INFORMATION TECHNOLOGY
EU Court of Justice - a Member State may not impose additional obligations on an online service provider established in another Member State.
In Italy, providers of online intermediation services and search engines, such as Airbnb, Expedia, Google, Amazon and Vacation Rentals, are subject to certain obligations under national provisions. They were adopted in 2020 and 2021, with the stated aim of ensuring the adequate and effective enforcement of the regulation on promoting fairness and transparency for business users of online intermediation services.
Providers of those services must, inter alia, be entered in a register held by an administrative authority (AGCOM), periodically forward to it a document on their economic situation, provide it with a series of detailed information and pay it a financial contribution. Penalties are provided for in the event of failure to comply with those obligations. The above-mentioned companies are challenging those obligations before an Italian court, on the grounds that the resulting increase in administrative charges is contrary to EU law.
All those companies – except for Expedia, which is established in the United States – invoke the principle of freedom to provide services and argue that they are mainly subject to the legal system of the Member State in which they are established (in this case, Ireland or Luxembourg). Therefore, they consider that Italian law cannot impose on them other requirements relating to access to the activity of information society services. In that context, the Italian court decided to refer the matter to the Court of Justice. The Court of Justice holds that EU law precludes measures such as those adopted by Italy. Under the Directive on electronic commerce, it is the home Member State of the company providing information society services that regulates the provision of those services. Member States of destination, bound by the principle of mutual recognition, are required, save in exceptional circumstances, not to restrict the freedom to provide those services. Thus, Italy cannot impose on providers of those services established in other Member States additional obligations which, although required for the provision of those services in that country, are not imposed in their Member State of establishment.
According to the Court of Justice, those obligations do not fall within the exceptions permitted by the Directive on electronic commerce. First, they are, subject to verification by the Italian court, of general and abstract application. Secondly, they are not necessary in order to protect one of the objectives of general interest referred to in that directive. Moreover, the establishment of those obligations is not justified by the intention, invoked by the Italian authorities, to ensure the adequate and effective enforcement of the above-mentioned regulation.
Providers of those services must, inter alia, be entered in a register held by an administrative authority (AGCOM), periodically forward to it a document on their economic situation, provide it with a series of detailed information and pay it a financial contribution. Penalties are provided for in the event of failure to comply with those obligations. The above-mentioned companies are challenging those obligations before an Italian court, on the grounds that the resulting increase in administrative charges is contrary to EU law.
All those companies – except for Expedia, which is established in the United States – invoke the principle of freedom to provide services and argue that they are mainly subject to the legal system of the Member State in which they are established (in this case, Ireland or Luxembourg). Therefore, they consider that Italian law cannot impose on them other requirements relating to access to the activity of information society services. In that context, the Italian court decided to refer the matter to the Court of Justice. The Court of Justice holds that EU law precludes measures such as those adopted by Italy. Under the Directive on electronic commerce, it is the home Member State of the company providing information society services that regulates the provision of those services. Member States of destination, bound by the principle of mutual recognition, are required, save in exceptional circumstances, not to restrict the freedom to provide those services. Thus, Italy cannot impose on providers of those services established in other Member States additional obligations which, although required for the provision of those services in that country, are not imposed in their Member State of establishment.
According to the Court of Justice, those obligations do not fall within the exceptions permitted by the Directive on electronic commerce. First, they are, subject to verification by the Italian court, of general and abstract application. Secondly, they are not necessary in order to protect one of the objectives of general interest referred to in that directive. Moreover, the establishment of those obligations is not justified by the intention, invoked by the Italian authorities, to ensure the adequate and effective enforcement of the above-mentioned regulation.
