JUDGMENT OF THE COURT (Second Chamber)

14 October 2021 ( *1 )

(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)

In Case C‑231/20,

REQUEST for a preliminary ruling under Article 267 TFEU from the Verwaltungsgerichtshof (Supreme Administrative Court, Austria), made by decision of 27 April 2020, received at the Court on 3 June 2020, in the proceedings

MT

v

Landespolizeidirektion Steiermark,

THE COURT (Second Chamber),

composed of A. Arabadjiev, President of the First Chamber, acting as President of the Second Chamber, I. Ziemele (Rapporteur), T. von Danwitz, P.G. Xuereb and A. Kumin, Judges,

Advocate General: M. Szpunar,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

–

MT, by P. Ruth and D. Pinzger, Rechtsanwälte,

–

the Austrian Government, by A. Posch and J. Schmoll, acting as Agents,

–

the Belgian Government, by L. Van den Broeck and M. Jacobs, acting as Agents, and by P. Vlaemminck, advocaat, and M. Thibault, avocate,

–

the Hungarian Government, by B.R. Kissné, M.Z. Fehér and G. Koós, acting as Agents,

–

the Portuguese Government, by P. Barros da Costa, A. Silva Coelho and L. Inez Fernandes, acting as Agents,

–

the European Commission, by G. Braun, L. Malferrari and L. Armati, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

Judgment

1This request for a preliminary ruling concerns the interpretation of Article 56 TFEU and Article 49(3) of the Charter of Fundamental Rights of the European Union (‘the Charter’).

2The request has been made in proceedings between MT and the Landespolizeidirektion Steiermark (Regional Police Directorate, Styria, Austria) concerning penalties imposed on MT for infringements consisting of making prohibited lotteries commercially available.

Legal context

The GSpG

3Paragraph 2, entitled ‘Lotteries’, of the Glücksspielgesetz (Federal Law on games of chance) of 28 November 1989 (BGB1. 620/1989), in the version applicable to the main proceedings (‘the GSpG’), provides:

‘(1) Lotteries are games of chance

1.which an operator arranges, organises, offers or makes available,

2.in which gamblers or other persons make a payment (stake) in connection with participating in the game, and

3.in which the prospect of a payment (payout) is provided by the operator, gamblers or other persons.

…

(4) Prohibited lotteries are lotteries for which no licence or authorisation under the present Federal law has been granted, and which are not excluded from the Federal State’s monopoly on games of chance pursuant to Paragraph 4.

…’

4Paragraph 52 of the GSpG, entitled ‘Provisions relating to administrative penalties’, reads as follows:

‘(1) An administrative offence, punishable by a fine imposed by the administrative authorities of up to EUR 60000 in the cases covered by point 1 and up to EUR 22000 in the cases covered by points 2 to 11, is committed where:

1.a person, for the purpose of participation from national territory, arranges, organises or makes available in the course of business prohibited lotteries within the meaning of Paragraph 2(4), or participates in them as an operator within the meaning of Paragraph 2(2);

…

(2) In the event of an infringement of point 1 of subparagraph 1 by means of a maximum of three gaming machines or other objects which infringe the legislation, the use of each gaming machine or other object which infringes the legislation shall be punishable by a fine of between EUR 1000 and EUR 10000 in the case of a first infringement, or between EUR 3000 and EUR 30000 in the case of a repeated infringement; in the event of an infringement by means of more than three gaming machines or other objects which infringe the legislation, the use of each gaming machine or other object which infringes the legislation shall be punishable by a fine of between EUR 3000 and EUR 30000 in the case of a first infringement, or a fine of between EUR 6000 and EUR 60000 in the case of a repeated infringement.’

The VStG

5Paragraph 9 of the Verwaltungsstrafgesetz ‘Law on administrative offences, BGBl. 52/1991), in the version applicable to the main proceedings (‘the VStG’), entitled ‘Specific cases of liability’, provides:

‘(1) As regards compliance by legal persons with administrative provisions …, unless provided otherwise by administrative provisions and in so far as authorised agents have not been appointed (subparagraph 2), the person who is required to represent the company in relation to third parties shall be regarded as liable.

