European Commission v Portuguese Republic

1. 

In this matter, the European Commission has brought an action before the Court, pursuant to the second paragraph of Article 258 TFEU, seeking a declaration that, by failing to ensure that the slot coordinator is functionally and financially independent, the Portuguese Republic has failed to fulfil its obligations under Article 4(2) of Council Regulation (EEC) No 95/93 of 18 January 1993 on common rules for the allocation of slots at Community airports. ( 2 )

2. 

When an airport located within the territory of a Member State is congested, that is, when its capacity is insufficient, to such an extent that significant delays cannot be avoided, Article 3(5) of Regulation 95/93 requires that Member State to designate it as a ‘coordinated’ airport. According to Article 2(g) of Regulation No 95/93, a coordinated airport is one at which air carriers can only land and take off in a slot which has been allocated to them, a slot being defined as a permission to use the full range of airport infrastructure necessary for landing and taking off at a precise date and time.

3. 

The Member State responsible for a coordinated airport appoints a natural or legal person to perform the function of ‘coordinator’. According to Article 4(5) and 6 of Regulation No 95/93, the coordinator allocates slots to air carriers and satisfies itself, in conjunction with the managing body of the airport, that air carriers’ activities are in accordance with the slots allocated to them. Article 4(2) of Regulation 95/93 requires the Member State to ensure that the coordinator is independent.

4. 

In the present case, the Commission alleges that the Portuguese Republic has failed to ensure that the coordinator is independent. While the Court has already considered the independence of other national authorities responsible for implementation of EU law in the Member States, such as the authority responsible for the management of railway infrastructure, ( 3 ) or data protection, ( 4 ) it has never considered that of the coordinator of an airport. It is thus called on to explain the circumstances in which the coordinator of an airport can be considered to be independent.

5.

The second recital of Regulation No 95/93 states that ‘the allocation of slots at congested airports should be based on neutral, transparent and non-discriminatory rules’.

6.

The fifth recital of Regulation No 95/93 states that ‘the Member State responsible for the coordinated airport should ensure the appointment of a coordinator whose neutrality should be unquestioned’.

7.

In its original version, Article 4(2) of Regulation No 95/93 provided that ‘a Member State shall ensure that the coordinator carries out his duties under this Regulation in an independent manner’.

8.

Regulation No 95/93 was amended by Regulation (EC) No 793/2004 of the European Parliament and of the Council of 21 April 2004 amending Regulation No 95/93. ( 5 ) For simplicity’s sake, I shall refer to Regulation No 95/93 as amended by Regulation No 793/2004 as ‘Regulation No 95/93, as amended’.

9.

Article 4(2)(b) of Regulation No 95/93, as amended, provides that the Member State responsible for a schedules facilitated or coordinated airport shall ensure ‘the independence of the coordinator at a coordinated airport by separating the coordinator functionally from any single interested party. The system of financing the coordinators’ activities shall be such as to guarantee the coordinator’s independent status’. The sixth recital of Regulation No 793/2004 justifies that amendment in the following terms:

‘… At coordinated airports the coordinator plays a central role in the coordinating process. Therefore, coordinators should be in a fully independent position and their responsibilities should be specified in detail.’

10.

The Communication from the Commission of 30 April 2008 to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on the application of Regulation No 95/93, as amended ( 6 ) (‘the 2008 Communication’) provides more detail as to the scope of Article 4(2)(b) of Regulation No 95/93, as amended. The fourth and fifth subparagraphs of paragraph 1 of the 2008 Communication state that:

‘The Commission is of the view that functional separation means inter alia that the coordinator should act autonomously from, not be instructed by, and not have a duty to report back to the airport managing body, a service provider nor any air carrier operating from the airport concerned.

The Commission further considers that the system of financing the coordinator’s activities should be set up in such a way that the coordinator is financially autonomous from any single party directly affected by — or having an interest in — its activities. The coordinator should therefore keep separate accounts and budgets and not rely for the financing of his activities only on the airport managing body, a service provider nor a single air carrier.’

11.

Article 3(1) of Decree-law No 109/2008 of 26 June 2008 ( 7 ) designates the airports of Lisbon, Porto and Madeira (Portugal) as coordinated. Article 3(2) thereof designates the airport of Faro (Portugal) as coordinated, but only for the period from the last Sunday in March to the last Saturday in October.

12.

Article 1(2) of Decree-law No 109/2008 appoints Aeroportos de Portugal, S.A. (‘the ANA’) as national coordinator.

13.

Article 5 of Decree-law No 109/2008 concerns the independence of the coordinator. According to that provision:

‘1.   In carrying out its functions as national facilitator and coordinator in respect of the allocation of slots, the ANA, shall ensure that this activity is independent of its activity as an airport manager, by means of appropriate separation.

2.   For the purposes of the preceding paragraph, [the ANA] shall ensure such independence, at a functional level at minimum, and shall keep specific accounts relating to slot coordination activities, which shall be completely separate from the accounts relating to other activities.’

14.

