Transparency is country’s sovereign right (III)
II. The competence of the national legislator to regulate the critical issue The adoption of provisions to avoid real situations that could lead to the distortion of the mass media’s mission, as indicated above, and thereby to the exercise of undue, indirect and non-apparent influence on the state’s economic functions and, in particular, on procedures for the execution of public contract, is not only legitimate and compatible with the rules of Community law, but also an obligation that is entrusted to the regulatory power of Member States. This is because, under Community law, within the framework of undertaking media activity, national provisions are admissible to regulate the operation of mass media companies for the purpose of attaining the objectives defined by the national legislator, which may, as a result, entail admissible restrictions on the exercise of Community freedoms, taking into account what is mentioned below (under III and IV). Specifically: It is known that, in contrast to the European Union that has vested power, since the aims to be achieved and related competencies are determined by its founding Treaty and its amending Treaties, the Member States have the power of competence (competenz-competenz), i.e the authority to regulate, in a sovereign manner, the aims to be achieved by them and related competences. In this context, it arises from the rules of Community law, as interpreted by the case law of the ECJ, that the establishment, in particular, of a pluralistic radio-television system, that is in this way part of a democratic, social and cultural public policy aiming at ensuring the free expression of different aspects, mainly of a social, cultural, religious or philosophical nature, constitutes an objective of public interest, which a Member State can lawfully pursue by duly regulating the status of the mass media (cf. ECJ C – 148/1991, 3.2.1993, Veronica Omroep Organisatie v/ Commissariaat voor de Media, («Mediawet»), op.cit. 9-11, ECJ C – 353/89, 25.7.1991, Commission versus The Netherlands, Comp.1991, p. I-4069, 3, 29 & 30 and ECJ, c – 288/89, Collectieve Antenevoorziening Gouda, op.cit., 22-23). This is further supported by the principle of pluralism of the media enshrined in the EU’s Charter of Fundamental Rights (article II-71, par. 2 of the European Constitution), which to a large extent encapsulates the above ECJ case law on this question. Moreover, entrepreneurial freedom (article II-76 of the European Constitution) is subject not only to the regulatory power and competence of the EU, but also to «national law and practices». It is further noted that public policy on media, linked especially to objectives of education and culture, does not, in principle, fall under the exclusive competence of EU institutions, in accordance with article I-13 of the European Constitution, nor under areas of shared competence, pursuant to article I-14 of this Treaty, but under areas of supporting, coordinating or complementary action (article I-17, III-167 par.3 item d, III-280 par. 2 item d, 4 and 5 par. a, III-315 par. 4 it. c, a of the European Constitution under ratification). In any case, taking into account that EU has not regulated on such specific matter, the relevant competence remains with the member states. In addition, transparency, especially regarding the management of public funds, also constitutes a Community principle. Finally, the «Protocol on the system of public broadcasting in the Member States», which accompanies the Treaty of Amsterdam, recognizes the possibility for Member States to regulate the financing of radio-television media, in order for them to fulfill their mission in accordance with the need to preserve media pluralism, pursuant to the democratic, social and cultural needs of each society (cf. also relevant Commission observations in the White paper). Our country, therefore, has the competence to regulate matters pertaining to the operation of mass media in Greece, with the view to achieving the aims of its democratic, social and cultural public policy, based on the fundamental principles of Community law. In this context, the national legislator has regulatory freedom, provided that he does not infringe, indirectly, because of the violation of the proportionality principle, a Community provision, which is not the case herein as indicated below. III. National provisions do not violate Community law because they do not refer to the terms and conditions for exercising Community freedoms, nor to the adoption of sanctions against domestic or foreign companies In view of the above, it is clear that national provisions do not aim to, and do not concern, the regulation of terms and conditions relating to the free movement of goods, the freedom of establishment, the freedom to provide services, the free movement of employees or the free movement of capital, as indicated in the Letter, nor do they impede, directly or indirectly, intra-community trade. On the contrary, these provisions regulate issues, which are related to the mission and operation of the mass media and the transparency in the country’s economic and political life. Therefore, even if it were to be accepted that national provisions could introduce restrictions over companies, they certainly do not impose any discrimination between domestic and foreign companies, but, on the contrary, they apply to all the companies that exercise this specific activity on the national territory in the same legal and factual way. Therefore, the issue of compatibility between national provisions and Community law does not arise (cf. relevant case law, in particular on the free movement of goods, as changed after ECJ decisions «Keck and Mithouard» C – 267, 268/91, cf. also «Huernermund» C – 292/92, «Société d’importation Edouard Leclerc-Siplec» C- 412/93, «Commission versus Hellenic Republic» C- 391/92, «De Agostini» C – 34-36/95). Furthermore, these provisions do not introduce sanctions against domestic or Community companies, but preventive measures in order to avert any risk of causing damage to