…

(7) Legal persons … and the natural persons referred to in subparagraph 3 shall be jointly and severally liable for fines imposed on persons required to represent the company in relation to third parties or on an authorised agent, for other damage expressed in money, and for the costs of proceedings.’

6Paragraph 16 of the VStG, entitled ‘Custodial sentence in lieu of a fine’, provides:

‘(1) If a fine has been imposed, a custodial sentence in lieu of a fine should be set at the same time in the event that the fine cannot be recovered.

(2) The custodial sentence in lieu of a fine may not exceed the maximum custodial sentence imposed for the administrative offence and, where no custodial sentence or any other provision is provided for, it may not exceed two weeks. A custodial sentence in lieu of a fine in of more than six weeks is unlawful. Such a sentence must be determined in accordance with the provisions for determining the penalty, regardless of Paragraph 12.

…’

7Paragraph 19 of the VStG, entitled ‘Determination of the penalty, reads as follows:

‘(1) The penalty shall be determined in accordance with the importance of the legal interest protected and the seriousness of the harm to that interest arising from the infringement.

…’

8Paragraph 20 of the VStG, entitled ‘Exceptional mitigation of the penalty’, provides:

‘If there are clearly more mitigating factors than aggravating factors or if the alleged perpetrator of the infringement is a minor, the minimum penalty may be reduced by half.’

9Paragraph 64 of the VStG, entitled ‘Costs of penalty proceedings’, provides:

‘(1) Any decision imposing a penalty shall make the sanctioned person liable to pay a contribution to the costs of the penalty proceedings.

(2) The amount of that contribution shall be 10% of the penalty for (administrative) proceedings, but shall not be less than EUR 10; where a custodial sentence is imposed, one day of detention shall be equal to the sum of EUR 100 for the purposes of calculating the costs of the proceedings. …

…’

Law on the rules of procedure of the administrative courts

10Paragraph 38 of the Verwaltungsgerichtsverfahrensgesetz (Law on the rules of procedure of the administrative courts, BGBl. I, 33/2013), in the version applicable to the dispute in the main proceedings, provides for the application of the provisions, inter alia, of the VStG in proceedings before the administrative courts.

The dispute in the main proceedings and the questions referred for a preliminary ruling

11From 30 April to 3 May 2016 the company represented by MT made 10 gaming machines available for commercial purposes in a particular establishment. The organiser of the games of chance at issue was a company established in Slovakia.

12In accordance with Paragraph 9 of the VStG, the applicant in the main proceedings was found guilty by an administrative decision of the offences in the third case of point 1 of Paragraph 52(1) of the GSpG committed by that company. Pursuant to Paragraph 52(2) of that law, the administrative enforcement authority imposed an administrative penalty on him of EUR 10000 for each offence and, on the basis of Paragraph 16 of the VStG, applicable in administrative proceedings under Paragraph 38 of the Law on the rules of procedure of the administrative courts, in the version applicable to the dispute in the main proceedings, a custodial sentence in lieu of a fine of three days, that is to say, a total fine of EUR 100000 and a custodial sentence in lieu of a fine of 30 days for the 10 gaming machines. Pursuant to Paragraph 64(2) of the VStG, it also ordered him to pay EUR 10000 as a contribution to the costs of the proceedings.

13That decision was the subject of an appeal before the Landesverwaltungsgericht Steiermark (Regional Administrative Court, Styria, Austria), which was dismissed.

14The applicant in the main proceedings brought a first appeal on points of law against the judgment of that court before the Verwaltungsgerichtshof (Supreme Administrative Court, Austria). The latter court upheld the earlier judgment as regards the finding of guilt, but set it aside as regards the decision on the penalty.