Article 11 of Decree-law No 109/2008 provides for a charge to be introduced, payable to the ANA, in respect of the allocation of slots. Under that article:

‘1.   The supply of the services of coordination and allocation of slots shall be subject, in consideration of the use of those services, to a slot-allocation charge, levied at the same time as the landing and take-off charges, per movement, and set by order of the minister responsible for civil aviation.

…

3.   The charge referred to in paragraph 1 constitutes revenue of the ANA.’

15.

The ANA was created as a public undertaking in 1979. It was subsequently converted into a limited company by Decree-law No 404/98 of 18 December 1998, and was granted a forty-year franchise to provide supporting public airport services for civil aviation at the airports of Lisbon, Porto, Madeira and Faro. By resolution of the Council of Ministers dated 28 December 2012, ( 8 ) the ANA was privatised. The State transferred the entirety of its share capital to Vinci-Concessions SAS.

16.

Following its appointment, by Decree-law No 109/2008, as coordinator of the airports of Lisbon, Porto, Madeira and Faro, the ANA created an internal department responsible for their coordination, the Divisão de Coordenação Nacional de Slots (‘DCNS’).

17.

The Commission had doubts as to whether the DCNS, which performed the function of coordinator in those 4 airports, was independent of the ANA, of which it is a department and which is the managing body of those same airports. It therefore requested information from the Portuguese Republic in this regard, on 19 July 2010, 4 October 2010 and 14 April 2011. The Portuguese Republic responded to those requests on 28 August 2010, 28 October 2010 and 28 April 2011, respectively.

18.

By letter of 30 April 2012, the Commission sent a letter of formal notice to the Portuguese Republic, asserting that it had infringed its obligations under Article 4(2) of Regulation No 95/93, as amended. According to the Commission, functional separation within the meaning of subparagraph (b) of that provision did not exist between the DCNS and the ANA, the former being a department of the latter. Furthermore, the financing of the DCNS was not such as to guarantee its independent status. Such independence could only be ensured by means of a budget and accounts specific to the DCNS, whereas the DCNS was financed entirely by ANA, the slot allocation charge provided for by Article 11 of Decree No 109/2008 never having come into being.

19.

By letter of 19 July 2012, the Portuguese Republic submitted observations on the letter of formal notice.

20.

On 25 January 2013, the Commission sent the Portuguese Republic a reasoned opinion, on the basis of breach of Article 4(2) of Regulation 95/93, as amended. Inasmuch as the staff assigned to the DCNS came from the ANA, and the DCNS did not seem to have its own premises, functional separation did not, according to the Commission, exist between the DCNS and the ANA. As to the financial independence of the DCNS, the Commission reiterated that in the absence of a slot allocation charge, the expenses of the DCNS had to date been borne in their entirety by the ANA.

21.

By letter of 27 March 2013, the Portuguese Republic submitted its observations on the letter of formal notice.

22.

As it was not satisfied with the Portuguese Republic’s arguments, the Commission brought the present action.

23.

The Commission alleges that the Portuguese Republic has failed to fulfil its obligations under Article 4(2) of Regulation No 95/93, as amended, in that it has not ensured the functional and financial independence of the coordinator.

24.

The Commission maintains that Article 4(2)(b) of Regulation No 95/93, as amended, should be interpreted broadly, in the light of the fifth recital of that regulation, according to which the ‘neutrality’ of the coordinator should be ‘unquestioned’, and in the light of its objective, as defined in the second recital of that regulation, that is, for slots to be allocated on the basis of ‘neutral, transparent and non-discriminatory rules’. The Commission relies on the amendment of Article 4(2) of Regulation No 95/93 by Regulation No 793/2004, an amendment which emphasises, according to recital 6 of Regulation No 793/2004, that the coordinator should be ‘fully independent’, and therefore replaces the simple requirement that ‘the coordinator carries out his duties under this Regulation in an independent manner’ with the current wording of Article 4.

25.

As to the functional separation of the coordinator from any interested party, provided for by Article 4(2)(b) of Regulation No 95/93, as amended, the Commission maintains that the concept of interested party should be interpreted broadly, and includes not only air carriers but also service providers, public bodies of the Member States and the managing body of the airports at issue. It emphasises, amongst other things, that the managing body of an airport may have a commercial interest in that airport becoming a hub for a given air carrier, and that it is therefore indispensable for the coordinator to be independent of that body. In the present case, the DCNS appears to have the same staff and the same premises as the ANA. Thus, according to the Commission, it is not functionally separate from the ANA. It is also said that the Portuguese Republic, by stating in its response to the letter of formal notice that, following the privatisation of the ANA, it intended to put a new entity in place which would be responsible for the coordination of slots, and that the formation of that entity would make it possible to ensure that the coordinator was fully independent, has itself acknowledged that, at present, the coordinator is not functionally independent.

26.

As to the system of financing the coordinator, it is said that this cannot be independent, as required by Article 4(2)(b) of Regulation No 95/93, as amended, unless the coordinator keeps separate accounts, manages a separate budget and is not financed by one or more interested parties. In the present case, it is said that the DCNS is financed entirely by the ANA, which also approves its budget. Thus, according to the Commission, the DCNS is not financially independent of the ANA.

