Wednesday, 30 April 2014

Austrian winners may still take it all - CJEU in Pfleger (C-390/12)

30 April 2014: CJEU judgment in Pfleger (C-390/12)

As we have previously mentioned on this blog (Taking a chance on a game of chance...), Austrian government limited a possibility of running gambling establishments by issuing only a limited number of licenses that would allow for it. This legislation was explained to be justified by the need to protect consumers from gambling addictions and to prevent crime related to gambling. However, these justifications clashed with the permitted, aggressive advertising of games of chance, encouraging active participation of consumers in them and presenting a positive image of gambling. This led some unlicensed operators of gambling establishments to question the compliance of the Austrian law with Art. 56 TFEU, which prohibits unjustified restrictions on the freedom to provide services. If Austrian law did not really try to protect consumers but, for example, the introduction of limited licensing would only serve specific tax purposes that could be seen as breaching the protection established by Art. 56  TFEU.

The opinion of AG Sharpston left it to the national courts to decide whether in the given case the restrictions on the freedom to provide services were justified. While on the one hand, limitation of gambling licences should lower the number of gambling opportunities and, therefore, automatically increase consumer protection and lower crime related to gambling, the national court would need to consider whether such measures were proportionate and whether other laws (e.g. allowing advertising of gambling) would not undermine this protection. The CJEU takes these factors into account and since the national court claimed that national authorities did not actually managed to prove that gambling was a significant problem in Austria (Par. 53) and that the increase of tax revenue was really at stake (Par. 54), it concluded that Austrian law is in breach of Art. 56 TFEU if it "does not actually pursue the objective of protecting gamblers or fighting crime and does not genuinely meet the concern to reduce opportunities for gambling or to fight gambling-related crime in a consistent and systematic manner". (Par. 56)

It remains to be seen what the referring court will decide in this matter, but once again it is made clear by the CJEU that in restrictions are placed on one of the freedoms, they need to be justified by real and attainable objectives, such as actual consumer protection that is not just a smoke screen.

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