15After the case had been referred back to it, the Landesverwaltungsgericht Steiermark (Regional Administrative Court, Styria) reduced the amount of the fine to EUR 4000 for each infringement and set a custodial sentence in lieu of a fine of one day, that is to say a total fine for the 10 gaming machines of EUR 40000 and a 10-day custodial sentence in lieu of a fine. It also set the contribution to the costs of the proceedings at EUR 4000.

16The applicant in the main proceedings brought a fresh appeal on points of law before the referring court against the determination of that penalty.

17The referring court observes that, in the appeal on points of law brought before it, the Landesverwaltungsgericht Steiermark (Regional Administrative Court, Styria) examined, in the first set of proceedings, the adverse effect on the freedom to provide services caused by the monopoly system at issue, by carrying out an overall assessment in the light of the criteria established by the Court, and reached the conclusion that the provisions of the GSpG criminalising the organisation of automated games of chance without the requisite licence were not contrary to EU law.

18The referring court notes, however, that its assessment of the lawfulness of the penalty depends on whether the provisions of the GSpG, in conjunction with those of the VStG, which must be applied by the Landesverwaltungsgericht Steiermark (Regional Administrative Court, Styria) for the purposes of determining the sentence are compatible with Article 56 TFEU and, as the case may be, with Article 49(3) of the Charter.

19In those circumstances, the Verwaltungsgerichtshof (Supreme Administrative Court) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

‘(1)

In the context of criminal proceedings that are being conducted in order to protect a monopoly system, must the national court or tribunal examine the applicable criminal penalty rule in the light of the freedom to provide services if it has previously examined the monopoly system in accordance with the guidance provided by the Court … and that examination has revealed that the monopoly system is justified?

(2)

If Question 1 is answered in the affirmative:

(a)

Must Article 56 TFEU be interpreted as precluding a national provision according to which, by way of sanction for making prohibited lotteries commercially available contrary to [the GSpG], a fine must be imposed per gaming machine, with no absolute limit on the total fine imposed?

(b)

Must Article 56 TFEU be interpreted as precluding a national provision which, by way of sanction for making prohibited lotteries commercially available contrary to [the GSpG], provides for the mandatory imposition of a minimum penalty of EUR 3000 per gaming machine?

(c)

Must Article 56 TFEU be interpreted as precluding a national provision which, by way of sanction for making prohibited lotteries commercially available contrary to [the GSpG], provides for a custodial sentence in the event of non-payment per gaming machine, with no absolute limit on the total number of custodial sentences imposed?

(d)

Must Article 56 TFEU be interpreted as precluding a national provision which, in the event of a penalty being imposed for making prohibited lotteries commercially available contrary to the [GSpG], requires the payment of a contribution to the costs of criminal proceedings amounting to 10% of the fines imposed?

(3)

If Question 1 is answered in the negative:

(a)

Must Article 49(3) of the [Charter] be interpreted as precluding a national provision according to which, by way of sanction for making prohibited lotteries commercially available contrary to the [GSpG], a fine must be imposed per gaming machine, with no absolute limit on the total fine imposed?

(b)

Must Article 49(3) of the Charter be interpreted as precluding a national provision which, by way of sanction for making prohibited lotteries commercially available contrary to the [GSpG], provides for the mandatory imposition of a minimum penalty of EUR 3000 per gaming machine?

(c)

Must Article 49(3) of the Charter be interpreted as precluding a national provision which, by way of sanction for making prohibited lotteries commercially available contrary to the [GSpG], provides for a custodial sentence in lieu of a fine per gaming machine, with no absolute limit on the total number of custodial sentences imposed?

(d)

Must Article 49(3) of the Charter be interpreted as precluding a national provision which, in the event of a penalty being imposed for making prohibited lotteries commercially available contrary to the [GSpG], requires the payment of a contribution to the costs of criminal proceedings amounting to 10% of the fines imposed?’

Consideration of the questions referred

The first question

Admissibility

20The applicant in the main proceedings submits that the first question is hypothetical, on the ground that, in the context of the main proceedings and contrary to what is suggested by the wording of that question, the referring court has not itself reviewed the monopoly system at issue in accordance with the criteria laid down by the Court.

21It must be recalled that, in the context of the cooperation between the Court and the national courts provided for in Article 267 TFEU, it is solely for the national court, before which the dispute has been brought and which must assume responsibility for the subsequent judicial decision, to determine in the light of the particular circumstances of the case both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court. Consequently, where the questions submitted concern the interpretation of a rule of EU law, the Court is in principle bound to give a ruling (judgments of 13 November 2018, Čepelnik, C‑33/17 , EU:C:2018:896 , paragraph 20 , and of 2 April 2020, Coty Germany, C‑567/18 , EU:C:2020:267 , paragraph 23 and the case-law cited).

22It follows that questions relating to EU law enjoy a presumption of relevance. The Court may refuse to rule on a question referred by a national court only where it is quite obvious that the interpretation of EU law that is sought bears no relation to the actual facts of the main action or its object, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (judgments of 13 November 2018, Čepelnik, C‑33/17 , EU:C:2018:896 , paragraph 21 , and of 2 April 2020, Coty Germany, C‑567/18 , EU:C:2020:267 , paragraph 24 and the case-law cited).

23In the present case, as noted in paragraph 17 above, the referring court states that the Landesverwaltungsgericht Steiermark (Regional Administrative Court, Styria), assessed the compatibility with EU law of the provisions of the GSpG which criminalise the organisation of automated games of chance where the required licence has not been issued. In the light of that finding, which it is not for the Court to call into question in proceedings based on Article 267 TFEU, the referring court seeks to ascertain whether it is specifically required, in its examination of the lawfulness of the penalty imposed on the applicant in the main proceedings when applying the provisions of the GSpG, in conjunction with those of the VStG, to assess that penalty in the light of Article 56 TFEU. It cannot therefore be disputed that the compliance of the referring court’s subsequent decision with EU law depends on the answer to the question referred, which is therefore not hypothetical.

24It follows that the first question is admissible.

Substance

25By its first question, the referring court asks, in essence, whether Article 56 TFEU must be interpreted as meaning that, in proceedings concerning the imposition of penalties for infringement of a monopoly in the sector of games of chance, a national court, hearing an assessment of the lawfulness of a penalty imposed for such an infringement, must specifically assess whether the penalties laid down by the applicable legislation comply with Article 56 TFEU, where the establishment of such a monopoly system has already been held to be compatible with that provision.

26The Austrian and Belgian Governments and, in essence, the Hungarian Government submit that there is no need to carry out a separate examination of the national rules on penalties designed to ensure compliance with the monopoly in the light of Article 56 TFEU, since, in principle, they have already been examined in the context of the overall assessment of the circumstances surrounding the adoption and implementation of the restrictive legislation at issue. By contrast, the Portuguese Government, the European Commission and, in essence, MT, argue that such rules must be examined separately in the light of that provision and, in particular, the principle of proportionality.

30The referring court noted in that regard that the Landesverwaltungsgericht Steiermark (Regional Administrative Court, Styria) in the main proceedings held that, in the light of the criteria established by the Court, the provisions of the GSpG which criminalise the organisation of automatic games of chance without the necessary licence did not contravene EU law.

31For its part, the Austrian Government stated that the conclusion reached by the Landesverwaltungsgericht Steiermark (Regional Administrative Court, Styria) was in line with the settled case-law of the highest courts in Austria which, in such an examination, systematically take account of the provisions on penalties laid down in Paragraph 52 of the GSpG, the purpose of which is to combat illegal gambling in an effective manner.

32However, the referring court, first, has not stated whether the assessment in question touched specifically on that paragraph. Secondly, in any event, it is apparent from the file before the Court that the penalties imposed on the applicant in the main proceedings were determined not only on the basis of Paragraph 52 of the GSpG, but also of Paragraphs 16 and 64 of the VStG, applicable to proceedings before administrative courts, which, along with any decision to hand down a penalty, provide for the imposition of a custodial sentence in lieu of a fine and of a contribution to the costs of the administrative penalty proceedings.