27.

The Commission requests the Court to:

28.

In its defence, the Portuguese Republic maintains that the DCNS meets the requirements of Article 4(2) of Regulation No 95/93, as amended.

29.

The Portuguese Republic claims that the ANA cannot be regarded as an interested party from which the DCNS should be separated. Given that Regulation No 95/93, as amended, does not define ‘interested party’, it is only on the basis of a case-by-case examination that a party can be classified as interested. In classifying the ANA as an interested party simply on the basis of its status as managing body of the airports, however, the Commission is said to have failed to carry out any such examination. Furthermore, the ANA’s interests are said to lie in receiving as much as possible in airport charges, and thus in as many air carriers as possible being allocated slots, not in a particular air carrier receiving advantageous treatment from the DCNS. It would be otherwise if the ANA held shares in an air carrier, which, it is said, is not the case.

30.

On the assumption that the ANA is to be regarded as an interested party, it is said that the Portuguese Republic has nevertheless complied with Article 4(2)(b) of Regulation 95/93, as amended. This provision is said not to require the coordinator to be a distinct legal entity from the airport manager, but only to require functional separation. It is said that in fact there is functional separation between the DCNS and the ANA, on the basis that the DCNS alone manages the coordination of slots, without receiving instructions from the ANA and without its decisions being subject to approval by the ANA’s board of directors, and that it keeps separate accounts and has its own staff.

31.

As to the system of financing being such as to guarantee the independent status of the coordinator, under Article 4(2)(b), this is said not to be a requirement the breach of which leads automatically to an infringement of the provision. Rather, it is said that it should be seen as one of the factors, and indeed a secondary one, to be taken into account in determining whether the coordinator is independent. Thus it cannot be concluded from the fact that the slot allocation charge was not introduced that the DCNS is not independent.

32.

The Portuguese Republic contends that the Court should:

33.

In its reply, the Commission maintains that the ANA should be regarded as an interested party within the meaning of Article 4(2)(b) on the basis that it is the managing body of the airports, without the need to establish that, in this particular case, it has an interest in slots being allocated to one particular air carrier rather than another. According to the Commission, the managing body of an airport may have an interest in slots being allocated to its contractual partners, such as the tenants of airport units, or to particular air carriers. In this regard, it observes that it is strange that the DCNS continued to perform the function of coordinator after the privatisation of the ANA, when that function was not assigned to the ANA under the public service franchise, and the ANA is thus performing it free of charge.

34.

According to the Commission, the DCNS and the ANA are not functionally separate. As the DCNS is a department of the ANA, its report and annual accounts are subject to the scrutiny of the board of directors of the ANA, in accordance with Articles 405 and 406 of the Portuguese Commercial Companies Code. It is said that only a ‘Chinese wall’ between the DCNS and the ANA could guarantee the independent status of the DCNS.

35.

The fact that the DCNS keeps separate accounts is said not to establish that it is financed in such a way as to guarantee its independent status. Any department of a commercial company may keep separate accounts, which are subsequently integrated into the accounts of the company. In this case, according to the Commission, the ANA pays the expenses of the DCNS and collects the debts due to it, and its profit and loss account for the financial year includes the DCNS’s balance for the financial year.

36.

Finally, the Commission asserts that the heads of claim by which the Portuguese Republic asks the Court to declare that the DCNS meets the requirement of functional independence, and that the Portuguese Republic has complied with its obligations under EU law, are inadmissible counterclaims, because, amongst other reasons, the Treaty on the Functioning of the European Union does not provide for an action for a declaration from the Court to the effect that EU law has been complied with.

37.

In its rejoinder, the Portuguese Republic maintains that the 2008 Communication, which requires, amongst other things, that the coordinator is not financed entirely by the managing body of the airport, adds to the text of Regulation No 95/93, as amended, and that Commission communications are not binding on the Member States. As to the concept of interested party, the Portuguese Republic reiterates that, in the absence of an examination of the particular facts of the case, the Commission has gone no further than to demonstrate that the ANA, in its capacity as managing body of the airports, is capable of being an interested party, and has not demonstrated that it actually is an interested party. The Portuguese Republic emphasises that the allocation of slots is an activity of a technical nature, which is not put before the board of directors of the ANA. It continues to pursue the two heads of claim which the Commission asserts to be inadmissible.

38.

Before turning to the substance of the action, I will consider the Portuguese Republic’s first two heads of claim, which are said by the Commission to be inadmissible.

39.

The Portuguese Republic seeks not only the dismissal of the action and an order for the Commission to pay the costs, but also, first, a declaration that ‘in Portugal, the current coordinator ensures that the requirements relating to functional independence, laid down in Article 4(2)(b) of Regulation No 95/93, as amended, are met’, and secondly, a declaration that ‘the Portuguese Republic has fulfilled its obligations under the applicable EU law’. In its rejoinder, the Portuguese Republic indicates that what is intended by this head of claim is to ask the Court to declare that the Portuguese Republic has fulfilled its obligations under Regulation No 95/93, as amended.

