deep (trouble). It would put in question our ability to regulate competition in high-tech industries."

Link to case documents so far