Luxembourg, 16/03/2007 (Agence Europe) - The Court of the European Free Trade Association (EFTA) gave its ruling on Wednesday 14 March in Case E-1/06, confirming that a State-run monopoly (the State in this case being Norway) may be an appropriate way to take control with a view to containing gambling dependency. Given the similarities between the EFTA agreement and the EC Treaty, this judgement could have an impact on other cases currently before the courts in the European Union.
“They are not the same organisations”, said Rupert Hornig representing the Association of National Lotteries with reference to the Courts of the EFTA and European Communities, but, he added: “they are interpreting the same rules, especially regarding freedom to provide services and freedom of establishment. This judgement is of political relevance”. In particular, the ruling quashes the legal antecedent (see the Placanica case in EUROPE 9381) that gave some observers the mistaken impression that a State monopoly was inadmissible under European law. The analysis of the EFTA Court in this affair presents at least one case where a State-run monopoly is in line with the freedoms set out under Community law.
The Norwegian authorities, who were concerned by the growing problem of gambling addiction since liberalisation of the market for “gaming machines”, repealed liberalisation in August 2003 and granted a single monopoly licence to the Norsk Tipping AS agency.
Alerted by operators who thus saw themselves excluded from Norwegian territory, the EFTA Surveillance Authority then filed a complaint against the Kingdom of Norway before the EFTA Court for breach of the freedom of establishment and service provision.
Taking inspiration from Community law, EFTA rules allow certain measures that are in derogation of competition rules for reasons of morality and public safety - but only when such measures truly have such an aim and are not discriminatory. In the case in hand, the Norwegian authorities defended their monopoly with the argument that there was a need to effectively fight gambling dependency. The EFTA Surveillance Authority recognised the truth of the argument but questioned whether the measures taken were in proportion - a State-run monopoly would go well beyond what is necessary to attain the aim sought, in a way that would be in violation of the freedoms set out in the EFTA agreement.
The EFTA court, however, rejected this assessment by the Surveillance Authority after considering the specific nature of the aim, saying: “It is reasonable to assume that a monopoly operator in the field of gaming machines subject to effective control by the competent public authorities will tend to accommodate legitimate concerns of fighting gambling addiction better than a commercial operator. (…) Furthermore, it is plausible to assume that in principle the State can more easily control and direct a wholly State-owned operator than private operators”. Furthermore, the Norwegian system has, according to the Court, already shown its worth on the ground and demonstrated its effectiveness in the fight against gambling addiction.
Since the Gambelli and Placanica rulings
The above judgement by the EFTA court clarifies the Placanica ruling given by the European Court of Justice, which had stipulated that restrictions to gambling, even in the public interest, must be applied in a non-discriminatory manner. In the Italian case in question, this means that the call for tenders for the allocation of licences should not rule out entire categories of candidates, as “blanket exclusion goes beyond what is necessary”, in a way that would be detrimental to competition. It is true that, at first sight, this ruling could appear like a ban on State monopolies, as these are both restrictive (authorising only one operator) and exclusive (authorising only one national operator, namely the State). Attentive reading of the ruling shows, however, that it does not take a stance on the monopolies as such and that it only makes reference to measures aimed at preventing operators involved in the gambling sector from being involved in criminal or fraudulent activities.
Derogation by the Norwegian State from the general competition rules, on the other hand, does not aim to combat fraud but rather gambling addiction. The monopoly on gaming machines would be inadequate to attain this first objective but, according to the ruling from the EFTA Court, is appropriate for attaining the second. Different cures must be used for different ills. This clarification therefore does not raise any contradictions and will reassure Union national lottery operators.
Unibet and Svenska Spel: Swedish state monopoly
Among these relieved operators is Svenska Spel of Sweden. In another ruling issued on the same day, the European Court of Justice sent case C-432/05, concerning the gambling company Unibet, back to the Swedish court. This independent operator was not allowed to advertise in Sweden under national laws, which require all gambling companies to be subject to state control through the national agency Svenska Spel. Unibet is currently awaiting the outcome of a complaint lodged with the Tingsrätt (the district court) but in its impatience also took the matter to the Högsta (Supreme Court) in the hope that it would be granted provisional measures allowing it to advertise, while awaiting the main judgment. The Högsta domstolen asked the European court of Justice, which gave a clear ruling - the Swedish court is indeed competent to decide on this case. Unibet will have to be patient.
As for the Tingsrätt ruling, its recent decisions have all been in favour of the Svenska Spal. Although the monopoly is justified in terms of general interest, the restrictions currently in force should comply with Community law. While Sweden can ban independent operators from advertising in the Swedish media, it will be much more difficult for it to prevent the supply of services from abroad via the internet, an official Swedish investigation acknowledged in January 2006. (cd)