40.

The Commission maintains that these counterclaims are inadmissible.

41.

In this regard, I would point out that Article 259 TFEU enables a Member State to bring an action before the Court seeking a declaration that another Member State has failed to fulfil its obligations under EU law; it does not enable a Member State to bring an action before the Court seeking a declaration that that same Member State has not failed to fulfil its obligations.

42.

Furthermore, I note that none of the provisions of the Treaty on the Functioning of the European Union empowers the Court to adopt a position by means of a positive declaration. If the Court were to dismiss the present action, it would be recognising that the Portuguese Republic has complied with its obligations under Article 4(2) of Regulation 93/95, as amended; but the Portuguese Republic cannot bring an application for that purpose.

43.

Furthermore, it is irrelevant whether the application brought by the Portuguese Republic relates to whether the action taken by the coordinator complies with Regulation No 95/93, as amended, or whether the action taken by the Portuguese Republic so complies. A failure to fulfil obligations is attributed to the Member State even where it is caused by one of its organs, ( 9 ) be it the national legislature, the national courts or, as here, the coordinator, which is given a statutory function (the allocation of slots).

44.

Accordingly, the Portuguese Republic’s first and second heads of Claim must be declared inadmissible.

45.

Article 4(2)(b) of Regulation No 95/93, as amended, provides that the coordinator is to be ‘separat[ed] ... functionally from any single interested party’. Accordingly, in order to establish that the Portuguese Republic has failed to fulfil its obligations under Article 4(2) of Regulation No 95/93, as amended, the Commission must demonstrate, first, that the ANA is an interested party, and secondly, that the DCNS is not functionally separate from the ANA. I shall address the two questions in turn. In dealing with functional separation, I will consider whether the requirement that the ‘system of financing the coordinators’ activities shall be such as to guarantee the coordinator’s independent status’, laid down in the second sentence of Article 4(2)(b), should be regarded as a separate condition, distinct from that of functional separation, or whether independent financing is no more than an indicator of functional separation.

46.

In my view it is difficult to deny that the managing body of an airport can be classified as an interested party.

47.

Article 4(2)(b) of Regulation No 95/93, as amended, provides that the coordinator must be functionally separated from ‘any’ interested party. It therefore seems to me that it is not only parties with a direct interest in the allocation of slots, or in other words the air carriers to which they are allocated, which can be classified as interested parties, but also parties with an indirect interest, such as the managing body of the coordinated airport.

48.

There is support for this approach in Article 4(8) of Regulation No 95/93, as amended, which provides for the coordinator to make available ‘to interested parties, in particular to members ... of the coordination committee’, information relating to requested, allocated and available slots. The managing body is a member of the coordination committee, ( 10 ) and must therefore be regarded as an interested party.

49.

I note, furthermore, that the Portuguese Republic does not deny that the managing body can be classified as an interested party.

50.

The difficulty in this regard is in determining the burden of proof which lies on the Commission. The Commission maintains that the simple fact that a managing body of an airport has that status is a sufficient basis for classifying it as an interested party, whereas the Portuguese Republic asserts that it does not follow from the fact that the managing body of an airport has that status that it is to be classified as an interested party, and that whether it has an interest in the allocation of slots must be established on a case-by-case basis.

51.

In order to determine whether the managing body is presumed to be an interested party, or whether the Commission is required to demonstrate that, on the particular facts of the case, the managing body has an interest in the allocation of slots, I will first consider what economic interest a managing body may have in the allocation of slots, and then the conclusions which can be drawn from this with regard to proof of such an interest.

52.

First, the managing body may, it seems to me, have an interest in a particular air carrier being given advantageous treatment in the allocation of slots because it holds shares in that carrier.

53.

Secondly, the managing body may have an interest in the air carriers which pay it the highest airport charges being given advantageous treatment in the allocation of slots. Airport charges, which the Portuguese Republic refers to without stating their purpose, are, according to the definition given by Directive 2009/12/EC of the European Parliament and of the Council of 11 March 2009 on airport charges, ( 11 ) charges paid by air carriers to the managing body for the use of services which only the managing body can provide, more specifically the use of airport facilities and the provision of services related, amongst other things, to landing and take-off of aircrafts. ( 12 ) While Directive 2009/12 prohibits the managing body from imposing discriminatory charges, it permits it to vary the quality and scope of particular services, and to differentiate the level of airport charges according to the quality and scope of such services. ( 13 ) The managing body may thus have an interest in the air carrier to which it provides the highest level of service, for example the provision of an entire terminal, ( 14 ) and from which it consequently receives the highest airport charges, receiving advantageous treatment in the allocation of slots.

54.

In this regard, the Portuguese Republic’s argument that the interest of the managing body lies in the highest possible number of air carriers being allocated slots, because it would thus receive more by way of airport charges, does not seem to me to be convincing. This argument does not take account of the differentiation of services, and thus charges, described in the last paragraph.

55.

