Dods EU Alert: Portugal must pay €10,000-a-day for court judgement non-compliance

Portugal ordered to pay a lump sum of €3 million and a penalty payment.

By Dods EU monitoring

25 Jun 2014

The Court has reduced the amount proposed by the Commission, having regard to, inter alia, the fact that Portugal’s ability to pay has been reduced as a result of the financial crisis

The company Portugal Telecom (PTC) is the largest telecommunications operator in Portugal.

It operates in numerous other countries too, especially Portuguese-speaking ones (in Brazil, it runs the biggest mobile network in the southern hemisphere).

In 1995 the Portuguese Government granted it the exclusive right to operate the public telecommunications service. In principle, it was granted that right until that activity was liberalised in accordance with EU law.

The ‘Universal Service Directive’, adopted in 2002, provides that every Member State is to designate the undertakings that are to provide the universal service while observing the principles of objectivity, transparency, non-discrimination and proportionality. That directive was to be transposed by the Member States by 24 July 2003.

In 2005 the Commission initiated the pre-litigation procedure against Portugal on the grounds that PTC had, after 2003, continued to be the exclusive provider of the universal service and that it had

not been designated in accordance with the procedure laid down by the directive. In 2009the Commission brought infringement proceedings against Portugal before the Court of Justice. By judgment of 7 October2010, the Court held that, so far as concerned the designation of the universal service provider, Portugal had failed to transpose correctly the provisions of the directive and to ensure that those provisions were in practice applied.

After ordering Portugal to fulfil, by 7 June 2011, its obligations under the judgment of 2010, the Commission, taking the view that the judgment had not yet been complied with, decided in 2013 to

bring fresh infringement proceedings. In essence, the Commission considered that the concession contract concluded with PTC is still in force and that the undertakings responsible for providing the

universal service have still not been designated by means of a procedure consistent with EU law.

In this respect, it emphasised that it was not until the month of October 2012 that Portugal launched the competitive tendering procedure for the selection of the universal service providers, while the new legislation to repeal the legislation incompatible with EU law will not enter into force until 1 June 2014.

In addition, termination of the contract concluded with PTC is not provided for before 2025.The Commission claimed that Portugal should be ordered to make a penalty payment of €43500 for every day of delay in complying with the judgment of 2010 and to pay a fixed-rate sum of €5000for every day from the date of delivery of the judgment of 2010 until the date of Portugal’s compliance with that judgment or the date on which the Court delivers judgment in the new infringement proceedings.

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