Europe: freedom of establishment and Austrian casinos

The European Court of Justice delivered its judgment yesterday in Case C-64/08 (Criminal proceedings against Ernst Engelmann). The case concerned Austrian legislation which gave the Federal Minister for Finance the power to grant concessions entitling their holders to operate casinos in Austria. The grant of these concessions was restricted to public limited companies with their seat in Austria.

Mr Engelmann, a German national, operated a couple of casinos in Austria without applying for a concession and was found guilty of unlawfully organising games of chance and fined €2000. He appealed to the Landesgericht Linz (Regional Court, Linz, Austria), which referred questions to the ECJ for a preliminary ruling, including whether the Austrian legislation was compatible with European Union Law on the freedom to provide services and freedom of establishment.

The ECJ held - see here (judgment) or here (press release, pdf) - that requiring the company's seat to be in Austria constituted a restriction on freedom of establishment contrary to EU Law: it discriminated against companies with seats in other Member States and prevented them from operating gaming establishments in Austria through an agency, branch or subsidiary. With regard to the argument that such a restriction was justified in the interests of preventing fraud and crime, the ECJ held that the blanket exclusion of companies with seats in other Member States was disproportionate: it went beyond what was necessary to combat crime.