Thirdly, the managing body may not content itself with managing the airport infrastructure, but may engage in other activities, for example on the downstream market for the supply of groundhandling services. Groundhandling services, which are to be distinguished from services paid for through the airport charges referred to in point 53 above, ( 15 ) include, according to the definition given by Council Directive 96/67/EC of 15 October 1996 on access to the groundhandling market at Community airports, ( 16 ) checking passengers’ tickets and passports, loading and moving baggage, cleaning the aircraft, and refuelling. ( 17 ) Groundhandling services can be supplied to air carriers either by the managing body or by independent suppliers. An air carrier may also provide such services to itself. Consequently, if the managing body is active on the market for the supply of groundhandling services, it will have air carriers as clients or competitors. ( 18 ) It may therefore have an interest in an air carrier which is an important client being given advantageous treatment in the allocation of slots or, conversely, in an air carrier which is a competing supplier of groundhandling services being given disadvantageous treatment in the allocation of slots. ( 19 )

56.

Fourthly, the managing body, where it is a public or state-owned undertaking, may be tempted to give advantageous treatment to the national air carrier in the allocation of slots. ( 20 ) In such a situation, the managing body is pursuing the interest of a third party, the national carrier, rather than its own interest, but is no less capable of influencing the coordinator. ( 21 )

57.

We have seen above that the managing body may have an interest in the allocation of slots. Is it, as a managing body, to be presumed to have such an interest, or is the Commission required, in an action for failure to fulfil obligations, to prove that it does?

58.

In my view, the answer to the question posed in the last paragraph should be that the managing body should, as such, be regarded as an interested party, without the need to examine whether, in the particular case, it has an interest in the allocation of slots.

59.

It seems to me that it might be difficult to prove that a managing body had an interest in the allocation of slots. In order to establish that the managing body, in a particular case, had an interest in the allocation of slots, the Commission would have to show that it actually had a shareholding in an air carrier using the coordinated airport, that it let an entire terminal to an air carrier, or that it was active on the market for groundhandling services. Where the managing body holds the entirety of the shares in an air carrier, it seems obvious that it should be regarded as an interested party; but should it be so regarded if it only has, say, a one-fifth shareholding in that carrier? Where the managing body lets a terminal to an air carrier, it seems obvious that it should be regarded as an interested party; but should it be so regarded if it only lets certain parts of a terminal to that carrier, or if, while being active on the market for groundhandling services, it has only a modest market share? Demonstrating that a managing body has an interest in the allocation of slots would involve carrying out an analysis of the market for airport infrastructure and the downstream markets.

60.

Furthermore, in a situation where the managing body does not itself derive any benefit from the allocation of slots, but limits itself to giving advantageous treatment to a national carrier with which it is not connected, ( 22 ) I find it difficult to see how the Commission could demonstrate that the managing body itself had an interest in the allocation of slots. Such a situation could therefore escape Article 4(2)(b) of Regulation No 95/93, as amended, when, as we have seen, it is capable of giving rise to abuse.

61.

Accordingly, to require the Commission to demonstrate that the managing body is an interested party could lead to situations where the managing body’s interest in the allocation of slots is limited (for example, where it has a limited share in the market for groundhandling services) or simply lies in the future (where it plans to let an entire terminal to an air carrier) escaping scrutiny as to whether the coordinator is functionally separate. It seems to me that only systematic verification that the coordinator and the managing body are functionally separate can meet the objective of Regulation No 95/93, which is for slots to be allocated in accordance with ‘neutral, transparent and non-discriminatory rules’, ( 23 ) entailing that the ‘neutrality [of the coordinator] is unquestioned’. ( 24 ) A fortiori, it is the only approach which can meet the objective of Regulation No 793/2004, which is to reinforce the coordinator’s independence by placing it in ‘a fully independent position’. ( 25 )

62.

In this regard, I would refer to the judgment in Commission v Germany ( 26 ) which, although given in another field — that of processing of personal data — seems to me to be relevant. Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data ( 27 ) provides, in Article 28(1), for the Member States to put public authorities in place with responsibility for monitoring the application, within their territories, of the provisions transposing the directive, and lays down that those authorities are to ‘act with complete independence in exercising the functions entrusted to them’. In Commission v Germany, the Court ruled on German legislation which subjected the authority to the scrutiny of the State, or more specifically the relevant Land. It observed that the government of the Land‘may have an interest in not complying with the provisions with regard to the protection of personal data’ because it processes such data itself, or because it has an interest in having access to personal data held by third parties, particularly for taxation or law enforcement purposes, or because it has an interest in companies which are economically important to the Land not being troubled by the supervisory authorities. ( 28 ) It concluded from this that the fact that the supervisory authority was subject to Land scrutiny meant that it did not act with complete independence in exercising the functions entrusted to it, as required by Article 28(1) of Directive 95/46. ( 29 )

63.

