European Court Advisors Challenge Anti-Competitive Practices In Austria And Sweden, by Ulrika Lomas, Tax-News.com, Brussels
Thursday, February 25, 2010

Two Advocate General (AG) opinions at the European Court of Justice (ECJ) in cases related to gaming and betting restrictions, respectively in Austria and Sweden, are viewed as positive progress in the struggle to remove anti-competitive practices.

Advocate General Mazák has questioned the legality of Casinos Austria licenses and its de facto monopoly in the case involving Ernst Engelmann (C-64/08) before the ECJ, Advocate General Mazák confirming his opinion that:

• The requirement of an establishment in Austria “is a clear example of direct discrimination against companies who are seated in another member state”;
• “Contrary to the view of the Austrian government, ... controls can be enforced on any company established in a member state and in addition, sanctions can be applied irrespective of the place of residence of its management”;
• Licenses in the gaming sector must be awarded in a public and transparent manner: “Art 43 EC and 49 EC preclude national provisions ... which exclude from the tendering process candidates from the Community which do not have the nationality of that member state”;
• The national court has to determine whether fiscal objectives of the legislation in fact only constitute “an incidental beneficial consequence”. Should this not be the case, the monopoly regime is in violation of EU law, regardless of the level of advertising; and
• “With regard to advertising, the national court must further examine to what extent the relevant strategies of the factual monopoly holder inform the potential client merely about the existence of the products and serve the purpose of guaranteeing the client regular access to games of chance, or whether they invite and encourage the clients to an active participation in games of chance”.

This opinion, if confirmed by the ECJ in its ruling, would signal the end of Casinos Austria’s de facto monopoly on poker and casino games, and lead to important reforms in Austria.

The European Gaming and Betting Association (EGBA) commented that Austria had clear profit-driven objectives when it came to gaming and betting, with no consistent or systematic consumer protection policy.

The Austrian market had been continuously expanding with massive monopolists’ advertising expenditure. 77% of the shares of Casinos Austria are held by private shareholders, including banks and insurance companies, according to the EGBA.

Sigrid Ligné, Secretary General of the EGBA said: “In this context, there is no acceptable justification to prevent reputable European competitors from offering online poker and casino games to Austrian players”.

Cases (C-447/08 and C- 448/08) were brought to the ECJ in the context of the advertising in two Swedish newspapers “Expressen” and “Aftonbladet“ of non-Swedish online gaming and betting operators duly licensed in other member states. The chief editors of both newspapers are subject to criminal sanctions under Swedish law.

Advocate General Bot confirmed that member states must not discriminate against EU operators, concluding on these cases that:

• “According to consistent jurisprudence, while a member state is entitled to restrict activities associated with gambling within its territory, the measures which it adopts for that purpose must not be discriminatory, even if they are based on the defense of public order”; and
• ”Community law precludes national legislation under which … anyone who promotes participation in internet gaming organized by a company established in another member state is liable to criminal penalties, whereas anyone who promotes participation in such gaming organized within the national territory without an authorization does not incur such penalties.”

Ligne commented: “It is remarkable that leading national newspapers, which are financed through and very much dependent on the sale of advertising, are unfairly deprived of substantial sources of revenue”.

“The marketing prohibition that applies to legal EU operators in Swedish media does not have any impact on the overall level of consumption of games of chance in Sweden. Svenska Spel and ATG conduct heavy advertising campaign throughout the territory and Swedish consumers also receive advertising from other Member States on Television”, she added.

Dates for the rulings of the ECJ in the two above-mentioned cases have not yet been determined.