protected fundamental rights, as mentioned above. Specifically, it can be concluded from what has been outlined above (under point I) that the objective of the Greek constitutional, but also of the common legislator, is not to combat, after the fact has occurred, phenomena of established corruption, under the usual meaning of such term, but to avoid the creation of situations that may lead to phenomena of non-transparency in public life and, more particularly, in the operation of the mass media by preventing them from exercising undue influence on the political and economic life of the country (in a way contrary to the provisions, especially, of article 15, par. 2 of the Constitution about objective and under equal terms provision of information for all, etc.). This is a regulation dictated, therefore, by the principle of prevention, aiming at averting the creation of a factual situation, which as experience has shown, entails a very serious risk of giving rise to such undue influence, which would not be tolerated to any extent, as it would be extremely prejudicial to public interest. Precisely because of the very great importance of what is at stake (enjeu) for public interest, even the risk of such undue influence is unacceptable. IV. Any potential restrictions on the exercise of Community freedoms are justified and compatible with the principle of proportionality. Thus, on an ancillary basis and apart from the fact that the above national law provisions serve a legitimate purpose, in accordance with Community law, consisting in establishing transparency in public life and that such national provisions are related to issues of sovereign regulatory power of the national legislator, it should be clarified that these provisions do not violate the principle of proportionality as regards the lawful limitation of community freedoms in concreto. Specifically: A. The adoption of the said incompatibilities between the mass media and companies concluding public contracts does not impede the exercise of the main freedoms under EU primary law. On the contrary, it substantially reinforces the exercise of these freedoms through the protection of transparency and healthy, fair and undistorted competition. The implementation of national provisions does not render the establishment of EU companies in Greece less attractive, as would be the case if measures against intra-community trade were introduced; on the contrary, it creates a framework for the operation of the market in the public contracts sector, which further enhances the participation of all companies on equal conditions, while excluding the inconspicuous, and difficult to prove, power of the media to abuse their position of strength, as well as the distortion of the free and fair competition. Indeed, the average EU company is in a difficult position, to say the least, if it has to compete, in a public tender, with a Greek and/or another EU company, which is at the same time related to a Greek media company, i.e. a company that, due to its position of strength, has the power, by means of inconspicuous but extremely effective methods, to substantially influence the decisions of state authorities. It must be noted that the real «opening» of the market is not only related to the observance of specific procedures, but also to the adoption of measures, taking into consideration the particularities of each Member State as well, which aim to creating such conditions in practice that allow the unimpeded participation in public tenders of all companies, either domestic or foreign (see also Wood Review 2004 – «Investigating UK business experiences of competing for public contracts in other EU countries»). Moreover, national provisions concern only and exclusively the control of the participation of a natural or legal person in only one activity, that of the media, and in particular the Greek media, and do not, of course, impose any substantial restrictions on EU companies, nor do they exclude whole economic sectors (!) as mentioned in the Letter. In addition, it is inaccurately stated in the Letter that holding companies in particular and investment companies, as well as credit institutions are discouraged from acquiring shares of Greek companies since (because of the nature and object of such companies) par. 3 of article 8 of law 3310/ 2005 includes special provisions aiming at ensuring their unimpeded investment activity. B. Furthermore, even if it were assumed that these measures introduce limitations to the exercise of Community freedoms, such limitations are justified given the fact that these provisions concern imperative reasons of public interest (as mentioned above) and are compatible with the proportionality principle. As it is well known, the adoption of measures, which restrict fundamental freedoms must ensure that these measures will not be implemented in a discriminatory way and will be appropriate and necessary to contribute to the attainment of the pursued objective of imperative public interest, while not exceeding the level required for achieving that objective. In the present case, a) the measures introduced are both necessary and appropriate since the particularity of the pursued objective requires the adoption of a general system of preventive rules in order to avoid the emergence of non-transparency phenomena, b) nor do they lead to discriminating treatment, since the adopted rules apply uniformly to all companies with business activity in Greece, c) nor are they excessive as regards the limitation of fundamental Community freedoms. Indeed, these measures are absolutely necessary for eliminating the possibility that major financial transactions (of considerable consideration), in particular through public contracts, are concluded between the media and the state, thus avoiding, by means of these preventive measures, the creation of those real conditions that unavoidably generate the risk of distorting the role of the media and the risk of the exercise of undue influence on the state’s economic functions. It should be stressed that, as was ruled by the national judge, the