In other words, in a situation which is similar to that with which we are concerned, although Directive 95/46 does not specify the parties from which the supervisory authorities must be independent any more than Regulation No 95/93, as amended, defines ‘interested party’, the Court has held, not on the basis that the Land does have an interest in influencing the supervisory authority, but that it may have such an interest, that this hinders the authority in acting independently. This outcome is all the more remarkable for the fact that Advocate General Mazák had reached the opposite conclusion in his Opinion, considering that the Commission ought to have proved that the system of scrutiny was a failure, or that there was a consistent practice on the part of the Land which hindered the supervisory function in performing its tasks independently. ( 30 )

64.

In the present case I propose to adopt reasoning similar to that of the Court in its judgment in Commission v Germany. It is sufficient in my opinion that a party may have an interest in the allocation of slots in order for the Member State concerned to be required to ensure that the coordinator is functionally separated from that party. As regards the managing body, it has been shown above that it may have various interests in the allocation of slots. Those interests arise from its status as managing body, just as the interests of the Land set out by the Court in Commission v Germany ( 31 ) arise from its status as an economic operator and as a tax and law enforcement authority.

65.

Accordingly, in my opinion it follows from the mere fact that a party is the managing body of the coordinated airport that it is to be classified as an interested party.

66.

In the present case, Article 5(1) of Decree-law No 109/2008 appoints the ANA as the managing body of the four coordinated airports at issue. It is thus of no relevance that the Commission’s arguments relate to the classification of managing bodies in general as interested parties, and not to the classification of the managing body at issue in the present case, the ANA, as an interested party. ( 32 ) The ANA is to be regarded, simply on the basis of its status as managing body, as an interested party within the meaning of Article 4(2)(b) of Regulation No 95/93, as amended.

67.

Accordingly, in order to establish that the Portuguese Republic has failed to fulfil its obligations under Article 4(2)(b) of Regulation No 95/93, as amended, the Commission must demonstrate that it has not ensured that the DCNS is functionally separated from the ANA.

68.

It will be recalled that Article 4(2)(b) of Regulation No 95/93 requires the Member State responsible for a coordinated airport to ensure that the coordinator is independent by separating it functionally from any interested party, and that the system of financing the activities of coordinators is such as to guarantee its independent status.

69.

The ‘functional separation’ between the coordinator and interested parties which is referred to in Article 4(2)(b) of Regulation No 95/93 must, in my view, be understood as a separation of functions, that is, of activities. Moreover, the second sentence of Article 4(2)(b) of Regulation No 95/93, as amended, refers expressly to the ‘activities’ of the coordinator, in requiring a system of financing ‘the activities of coordinators’ which is such as to guarantee their independent status. Similarly, before its amendment by Regulation No 793/2004, Article 4(2) of Regulation No 95/93 referred to the ‘duties’ of the coordinator. It provided for the coordinator to ‘[carry] out his duties under this Regulation in an independent manner’. Accordingly, Article 4(2)(b) of Regulation No 95/93, as amended, requires Member States to ensure that the activities of the coordinator, as defined in that Regulation and including, in particular, allocating slots to air carriers and monitoring compliance with those slots on the part of the air carriers, ( 33 ) are separated from the activities of interested parties. In particular, the activities of the coordinator must be separated from the activities of the managing body of the airport, whether the latter relate to management of airport infrastructure or to other tasks which the managing body may perform, such as providing groundhandling services.

70.

Regulation No 95/93, as amended, does not give any indication as to the criteria relevant to functional separation.

71.

According to the Commission, although Article 4(2)(b) of Regulation No 95/93, as amended, does not require the coordinator to be a distinct legal entity from the interested parties, it is nevertheless relevant, where the Member State concerned has put such an entity in place, to take this matter into account in assessing functional separation. In the present case, the DCNS is a division of the ANA, and the staff and offices of the DCNS are those of the ANA. Furthermore the ANA is a limited company and, in accordance with Articles 405 and 406 of the Portuguese Commercial Companies Code, its board of directors manages the activities of the company, including those of the DCNS. Thus, according to the Commission the DCNS cannot be functionally separate from the ANA.

72.

It seems to me that in merely requiring separation of activities, Regulation No 95/93, as amended, does not require legal separation, that is, that it leaves it to the Member States to decide whether to create a distinct legal entity to perform the function of coordinator. I will briefly examine this point below, before proposing, by analogy with the Court’s case-law in other areas, criteria for the assessment of functional separation. I will then consider the independent system of financing expressly required by Article 4(2)(b) of Regulation No 95/93, as amended, in order to determine whether it should be regarded as one of the criteria for assessing functional separation, or as a separate requirement.

73.

As I see it, it is beyond question that Article 4(2)(b) of Regulation No 95/93, as amended, does not require the Member States to create a distinct legal entity with responsibility for allocating slots.

74.

If the intention of the EU legislature had been to require a distinct legal entity to be created, it would have stated this expressly, as it has done in other areas. ( 34 ) Furthermore, the Commission’s proposal, made in the course of preparatory work relating to Regulation No 793/2004, for the coordinator to be ‘institutionally’ separated from interested parties, ( 35 ) was not adopted.

75.

In any event, as has been seen, the Commission does not maintain that the coordinator must be a distinct legal entity. This is also the position it adopted in its 2008 Communication. ( 36 )

76.

