European Commission issues infringement proceedings across Europe

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

We recently reported that the European Commission was on the verge of issuing infringement proceedings against certain EU Member States whose gambling legislation is considered to contravene EU law (see here). On 20 November 2013, Michel Barnier and his colleagues delivered on their promise, with the announcement that six new infringement cases have been opened and an existing case against Sweden has been further escalated (see the European Commission's press release). We examine these developments in further detail below.

New infringement cases

Belgium, Cyprus, Czech Republic, Poland and Romania have all received official requests for information on provisions in their national legislation which restrict the supply of certain gambling services. In these cases the Commission is seeking to verify whether the measures in question are compatible with Article 56 TFEU, which guarantees the free movement of services.

In issuing these proceedings, the Commission has stated that it has particular concerns regarding national provisions which:

• subject the provision of online gambling services to establishing a physical presence in the recipient Member State;
• prescribe a specific legal form on the basis of national law;
• request prior consent of the authorities in relation to any changes in the shareholder structure; or
• ban foreign capital.

In addition, the Commission has identified certain national provisions in Belgium, Romania and Cyprus which it intends to examine further. These include:

• the transparency of the legal framework for gambling in Belgium;
• the coherence of the Romanian gambling policy; and
• the scope of the Cypriot gambling legislation with regard to different operators authorised to offer their services in Cyprus.

Each of the six countries must respond to the Commission's request for information within two months. If the Commission is satisfied with the responses it receives, the cases will be closed. If not, the next step will be to issue a reasoned opinion to the Member State.

Sweden to be referred to the EU Court of Justice?

In the case of Sweden, the Commission has sent two reasoned opinions requesting that its laws on online sports betting and online poker be amended to fully comply with EU law. The Commission's requests cover both the cross border provision of gambling services and issues such as advertising and sponsorship. Previous Commission requests found that Sweden's restrictive policy in the area of gambling services is not applied in a systematic and consistent manner and that Svenska Spel, the monopoly operator, is not subject to strict state control.

Although the Commission issued a reasoned opinion to Sweden in 2007, it was decided that, given the time lapse and developments in Swedish regulation and EU case law in the interim, Sweden should be given further time to comply. If Sweden fails to act within two months, the Commission has indicated that it may refer the case to the EU Court of Justice. Critics have questioned the need to give Sweden another chance with many calling for Sweden to be referred to the Court of Justice straight away.

Closure of proceedings against Finland

The Commission has also closed proceedings against Finland after concluding that Finnish legislation establishing a gambling monopoly complies with EU Law and is applied in a consistent and systematic manner. The Finnish framework law on gambling was amended in January 2012 in order to address Commission concerns.

The Commission also announced the closure of investigations and proceedings against several Member States which had not reached the stage of formal infringement proceedings. However, specific details of the Member States involved were not made public.

Have Germany and Greece been forgotten?

European operators have been expressing surprise at the Commission's failure to act in respect of Germany and Greece. Infringement proceedings are open in respect of both countries' gambling regimes but it is likely that the Commission chose not to advance proceedings at this stage given that the regulatory situation in both Member States is currently in a state of flux (see, for example, our reports here and here). Indeed, Commission officials have been reported as saying that the proceedings against Germany are on-going.

Will the forward momentum continue post-Barnier?

There is also much concern about whether this forward momentum can continue when EU Internal Market Commissioner Michel Barnier's term expires in 2014 and a new College of Commissioners is put in place. As the College of Commissioners must vote in favour of sending a reasoned opinion, or taking a Member State to court, its role will be pivotal in the next stage of the infringement proceedings. Operators will be hoping that the political will to continue to pursue infringing Member States remains.