35In the light of the foregoing considerations, the answer to the first question is that Article 56 TFEU must be interpreted as meaning that, in proceedings concerning the imposition of penalties for infringement of a monopoly in the sector of games of chance, a national court, hearing an assessment of the lawfulness of a penalty imposed for such an infringement, must specifically assess whether the penalties laid down by the applicable legislation comply with Article 56 TFEU, having regard to the actual rules for determining those penalties.

The second question

36By its second question, the referring court asks, in essence, whether Article 56 TFEU must be interpreted as precluding a national provision which, in cases where prohibited lotteries have been made commercially available, makes it mandatory to:

–

impose a minimum fine per unauthorised gaming machine, with no limit on the total amount of the fines imposed;

–

impose a custodial sentence in lieu of a fine per unauthorised gaming machine, with no limit on the total length of the custodial sentences imposed; and

–

contribute to the costs of proceedings amounting to 10% of the fines imposed.

52In the present case, it is apparent from the order for reference that, in the case of infringements such as those at issue in the main proceedings, the custodial sentence in lieu of a fine may not exceed a maximum of two weeks per infringement.

54In that context, the Austrian Government observed that there is no general minimum threshold for custodial sentences in lieu of a fine, since such a penalty has to be commensurate with the fine imposed.

55However, such a factor cannot be of decisive influence since a custodial sentence in lieu of a fine cannot comply with the principle of proportionality merely because the authorities of a Member State may, at their sole discretion, reduce its length (see, by analogy, judgment of 3 March 2020, Google Ireland, C‑482/18 , EU:C:2020:141 , paragraph 53 ).

58In the light of the foregoing considerations, the answer to the second question is that Article 56 TFEU must be interpreted as not precluding a national provision which, in cases where prohibited lotteries have been made commercially available, makes it mandatory to:

–

impose a minimum fine per unauthorised gaming machine, with no limit on the total amount of the fines imposed, to the extent that the total amount of the fines imposed is not disproportionate to the economic benefit which the infringements thus penalised might provide;

–

impose a custodial sentence in lieu of a fine per unauthorised gaming machine, with no limit on the total length of the custodial sentences in the event of non-payment imposed, to the extent that the length of the custodial sentence in lieu of a fine actually imposed is not excessive in the light of the seriousness of the infringements found; and

–

contribute to the costs of proceedings amounting to 10% of the fines imposed, to the extent that that contribution is neither excessive in the light of the actual cost of such proceedings nor infringes the right of access to a tribunal enshrined in Article 47 of the Charter.

The third question

59In light of the answer given to the first question, there is no need to answer the third question.

Costs

60Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Second Chamber) hereby rules:

1.Article 56 TFEU must be interpreted as meaning that, in proceedings concerning the imposition of penalties for infringement of a monopoly in the sector of games of chance, a national court, hearing an assessment of the lawfulness of a penalty imposed for such an infringement, must specifically assess whether the penalties laid down by the applicable legislation comply with Article 56 TFEU, having regard to the actual rules for determining those penalties.

2.Article 56 TFEU must be interpreted as not precluding a national provision which, in cases where prohibited lotteries have been made commercially available, makes it mandatory to:

–

impose a minimum fine per unauthorised gaming machine, with no limit on the total amount of the fines imposed, to the extent that the total amount of the fines imposed is not disproportionate to the economic benefit which the infringements thus penalised might provide;

–

impose a custodial sentence in lieu of a fine per unauthorised gaming machine, with no limit on the total length of the custodial sentences imposed, to the extent that the length of the custodial sentence in lieu of a fine actually imposed is not excessive in the light of the seriousness of the infringements found; and

–

contribute to the costs of proceedings amounting to 10% of the fines imposed, to the extent that that contribution is neither excessive in the light of the actual cost of such proceedings nor infringes the right of access to a tribunal enshrined in Article 47 of the Charter of Fundamental Rights of the European Union.

[Signatures]

( *1 ) Language of the case: German.