Council of State (in a binding way through its interpretation) the above measures do not aim at suppressing specific cases of corruption or distortion of competition, as was stated in the Letter, nor at dealing after the fact with specific cases of undue influence on the state’s economic functions and, in particular, on the awarding of public contracts. On the contrary, because (a) of the importance of the pursued objective, (b) of the risk of causing damage to fundamental rights, something that cannot be in the least tolerated and (c) of the inconspicuous and difficult to prove methods used to cause damage to these goods, the primary purpose is not to deal with specific cases of violation, which would be impossible on the one hand and inappropriate for eliminating the prejudicial circumstances on the other; on the contrary, the aim is to exclude the possibility for such real conditions to emerge that would render apparent the risk of distorting the role of the media and the state’s economic functions. Therefore, the critical measures represent, according to the reasonable appreciation (appréciation raisonnable) of the legislator, a fully appropriate and necessary action to achieve the legitimate objective pursued. Moreover, the principle of prevention in order to avert severe prejudice is present both in national law (e.g. regulations on the concentration of media ownership) and in EU law (e.g. provisions on concentration of undertaking). The UN Convention against corruption in fact highlights the importance of preventive measures, in particular as regards the protection of transparency in the public contract sector. Finally, the specific measures do not go beyond what is necessary for achieving the objective pursued. In view of the above (importance and nature of the objective pursued, risk of prejudice to fundamental goods, a prejudice that could not in the least be tolerated, as well as the inconspicuous and difficult to prove methods causing prejudice to these goods) it is clear that there are no other suitable measures that would have the same effect, by serving the same purposes (e.g. ECJ «Alpine Investments» C-384/94, par. 45, «Gouda», C-288/89, par. 15) i.e. that of completely averting the creation of major financial relations (involving substantial consideration), through public contracts, between natural or legal persons of media companies and the state, as well as averting violations that could substantially weaken and/or invalidate the objective pursued. The suppressive penal measures, indicatively mentioned by the Commission, are apparently inappropriate for achieving the objective pursued and, in any event, can not have the same effect with that sought by the constitutional legislator (according to the interpretation of the national judge). No sanction and no control could prevent the choice of taking a specific position by a media company on current events, for the purpose of promoting its financial interests in relation to the state (in any case such control would constitute censorship). Moreover, no sanction or control could exclude the exercise of undue influence and the emergence of distortions, which are difficult to prove, in the public contract sector, through «insider trading» for example, when by definition there cannot be any evidence of this (as in bribery cases for example). In addition, even if the measures mentioned indicatively by the Commission were, in principle, appropriate for unveiling specific cases, they would obviously not be appropriate for achieving the objective pursued, which is to prevent the creation of conditions that might generate the risk of damage to fundamental rights, and not to attempt to unveil specific cases (and not all would be possible in fact) and this after damage has already been caused. C. Furthermore, any restrictions do not violate in concreto the principle of proportionality for the following reasons as well: Firstly, the above restrictions refer to only one of all economic activities, i.e the participation in Greek media undertakings, whilst all other economic activities remain free. Therefore, this is a very specific limitation in relation to the overall business and general economic activity that can be developed in Greece. Secondly, beyond this, as shown by all available economic data, the Greek media companies are not to such extent profitable that would make them an attractive business option from a financial point of view. Thirdly, as the direct consequence of the above, the question that is raised is which are the real reasons that make public contract companies so persistently wishing to participate in media undertakings, given the fact that in Greece this is a financially unimportant activity. Even more so when, in specific cases, this business activity leads not only to no profits but also to substantial losses of capital. This unjustified business obsession is also one of the reasons for the introduction in Greece of the incompatibility provisions of article 14, par. 9 of the Constitution. Moreover, the case law of the ECJ, in the «Veronica» case (C – 148/91), which refers to a national legal system much more detrimental to private economic initiative, has already accepted the regulatory power of Member States in adopting rules for the operation of the media, in accordance with the plurality principle and in providing for restrictions of fundamental EU freedoms, justified under Community law. D. In this context, precisely, of ensuring the compliance of these particular measures with the principle of proportionality as regards the objective pursued by the constitutional legislator, the provisions of the implementing legislation apply the letter and the spirit of article 14, par. 9 of the Constitution, both as regards the regulations pertaining to spouses and relatives (1) and the meaning of the «basic» shareholder (2). Specifically, par. 9 of article 14 of the Constitution expressly stipulates, on the one hand, that these interdictions also apply to «any related persons such as spouses, relatives, financially dependent individuals or companies» while, on