Case C‑231/20

MT

v

Landespolizeidirektion Steiermark

(Request for a preliminary ruling from the Verwaltungsgerichtshof)

Judgment of the Court (Second Chamber), 14 October 2021

(Reference for a preliminary ruling – Freedom to provide services – Article 56 TFEU – Games of chance – Making prohibited lotteries available – Penalties – Proportionality – Minimum-level fines – Accumulation – No limit – Custodial sentence in the event of non-payment – Proportional contribution to the costs of proceedings – Article 49(3) of the Charter of Fundamental Rights of the European Union)

1. Freedom to provide services – Restrictions – Games of chance – National legislation imposing penalties for infringement of a monopoly on games of chance – Assessment by the national court of the lawfulness of the penalties – Assessment of the compatibility of those penalties with the freedom to provide services – Scope

   (Art. 56 TFEU)

   (see paragraphs 27-29, 33-35, operative part 1)

2. Freedom to provide services – Restrictions – Games of chance – Making prohibited lotteries available – Penalties – Minimum-level fines and custodial sentence in lieu of a fine imposed per unauthorised gaming machine – Accumulation of the fines and sentences – No limit – Proportional contribution to the costs of proceedings – Whether permissible – Conditions – Observance of the principle of proportionality – Observance of the right of access to a tribunal

   (Art. 56 TFEU; Charter of Fundamental Rights of the European Union, Arts 47 and 49(3))

   (see paragraphs 39-47, 49-51, 53, 56-58, operative part 2)

Résumé

In 2016, in an establishment located in Austria, a company made 10 gaming machines available for commercial purposes, thereby infringing the monopoly on games of chance. Under the Austrian Federal Law on games of chance, lotteries for which no licence or authorisation has been granted, and which are not excluded from the Federal State’s monopoly on games of chance, are prohibited. The organisation of automated games of chance without the necessary licence is an offence and is punishable by a fine, combined with a custodial sentence in lieu of a fine and a contribution to the costs of the penalty proceedings, set at 10% of that penalty. As regards the compliance by legal persons with the provisions at issue, it is in principle the person who is required to represent the company in relation to third parties who is regarded as being liable.

Thus, the representative of that company, after being found guilty of those offences, was first fined EUR 100000 (EUR 10000 for each offence) and given a custodial sentence in lieu of a fine of 30 days (three days for each offence), and in addition was ordered to pay EUR 10000 as a contribution to the costs of the proceedings. In the course of the legal proceedings brought against that decision, those penalties were reduced to EUR 40000, 10 days and EUR 4000 respectively.

Called upon to assess the lawfulness of that new penalty, the Verwaltungsgerichtshof (Supreme Administrative Court, Austria) decided to refer several questions to the Court of Justice for a preliminary ruling concerning the compatibility of the national legislation concerned with the freedom to provide services laid down by Article 56 TFEU.

In its judgment, the Court, inter alia, explains the scope of the duty of national courts to examine, in the light of the freedom to provide services, the system of penalties laid down in relation to games of chance.

The Court’s findings

As a preliminary point, the Court states that the restrictive measures imposed by the national legislation on games of chance should be examined in turn, including the penalties laid down by that legislation, in order to determine in each case whether the measure is suitable for achieving the objective or objectives invoked by the Member State concerned and whether it does not go beyond what is necessary in order to achieve those objectives.

Consequently, a national court having to rule on the lawfulness of a penalty in that area must specifically assess, having regard to the actual rules for determining that penalty, whether it complies with the freedom to provide services, within the meaning of Article 56 TFEU. That assessment must be carried out even if the other restrictions surrounding the establishment of the monopoly on games of chance have already been held to be compatible with that provision.

Next, the Court finds, inter alia, that where the restrictions imposed by the Member States on games of chance serve overriding reasons in the public interest, ensure the attainment of the objective pursued and do not go beyond what is necessary in order to attain that objective, the imposition of penalties serves the same overriding reasons in the public interest as those restrictions. Nevertheless, the severity of the penalties must be commensurate with the seriousness of the infringements penalised and comply with the principle of the proportionality of penalties, enshrined in Article 49(3) of the Charter of Fundamental Rights of the European Union.

Accordingly, as regards, in the first place, the imposition of a minimum fine per unauthorised gaming machine, without any limit on the total amount of the fines, the Court finds that such a measure does not appear, in itself, to be disproportionate given the seriousness of the infringements at issue. It is true that that measure may lead to sizeable penalties, but it makes it possible to counter the economic benefit which the infringements thus penalised might provide. However, it is for the referring court to ensure that the minimum amount and the total amount of the fines imposed are not disproportionate in relation to that benefit.

In the second place, as regards the custodial sentence in lieu of a fine, the Court observes that that penalty seeks to ensure that infringements are actually punished if it is not possible to recover the fine and likewise does not appear, in itself, to be disproportionate in the light of the nature and gravity of the infringements at issue. However, in the present case, each gaming machine is capable of providing grounds for the imposition of such a penalty and no limit on the total duration of the penalties is provided for. Accordingly, since the accumulation of those penalties may lead to a custodial sentence of considerable length, it is for the referring court to verify that the length of the sentence imposed is not excessive in the light of the seriousness of the infringements found.

Lastly, as regards, in the third place, the imposition of a contribution to the costs of proceedings amounting to 10% of the fines imposed, the Court notes that the levying of court costs contributes to the proper functioning of the judicial system as a source of funding for the judicial activities of the Member States. The referring court must, however, satisfy itself that that contribution is not excessive in the light of the actual cost of the proceedings and does not infringe the right of access to a tribunal enshrined in Article 47 of the Charter of Fundamental Rights of the European Union.