It is thus of no importance, in determining whether the Portuguese Republic has failed to fulfil its obligations under Article 4(2)(b) of Regulation No 95/93, as amended, that it has not endowed the DCNS with legal personality. ( 37 )

77.

In identifying the criteria to be used in assessing functional separation, it seems to me that the case-law relating to Article 28(1) of Directive 95/46 ( 38 ) provides some guidance which is useful in this case. Among the factors taken into consideration by the Court in determining whether the national supervisory authority is operating with complete independence within the meaning of Article 28(1) of Directive 95/46 are: instructions from a third party (the State) which are binding on the national supervisory authority, ( 39 ) a hierarchical relationship between the authority’s staff and the State, enabling the latter to supervise the activities of staff and, potentially, to impede their promotion; ( 40 ) the fact that the staff of the national supervisory authority is made up entirely of federal officials, or in other words is interlinked with the federal government; ( 41 ) the possibility of early termination of the national supervisory authority’s mandate. ( 42 )

78.

The Court has adopted similar criteria in determining whether an entity responsible for approving telecommunications terminal equipment is, as required by Article 6 of Directive 88/301, ‘independent’ ( 43 ) (staff made up of members of an interested third party), ( 44 ) and in determining whether the authority responsible for issuing an opinion on the environmental effects of a plan met the requirement of ‘functional separation’ (administrative and human resources of the authority’s own). ( 45 )

79.

It seems to me that the criteria set out in points 77 and 78 above can be applied in assessing whether the coordinator is functionally separate, as required by Article 4(2)(b) of Regulation No 95/93, as amended. I find it difficult to see how the coordinator could claim to be independent if it received binding instructions from a third party, if it did not have its own staff, or if there was a hierarchical relationship between its staff and an interested party. Further criteria should be taken into consideration, particularly the fact, where applicable, that the coordinator has legal personality. As the Commission maintains, while Regulation No 95/93, as amended, does not require a distinct legal entity to be created, this factor is nonetheless relevant in assessing whether the coordinator is independent.

80.

As to the independent system of financing, for which express provision is made in Article 4(2)(b) of Regulation No 95/93, as amended, is this one of the criteria to be taken into account in assessing functional separation, or is it a separate condition which applies cumulatively with that of functional separation?

81.

If the independent system of financing were to be regarded as a separate condition, there would be an infringement of Article 4(2)(b) of Regulation No 95/93, as amended, wherever the coordinator was not financially independent, even if it met the requirement of functional separation from interested parties, defined by means of the criteria set out in points 77 to 79 above. If, on the other hand, independent financing is simply one of the criteria by which functional separation is to be assessed, infringement of Article 4(2)(b) of Regulation No 95/93, as amended, could not be established simply on the ground that the coordinator was not financially independent.

82.

I consider that the existence of an independent system of financing should be regarded simply as one of the criteria by which functional separation of the coordinator is to be assessed.

83.

There is no coordinating conjunction between the two sentences of Article 4(2)(b) of Regulation No 95/93, as amended, and thus nothing in the wording of the provision to suggest that the second sentence, which sets out the requirement for an independent system of financing, is cumulative with the first, which requires the Member States to ensure functional separation between the coordinator and interested parties.

84.

Furthermore, I note that, during the course of preparatory works relating to Regulation No 793/2004, the Commission proposed that Article 4(2)(b) of Regulation No 95/93 should be amended so as to provide that ‘the de facto independence of the coordinator shall be ensured additionally by separating the coordinator institutionally and financially from any single interested party’, and that the Member State should ensure ‘that sufficient resources are made available in such a way that the financing of the coordination activities cannot affect the independence of the coordinator’. ( 46 ) The Economic and Social Committee had, for its part, opined that ‘Member States must offer indemnification to coordinators so that they may be clear to pursue their brief and principles unfettered’. ( 47 ) These proposals were not adopted: Article 4(2)(b) of Regulation No 95/93, as amended, does not provide that the coordinators’ operating costs are to be reimbursed (that it is to be ‘indemnified’, to use the Economic and Social Committee’s expression), still less that it should have its own budget.

85.

It is thus apparent from the preparatory work that the Member States are not required to make sufficient resources available to the coordinator to cover its operating costs. Nor are they required, in my view, to provide it with a separate budget, as the EU legislature declined to require financial separation of the coordinator. In those circumstances, it seems to me that it would be illogical to maintain that independent financing is a separate condition, as the Member States have considerable discretion as to how such financing is to be provided. In particular, that discretion is broad enough to permit the Member States not to provide the coordinator with resources sufficient to cover its operating costs, which would seem to be a necessary condition of financial independence.

86.

I would emphasise, in this regard, that the 2008 Communication, which refers to separate accounts being kept by the coordinator, as well as to a separate budget and diversity in its sources of finance, ( 48 ) cannot be regarded as imposing obligations of that kind on the Member States. The legal basis of Regulation No 95/93, as amended, is Article 84(2) of the Treaty establishing the European Community, which empowered the Council, deciding by qualified majority, to lay down provisions for air transport. Thus, only the Council had power to impose obligations on Member States which were not contained in Regulation No 95/93, as amended, and the Commission could not do so by means of a communication.