the other that «the guarantees for averting circumventions» of this particular constitutional provision are specified by law. Law 3310/2005 contains the relevant provisions for spouses and relatives, in accordance with the conclusions of decisions 3242/2004 and 3243/2004 that were unanimously accepted by the Council of State’s (7-member chamber which referred the case to the plenary session of the Court). Pursuant to the statement of reasons of these decisions (the decision of the full assembly has not yet been issued): «… the constitutional legislator, taking into consideration that, as shown by empirical facts, under the social conditions, which prevail in Greece, particular relations of dependence may develop between relatives, which are not simply of an economic nature, but rely on different social and even psychological factors and may as a result take the form of informal relations of influence, which are extremely difficult to prove, has preferred to include spouses and relatives under the category of related persons, to ensure that the interdiction to conclude public contracts and the principle of incompatibility would apply to them in all cases. In this way, the effective implementation of the rules introduced by the constitutional provision under review, which are aimed at safeguarding constitutional values of capital and primary importance, is guaranteed, as already outlined. In this context, it was deemed by the constitutional legislator that the ties of marriage or kinship create, as common experience shows, an independent basis for exercising influence, irrespective of the existence or not of financial dependence between spouses or relatives as a community of interest does in fact exist, whose existence, according to empirical data obtained from social observations, represents a factor for influencing the economic activity of these persons». In this way, the common legislator, « … cannot restrict the scope of the constitutional provision, as defined by the constitutional legislator himself, by introducing additional conditions or challengeable presumptions, which if reversed would lift the prohibition on the conclusion of public contracts and incompatibility for the above categories of persons, in a way that would be contrary to the will of the constitutional legislator». Indeed, the above provisions were absolutely essential for achieving the objective pursued since otherwise the validity of incompatibility would be annulled given that someone could easily, for example through his father, son or brother (between whom, in Greece especially, there is community of interests as experience shows, in accordance also with the above decisions) avoid the implementation of the constitutional provision and the respective legislation. Moreover, an absolutely essential condition for achieving the objective pursued is ownership of at least 1% of the shares for the principle of incompatibility to apply. The clear will of the constitutional legislator as regards the meaning of principal shareholder that the «basic» shareholder is not a «large shareholder» and certainly not, as indicated in the Letter, the majority shareholder (cf. reports of the Reviewing Committee and the minutes of the House’s Plenary on the reviewing of the Constitution and, in particular, the opinion of the Rapporteur for the Majority). The notion of «basic» shareholder, according to the purpose of the constitutional provision at issue, was introduced not in order to identify the shareholder with dominant influence in a company, but for the purpose of avoiding «unnecessary exaggerations» that could even extend to cases where someone «owns one share by chance or for a specific period of time» and which would make then «practically impossible to apply the provisions of the Constitution». The constitutional legislator, by compelling the common legislator to provide for «guarantees to avoid circumventions» and being aware of the many opportunities that exist for violations under the current economic reality, has demanded from the common legislator to safeguard the implementation of the principle of incompatibility of functions in a way ensuring, to the extent possible, the accomplishment of the objective pursued. In this way, the constitutional provision, given the fundamental importance of the objective pursued for the country’s political and economic life (as outlined above), establishes a total interdiction (without any possibility of circumventing it) on financial transactions, through public contracts, between the media and the state. This objective, however, can only be achieved by the widest possible separation of the two activities. Otherwise, if the supervising body would need each time to examine who among the shareholders has dominant influence in a particular company and how he could influence decisions taking into account specific conditions (evident or not), we would end up with a substantial weakening of the objective pursued. The criterion of dominant influence is applied (under Greek legislation, as well) in obviously different cases and for obviously different purposes (as in issues of oligopoly and dominant market position). It is precisely in this context that the principle of proportionality needs to be judged in the present case, at the application of Community law. The compliance thus with the limits set by the proportionality principle is judged in concreto in relation to the specific factual elements that have led the constitutional legislator to adopt the measure of incompatibility in relation to the objective pursued by this measure. In any event, judgment on whether the introduction of the measure of incompatible functions is appropriate and essential for achieving the pursued objective is genuinely contained in the appreciation to which the constitutional legislator proceeded, as this appreciation is interpreted by the national judge. The inclusion of these measures in the Constitution as appropriate for achieving the particular objective represents the most authentic judgment in relation to the proportionality of such measures.
