Case C‑329/21

DIGI Communications NV

v

Nemzeti Média- és Hírközlési Hatóság Hivatala

(Request for a preliminary ruling from the Fővárosi Törvényszék)

Judgment of the Court (Fifth Chamber), 20 April 2023

(Reference for a preliminary ruling – Telecommunications – Electronic communications networks and services – Directive 2002/21/EC (Framework Directive) – Article 4(1) – Directive 2002/20/EC (Authorisation Directive) – Article 7 – Award of rights to use frequencies – Auction procedure – Holding company not registered as a provider of electronic communications services in the Member State concerned – Exclusion from the award procedure – Right of appeal against the award decision)

1. Approximation of laws – Telecommunications sector – Electronic communications networks and services – Authorisation – Directive 2002/20 – Procedure for limiting the number of rights of use to be granted for radio frequencies – Award decision resulting from that procedure – Aim – Promotion and development of effective and undistorted competition – Compliance with the principles of equal treatment and proportionality – Stage of the procedure including an examination of whether any applications comply with the tender specifications – Whether permissible – Condition

   (European Parliament and Council Directive 2002/20, Art. 7)

   (see paragraphs 25-32, operative part 1)

2. Approximation of laws – Telecommunications sector – Electronic communications networks and services – Regulatory framework – Directive 2002/21 – Right of appeal – Auction procedure conducted by a national regulatory authority, which led to an award decision – Conferral of a right of appeal on an undertaking providing electronic communications services – Concept – Undertaking which participated in that procedure as an applicant – Undertaking not itself providing those services on the market of the Member State concerned by that procedure – Undertaking which was the subject of a decision of that authority refusing to register its application on the ground that it does not satisfy the necessary conditions – Decision having become final following a judicial decision dismissing an action brought against that decision – Included

   (Charter of Fundamental Rights of the European Union, Art. 47; European Parliament and Council Directive 2002/21, Art. 4(1))

   (see paragraphs 46-61, operative part 2)

Résumé

On 18 July 2019, the Nemzeti Média- és Hírközlési Hatóság Hivatala (National Communications and Media Authority, Hungary; ‘the NMHH’) launched an auction procedure for the award of rights to use radio frequencies for additional wireless broadband services in support of the roll-out of 5G. The detailed rules were set out in a consultation file published on the same date.

DIGI Communications, a company formed in the Netherlands but not registered in Hungary as an electronic communications service provider, applied to take part in that auction procedure. The NMHH took the view that that application was not formally valid because, according to that authority, DIGI Communications had abused its right to take part in that auction procedure, and had engaged in conduct designed to circumvent the procedure, by attempting to mislead the NMHH. Indeed, according to the latter, DIGI Communications had applied in place of its Hungarian subsidiary, a company registered in Hungary and providing electronic communications services there. An application from that subsidiary would have been excluded from the auction procedure by virtue of a ground for exclusion provided for in the consultation file.

The NMHH continued the auction procedure following its decision to exclude DIGI Communications from it. DIGI Communications brought a legal action to challenge that exclusion decision. Its action was dismissed at first instance, and then at second instance by the Kúria (Supreme Court, Hungary). In the meantime, the NMHH adopted a decision closing the contested auction procedure, by which it granted the rights to use radio frequencies that were the subject of that procedure to three providers of electronic communications services present on the Hungarian market.

By an action brought before the Fővárosi Törvényszék (Budapest High Court, Hungary), which is the referring court in the present case, DIGI Communications sought the annulment of the contested award decision, basing its standing to bring proceedings on its status as an ‘affected undertaking’ within the meaning of Article 4(1) of the Framework Directive. ( 1 )

The referring court seeks a preliminary ruling from the Court of Justice on the interpretation to be given to that concept, noting the absence of a definition thereof in the Framework Directive and relying, inter alia, on the judgments in Tele2 Telecommunication ( 2 ) and T-Mobile Austria. ( 3 ) It refers, more specifically, to the three conditions examined by the Court, in those two judgments, in order to establish that an undertaking is affected within the meaning of the Framework Directive. According to the referring court, those conditions consist in establishing, first, that the undertaking in question provides electronic communications networks or services and is in competition with those persons to whom the decision of the national regulatory authority concerned (‘the NRA’) is addressed, secondly, that that decision is adopted in the context of a procedure intended to safeguard competition and, thirdly, that the decision is likely to have an impact on the position on the market of the undertaking in question.

By its judgment, the Court clarifies, in particular, the personal scope of Article 4(1) of the Framework Directive, as regards the possibility for an undertaking, which is not itself a provider of electronic communications services on the market concerned, but which has already participated, as an applicant, in an auction procedure such as that at issue in the present case, of bringing an action against the decision of an NRA terminating that procedure, even though that undertaking has already been excluded from the procedure at an earlier stage and that exclusion has already been confirmed by a judicial decision which has become final.

Findings of the Court

In the first place, the Court examines whether, within the meaning of the Authorisation Directive, ( 4 ) a selection procedure for the award of rights to use frequencies and the award decision resulting from that procedure are intended to safeguard competition. In that regard, the Court considers that it is apparent from the regulatory framework applicable in the present case ( 5 ) that a procedure such as the contested auction procedure and, consequently, the award decision resulting from that procedure are intended to promote and develop effective and undistorted competition, while respecting the principles of equal treatment and proportionality.

In addition, the Court notes that the referring court seeks to ascertain whether that objective is called into question by the fact that, by a separate decision, the NRA concerned refused to register the application of the undertaking which, as a result, is no longer an addressee of the decision closing the contested auction procedure. As regards the procedures for awarding radio frequencies, the regulatory framework applicable in the present case permits, in principle, the reduction of the number of rights of use to be granted for radio frequencies, in view of the scarcity of radio frequencies and the need to ensure their efficient use. According to the Court, as regards the nature and detailed rules of the procedures for granting frequencies which they organise, the Member States enjoy discretion, and there is nothing to suggest, in principle, that such a procedure cannot include a stage for examining whether any applications comply with the tender specifications defined by the NRA, entailing, where appropriate, the exclusion from that procedure of some of the entities which have tendered, provided that that procedure, taken as a whole, can be regarded as complying with the requirements and conditions laid down in the Authorisation Directive. ( 6 )

In the second place, the Court examines the interpretation of Article 4(1) of the Framework Directive. In that regard, it points out that that provision is an expression of the principle of effective judicial protection. ( 7 )

First, the Court recalls that neither the Framework Directive nor the Authorisation Directive contains a definition of ‘provider of electronic communications services’. The Court therefore defines the scope of that concept, by referring to the legislative framework established by the Authorisation Directive and to the objectives pursued by all the relevant provisions. ( 8 ) It follows from the foregoing that, in a Member State such as Hungary, which requires interested undertakings to lodge a notification, within the meaning of the Authorisation Directive, ( 9 ) those undertakings must submit that notification only before commencing the actual provision of electronic communications networks or services. It cannot, therefore, be excluded that an undertaking which intends to commence such an activity may participate in a procedure such as the contested auction procedure before lodging such a notification with the NRA concerned.

According to the Court, in order to be recognised as an undertaking ‘providing electronic communications networks and/or services’, within the meaning of Article 4(1) of the Framework Directive, an undertaking does not necessarily have to have lodged a formal notification with the competent authorities of the Member State concerned, in cases where such a notification would be required by the law of that Member State pursuant to the Authorisation Directive; ( 10 ) nor, more generally, must it already be present on the market of that Member State, provided that that undertaking fulfils the objective conditions to which the general authorisation referred to in that provision is subject in that Member State, which is for the referring court to ascertain. Consequently, an undertaking which, although it has not yet entered the market, has participated as an applicant in a procedure such as the contested auction procedure, is considered to satisfy the aforementioned requirements, provided that it fulfils those objective conditions, irrespective of whether it has a subsidiary which is itself present on the market.

Secondly, as regards the condition laid down in Article 4(1) of the Framework Directive, according to which an undertaking must be ‘affected by’ the decision taken by an NRA which it intends to challenge, that condition is fulfilled if the rights of the undertaking in question are potentially affected by the decision of the NRA concerned by reason of its content and the activity exercised or envisaged by that undertaking. Therefore, an undertaking which participated, as an applicant, in a procedure such as the contested auction procedure is ‘affected’, within the meaning of Article 4(1) of the Framework Directive (as interpreted by the Court, in particular in the T-Mobile Austria judgment), by a decision taken by the NRA at the end of that procedure, where that decision has, by its content, an impact on the activity envisaged by that same undertaking.

The Court considers, in that regard, that, in the context of an action brought under Article 4(1) of the Framework Directive – which differs from that of an action brought under the provisions of Directive 89/665 ( 11 ) – by an undertaking with a view to challenging the award decision closing the auction procedure in which that undertaking participated by submitting an application, but from which it was eliminated by an earlier decision which has become final, that undertaking’s legal interest in bringing proceedings may be derived, inter alia, from the fact that it might possibly participate in a new auction procedure relating to the award of the same rights to use radio frequencies and, where appropriate, be awarded those rights if, following the annulment of the decision in question, the contracting authority decided to launch such a procedure.

Third and lastly, however, the Court recalls the importance, both in the legal order of the European Union and in the national legal orders, of the principle of res judicata. Consequently, where an undertaking, which has been excluded from an auction procedure such as the contested auction procedure by a decision of the NRA which has become final following a judicial decision, brings an action, under Article 4(1) of the Framework Directive, in order to challenge the award decision terminating that procedure, that action must not undermine the force of res judicata attaching to the aforementioned judicial decision.

In that regard, the Court points out that the force of res judicata extends to the matters of fact and law actually or necessarily settled by a judicial decision. Thus, the application of the principle of res judicata in the present case depends, as a rule, on the scope of the action brought by DIGI Communications with a view to challenging the contested award decision and, therefore, on any overlap between that scope and that of the judicial decision by which its action challenging the decision to exclude it from the contested auction procedure was definitively dismissed.

( 1 ) Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (OJ 2002 L 108, p. 33), as amended by Directive 2009/140/EC of the European Parliament and of the Council of 25 November 2009 (OJ 2009 L 337, p. 37) (‘the Framework Directive’).

( 2 ) Judgment of 21 February 2008, Tele2 Telecommunication (C 426/05, EU:C:2008:103).

( 3 ) Judgment of 22 January 2015, T-Mobile Austria (C 282/13, EU:C:2015:24).

( 4 ) Within the meaning of Article 7 of Directive 2002/20/EC of the European Parliament and of the Council of 7 March 2002 on the authorisation of electronic communications networks and services (OJ 2002 L 108, p. 21), as amended by Directive 2009/140 (‘the Authorisation Directive’).

( 5 ) Article 7(1)(a) and (3) of the Authorisation Directive and Article 8 of the Framework Directive.

( 6 ) More specifically, by Article 7 of the Authorisation Directive.

( 7 ) As guaranteed by Article 47 of the Charter of Fundamental Rights of the European Union.

( 8 ) Article 3(2) and Article 6(1) of the Authorisation Directive.

( 9 ) Within the meaning of Article 3(2) of the Authorisation Directive.

( 10 ) Under Article 3(2) of the Authorisation Directive.

( 11 ) Council Directive 89/665/EEC of 21 December 1989 on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts (OJ 1989 L 395, p. 33).