87.

Incidentally, that would not seem to have been the Commission’s intention, as the 2008 Communication states, in the introduction, that its purpose is simply ‘to state the Commission’s views’, ( 49 ) and the Commission says only that the coordinator ‘should’ keep separate accounts, have a separate budget, and be financed by several different parties. ( 50 )

88.

I note, finally, that the 2008 Communication was not published in the Official Journal of the European Union, that it was adopted 4 years after Regulation No 793/2004, and that, although the Commission presented a proposal, on 1 December 2011, which contained some of the same material as the 2008 Communication, that proposal has not, so far, led to an amendment of Regulation No 95/93. ( 51 )

89.

Thus it does not assist the Commission, in establishing that the Portuguese Republic has failed to fulfil its obligations, to rely on the 2008 Communication. ( 52 )

90.

In my view, the Commission has not demonstrated that the DCNS is not functionally separate from the ANA.

91.

Undoubtedly, the fact that the DCNS is a department of the ANA, rather than a separate entity with legal personality, does not tell in favour of its independence. The same is true of the fact that the DCNS is financed entirely by the ANA, the slot allocation charge provided for by Article 11 of Decree-law No 109/2008 not having been implemented, and its budget is approved by the ANA.

92.

However, those two considerations must be balanced against the fact that the DCNS has its own staff, and that the Commission has not demonstrated that the ANA can interfere in the allocation of slots.

93.

First, the Commission does not dispute that the DCNS has its own staff, devoted entirely to slot allocation activities. It has not put forward any matter tending to show that there is a hierarchical relationship between the staff of the DCNS and that of the ANA, such as the promotion of DCNS staff being decided by the management of the ANA, or the management of the ANA being able to penalise DCNS staff. The only argument advanced by the Commission in this regard relates to the absence of any ‘Chinese wall’ between the DCNS and the ANA, that is, of any organisational structure internal to the ANA which prevents confidential information from passing between the DCNS and other departments of the ANA. That argument is not convincing: I find it difficult to see how a requirement for a ‘Chinese wall’ can arise from Article 4(2)(b) of Regulation No 95/93, as amended, which makes no reference to the coordinator’s staff.

94.

Secondly, the Commission has not established that the ANA is able to give instructions to the DCNS. It is not sufficient, in this regard, simply to rely on general considerations of Portuguese company law, under which the board of directors of any limited company, such as the ANA, manages the activities of the company, including its departments, and examines the company’s annual report and annual accounts, including the separate accounts of the DCNS. To maintain that the DCNS is not functionally separate from the ANA because the board of directors of the ANA manages the activities of the company amounts, it seems to me, in reality, to maintaining that it is not functionally separate because it is a division of the limited company which is the ANA. However, since Article 4(2)(b) does not require Member States to ensure that the coordinator is legally separated from interested parties, but only that it is ‘functionally’ separated, the Commission’s argument cannot succeed. ( 53 )

95.

I note, in this regard, that the Commission has not addressed the decision process of the DCNS, and has not examined whether the governing organs of that department kept those of the ANA informed and consulted them before taking decisions, or whether they received instructions from the ANA relating to individual cases, or simply general guidance, or no instructions at all. Such an examination was all the more necessary given that the Portuguese Republic asserts, in its defence and its rejoinder, that the decisions of the DCNS are not subject to the evaluation or the approval of the ANA’s board of directors.

96.

Thirdly, there is no dispute that the DCNS kept separate accounts. Article 5(2) of Decree-law No 109/2008 makes express provision to that effect. ( 54 )

97.

As to the fact that, when the ANA was privatised, the Portuguese Republic announced the creation of an independent entity which was to be responsible for the allocation of slots, I note, first, that the decision to privatise the ANA was taken only a month before the reasoned opinion ( 55 ) and that the privatisation seems to have taken place a month after the reasoned opinion, ( 56 ) secondly, that, if the Portuguese government did not wish to delegate the activity of coordination to a private undertaking, which would not have been prohibited by Regulation No 95/93, as amended, it would have had no choice but to create a new entity for this purpose, given that it was privatising the managing body and the coordinator was a department of that body.

98.

Finally, it is true that when questioned at the hearing, the Portuguese Republic was not able to specify the nature or details of procedure followed in appointing the coordinator. However, leaving aside the fact that the Commission did not raise this matter either in the application or in its reply, I would point out that these matters relate to Article 4(1) of Regulation 95/93, as amended, which requires Member States to ensure the appointment of a qualified person, rather than Article 4(2) of that regulation. The only allegation made by the Commission against the Portuguese Republic is that it has failed to fulfil its obligations under Article 4(2); nowhere does the Commission refer to Article 4(1).

99.

It follows that the Commission has not demonstrated that the Portuguese Republic has failed to fulfil its obligation under Article 4(2)(b) of Regulation No 95/93, as amended, to ensure that the coordinator is independent of the managing body of the coordinated airports.

100.

In the light of the foregoing considerations, I propose that the Court should: