Court of Justice of the European Communities (including Court of First Instance Decisions)

OPINION OF ADVOCATE GENERAL

Mazák

delivered on 9 October 2007 (1)

Case C-70/06

Commission of the European Communities

v

Portuguese Republic

(Failure of a Member State to fulfil obligations Review procedures for the award of public supply and public works contracts Judgment of the Court establishing a breach of obligations Case C-275/03 Non-compliance Article 228 EC Imposition of a penalty payment)

I Introduction

1. The present proceedings were brought by the Commission pursuant to Article 228 EC on 7 February 2006. The Commission claims that the Portuguese Republic has failed to take the necessary measures to comply with the judgment of the Court of 14 October 2004 in Case C-275/03 Commission v Portugal (2) and requests that a penalty payment be imposed on Portugal. In that judgment, the Court declared that, by failing to repeal Decree-Law No 48051 of 21 November 1967, making the award of damages to persons injured by a breach of Community law relating to public contracts, or the national laws implementing it, conditional on proof of fault or wilful misconduct, the Portuguese Republic has failed to fulfil its obligations under Article 1(1) and Article 2(1)(c) of Council Directive 89/665/EEC of 21 December 1989 on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts. (3)

II Legal framework

2. Article 1(1) of Directive 89/665, as amended, provides that '[t]he Member States shall take the measures necessary to ensure that, as regards contract award procedures falling within the scope of Directives 71/305/EEC, 77/62/EEC, and 92/50/EEC, decisions taken by the contracting authorities may be reviewed effectively and, in particular, as rapidly as possible ...'
3. Article 2(1) of Directive 89/665 provides that '[t]he Member States shall ensure that the measures taken concerning the review procedures specified in Article 1 include provision for the powers to:

...

(c) award damages to persons harmed by an infringement.'

4. Council Directive 71/305/EEC of 26 July 1971 concerning the coordination of procedures for the award of public works contracts (4) was repealed by Council Directive 93/37/EEC of 14 June 1993 concerning the coordination of procedures for the award of public works contracts, (5) which was in turn repealed by Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, with effect from 31 January 2006. (6)
5. Article 81 of Directive 2004/18 provides that '[i]n conformity with ... Directive 89/665 ..., Member States shall ensure implementation of this Directive by effective, available and transparent mechanisms'.
6. The reference in Article 1(1) of Directive 89/665 to Directive 71/305 should be read as a reference to Directive 2004/18. (7)

III Pre-litigation procedure and forms of order sought

7. By letter dated 4 November 2004, the Commission drew the Portuguese authorities' attention to the terms of the judgment in Case C-275/03 and the fact that Article 228 EC requires Portugal to take the necessary measures to comply with that judgment. The Commission requested the Portuguese authorities to inform it of the measures taken by 15 January 2005.
8. On 19 November 2004, the Portuguese authorities forwarded to the Commission a copy of a proposed new law on the non-contractual civil liability of the State and other public entities. The Portuguese authorities requested the Commission to indicate whether it considered that the proposed law would ensure the correct and complete transposition of Directive 89/665. In addition, by letter dated 12 January 2005, the Portuguese authorities requested the Commission not to take any action pursuant to Article 228 EC until after the new legislator commences, following the elections of 20 February 2005, in order that the procedure for the adoption of the law on non-contractual liability of the State could be undertaken during the first semester of 2005.
9. On 21 March 2005, the Commission sent a formal letter of notice to the Portuguese authorities in which it informed them that the dissolution of the Portuguese Parliament (Assembleia da República Portuguesa) and the holding of elections did not justify the failure by Portugal to comply with its obligations pursuant to Directive 89/665 and the time-limits established by that directive. The Commission also indicated that the proposed law did not, in any event, comply with Directive 89/665. The Commission informed the Portuguese authorities, that given that it had not received any information on the measures taken to comply with the judgment of the Court in Case C-275/03, it considered that Portugal had failed to fulfil its obligations pursuant to Article 228(1) EC. The Commission called on Portugal to submit its observations on the matter within two months. It also drew the Portuguese authorities' attention to the fact that the Court can impose monetary sanctions pursuant to Article 228(2) EC. The Commission indicated that it would specify to the Court the amount of the lump sum or penalty payment that the Commission considers should be paid by Portugal in the circumstances.
10. By letter dated 25 May 2005, the Portuguese authorities replied to the Commission's formal letter of notice. Dissatisfied with that response, the Commission issued a reasoned opinion on 13 July 2005 in which it stated that Portugal had failed to take the necessary measures to comply with the judgment of the Court in Case C-275/03 and had failed to fulfil its obligations pursuant to Article 228(1) EC. It set a time-limit of two months for the Portuguese Republic to adopt the measures necessary to comply with the judgment in Case C-275/03. The Commission also drew Portugal's attention to the fact that if the case were brought before the Court, that the Court could impose monetary sanctions and that the Commission itself would suggest that a lump sum or penalty payment be imposed.
11. In its response to the reasoned opinion dated 12 December 2005, the Portuguese authorities indicated that the proposed law on the non-contractual liability of the State, which inter alia repeals Decree-Law No 48051, had already been submitted to the Portuguese Parliament for final approval. Taking the view that Portuguese Republic had not complied with the judgment of the Court in Case C-275/03, the Commission decided to bring the present action.
12. By its application, the Commission requests the Court to:

' declare that, by having failed to take the measures necessary to comply with the judgment of the Court ... in Case C-275/03 ..., the Portuguese Republic has failed to fulfil its obligations under Article 228(1) of the EC Treaty;

order the Portuguese Republic to pay to the Commission, into the account 'European Community own resources', mentioned in Article 9 of Council Regulation (EC, Euratom) No 1150/2000, a penalty payment of EUR 21 450 for every day of delay in complying with the judgment in Case C-275/03 from the day on which the Court ... delivers judgment in the present case until the day on which the judgment in Case C-275/03 is complied with;

order the Portuguese Republic to pay the costs.'

13. The Portuguese Republic contends that the Court should:

'1. Dismiss as unfounded all the claims of the Commission, and:

a) consider that the Portuguese Republic has taken all the necessary measures to comply with the judgment of the Court ... in Case C-275/03, ... and thus, consider as unfounded the first claim of the Commission;

b) dispense the Portuguese Republic of the obligation to pay ... a penalty payment of EUR 21 450 for every day of delay in complying with the judgment in Case C-275/03 from the day on which the Court delivers judgment in the present case until the day on which the judgment in Case C-275/03 is complied with, and thus consider as unfounded the second claim of the Commission.

2. In the alternative, in the event that our position is not accepted [quod non] reduce the amount of the penalty payment specified, as that amount is manifestly excessive, and fix the applicable coefficient for seriousness at a level not exceeding 4 (four), fix the payment of the penalty payment on an annual basis and suspend the payment of the penalty payment until the entry into force of the measures adopted in the meantime by the Portuguese State.'

IV Compliance with the obligation imposed by Article 228(1) EC

A Arguments of the parties

14. The Commission claims that Portugal has not adopted the necessary measures to comply with the judgment of the Court in Case C-275/03 as that Member State has not repealed Decree-Law No 48051. The Commission submits that the proposed law on the non-contractual civil liability of the State and other public bodies, which was placed before the Portuguese Parliament by the Portuguese Government, does not comply with that judgment. Moreover, as no other measures have been communicated to the Commission, it considers that the Portuguese Republic has failed to fulfil its obligations under Article 228(1) EC.
15. Portugal considers that proposed Law No 56/X on the non-contractual civil liability of the State and other public entities, which was unanimously adopted by the Portuguese Parliament on 6 April 2006 and which will shortly enter into force correctly transposes Directive 89/665. Portugal also considers that the legal regime adopted by it in the meantime adequately transposes Directive 89/665 and that it thereby wholly complies with the judgment in Case C-275/03. In that regard, Portugal submits that Articles 22 and 271 of the Constitution of the Portuguese Republic (CRP) and the new Procedural Code of the Administrative Courts (CPTA) ensure sufficient compliance with the judgment in Case C-275/03. Moreover, it claims that the Portuguese courts, in their settled case-law, have recognised that there exists a presumption of fault in relation to the illegal acts of the Administration.

B Assessment

16. It is for the Commission to provide the Court, in the course of Article 228 EC proceedings, with the information necessary to determine the extent to which a Member State has complied with a judgment declaring it to be in breach of its obligations. Moreover, where the Commission has adduced sufficient evidence to show that the breach of obligations has persisted, it is for the Member State concerned to challenge in substance and in detail the information produced and its consequences. (8)
17. In the operative part of the judgment in Case C-275/03, the Court declared that, by failing to repeal Decree-Law No 48051, making the award of damages to persons injured by a breach of Community law relating to public contracts, or the national laws implementing it, conditional on proof of fault or wilful misconduct, the Portuguese Republic has failed to fulfil its obligations under Article 1(1) and Article 2(1)(c) of Directive 89/665.
18. Given the terms of the operative part of the judgment in Case C-275/03, it is necessary in my view to ascertain, in the context of the present case which concerns a failure to fulfil obligations pursuant to Article 228(1) EC, whether the Portuguese Republic has complied with that judgment and, in particular, whether it has repealed Decree-Law No 48051.
19. The reference date for assessing whether there has been a failure to fulfil obligations under Article 228(1) EC is the date of expiry of the period prescribed in the reasoned opinion issued under that provision. Moreover, since the Commission seeks the imposition of a penalty payment on the Portuguese Republic, it must also be ascertained whether the alleged failure to fulfil obligations continued up to the Court's hearing in the present case.
20. In the present case, it would appear from the written pleadings submitted by the Commission, and indeed Portugal, that while a proposed law for the repeal of Decree-Law No 48051 is currently before the Portuguese Parliament, that law has not been definitely adopted. The Portuguese Government itself admitted in its written pleadings that in order for proposed Law No 56/X to enter into force it would require, inter alia, the signature of the Presidente da República (President of the Republic) and publication in the Diário da República (Portuguese Official Journal). On the date of expiry of the period prescribed in the reasoned opinion of 13 July 2005, those necessary steps in the legislative procedure had not yet been taken by the Portuguese Republic.
21. Moreover, at the oral hearing, which took place on 5 July 2007, when it was directly put to the agent of the Portuguese Republic that Decree-Law No 48051 was still in force on the date of the hearing, the agent replied that it was the intention of the Portuguese Republic to alter the current regime by the adoption of proposed Law No 56/X. It is clear therefore that on 5 July 2007 the Portuguese Republic had failed to repeal Decree-Law No 48051. Moreover, on that date, the obligations owed by Portugal to transpose Articles 1(1) and 2(1)(c) of Directive 89/665 continued to exist. (9)
22. As regards, the submissions of the Portuguese Government based on Articles 22 and 271 of the CRP, the CPTA and the case-law of the Portuguese courts (10) on the presumption of fault, those submissions are, in my view, legally irrelevant and inappropriate in the context of the present proceedings. In my opinion, the submissions in question represent an attempt by Portugal to re-open the procedure in Case C-275/03 and to seek a re-examination of matters which were already debated by the parties and thus considered by the Court in reaching its final judgment in that case.
23. In the light of all the foregoing, the conclusion must be that the Portuguese Republic has failed to take the necessary measures to comply with the judgment in Case C-275/03 as regards the transposition of Articles 1(1) and 2(1)(c) of Directive 89/665, and has thereby failed to fulfil its obligations under Article 228(1) EC.
24. Since the failure to fulfil obligations on the part of the Portuguese Republic has thus been shown still to subsist on the date of the Court's hearing in the present case, the Commission's proposal of a penalty payment must now be examined.

V The appropriate financial penalty

A Arguments of the parties

25. On the basis of the calculation method defined in its Communication 96/C-242/07 of 21 August 1996 on applying Article [228] EC (11) and Communication 97/C-63/02 of 28 February 1997 on the method of calculating the penalty payments provided for pursuant to Article [228] EC, (12) the Commission proposes that the Court impose on the Portuguese Republic a penalty payment of EUR 21 450 for each day of delay as a sanction for non-compliance with the judgment in Case C-275/03. The penalty should be imposed from the date of delivery of the judgment in the present case until the date the judgment in Case C-275/03 is complied with.
26. The Commission considers that a penalty payment is the most appropriate means of bringing to an end as soon as possible the established infringement. A penalty payment of EUR 21 450 for each day of delay is commensurate with the seriousness and length of the infringement, due regard being had to the need to ensure that the sanction is effective. According to the Commission, that sum should to be calculated by multiplying a uniform base of EUR 500 by a coefficient of 11 (on a scale of 1 to 20) for the seriousness of the infringement, a coefficient of 1 for the duration of the infringement and a coefficient of 3.9 (based on Portugal's Gross Domestic Product (GDP) and the weighting of its votes in the Council), which reflects Portugal's ability to pay.
27. In relation to the duration of the infringement, the Commission submits that on 12 October 2005, the date it decided to bring the present action, 11 months had elapsed since the judgment in Case C-275/03 was handed down. In conformity with its orientations adopted in March 2001, the Commission starts counting the duration of an infringement pursuant to Article 228 EC from the seventh month following the date of the judgment finding an infringement of Community law. In the present case, the multiplication of the 'coefficient 0.1 by 5 months (November 2004 to May 2005) leads to the result 0.5'. The duration coefficient should therefore be 1, or the minimum coefficient.
28. As regards the seriousness of the infringement, the Commission considers that two factors should be taken into account when fixing the amount of the financial penalty, namely the importance of the Community rules breached and the impact of the infringement on general and particular interests. Pursuant to the third recital of Directive 89/665, 'the opening-up of public procurement to Community competition necessitates a substantial increase in the guarantees of transparency and non-discrimination'. In order 'for that opening-up to have tangible effects, effective and rapid remedies must be available in the case of infringements of Community law in the field of public procurement or national rules implementing that law'. The Commission considers that the rules which were infringed are of great importance and that the impact of that infringement on general and individual interests could be considerable. In that regard, in 2002 the public procurement sector represented 13.2% of Portugal's GDP. (13) Without prejudice to the above and in the light, firstly, of the fact that the Court, for the first time in Case C-275/03, ruled on whether national rules which condition the grant of damages to persons injured by a breach of the Community rules on public procurement, or national rules transposing those rules, on the proof of fault or wilful misconduct are compatible with Articles 1(1) and 2(1)(c) of Directive 89/665 and secondly, the infringement which led to the judgment in Case C-275/03 is, in the case of Portugal, an isolated case of incorrect transposition of a Community directive in the public procurement field, the Commission considers that the coefficient for seriousness to be applied in this case should be 11.
29. The Commission indicated in its reply that, contrary to Portugal's arguments, (14) paragraph 13.3 of the 2005 Communication from the Commission Application of Article 228 of the EC Treaty (15) (hereinafter the '2005 Communication'), which provides for the possibility of adapting the reference time-frame for assessing continuing non-compliance by a Member State after the judgment pursuant to Article 228 EC has been handed down, should not be applied in the present case. The Commission also considers that the circumstances in Case C-278/01 Commission v Spain, (16) where the Court held that the termination of the infringement in that case could only be ascertained annually, are materially different to those in the present case, which concerns the adoption of measures to transpose correctly into national law a provision of Directive 89/665.
30. Moreover, the Commission considers, again contrary to the submissions of Portugal, (17) that there is no need to suspend the imposition of a penalty in the present case in accordance with paragraph 13.4 of the 2005 Communication. Paragraph 13.4 of the 2005 Communication provides for the suspension of a penalty where, for example, a period of time is necessary in order to verify whether all the necessary measures have been taken to comply with a judgment. As the present case concerns the transposition of a directive, the Commission can immediately, upon notification of the national transposition measures, take note of such measures.
31. Portugal considers that the amount of the penalty payment proposed by the Commission, and in particular the coefficient of 11 for seriousness, is manifestly disproportionate and excessive in the light of the circumstances of the present case. According to the Portuguese Government, the imposition of civil liability on the Administration would appear, within the framework of Directive 89/665, to be an instrument of public procurement policy. However, that instrument should not be considered to be of over-riding importance with regard to that policy. The objective of public procurement policy is primarily to guarantee the legality of the procedures for the award of public tenders. The possibility to impose liability on the Administration should be considered as a secondary instrument to safeguard the interests of victims. Moreover, Portugal considers that it is doubtful whether the infringement has had any impact on general and individual interests as the Portuguese courts have recognised, in their settled case-law, that there is a presumption of fault in relation to the illegal acts of the Administration, thereby facilitating the grant of damages to injured individuals in perfect conformity with the requirements of Directive 89/665.
32. Portugal claims that the present case is not similar to other cases which were decided by the Court pursuant to Article 228 EC as the present case does not concern the incorrect application of Community law but rather the alleged incorrect transposition of a directive. Portugal claims that this should be considered as a mitigating circumstance. In addition, the present case, contrary to other cases decided by the Court where lower coefficients for seriousness were proposed by the Commission, does not concern fundamental interests such as public health or the bodily integrity of individuals. Furthermore, the present case does not concern a sensitive matter which is the exclusive competence of the Community and which has been extensively legislated and examined in Community case-law. Portugal considers that it is therefore surprising that the Commission proposes a coefficient of 11 for seriousness in a case relating to partial failure to transpose Directive 89/665. Portugal therefore considers that the coefficient for seriousness in this case should not exceed 4.
33. Moreover, Portugal considers, in accordance with paragraph 13.3 of the 2005 Communication which replaced Communications 96/C-242/07 and 97/C-63/02, that the appropriate reference time-frame in the present case for assessing compliance with Directive 89/665 should be annual and not daily as proposed by the Commission.
34. In addition, Portugal considers that in accordance with paragraph 13.4 of the 2005 Communication, the penalty in the present case should be suspended. By its adoption of proposed Law No 56/X, Portugal has ensured that all the necessary steps to comply with the judgment of the Court in Case C-275/03 have been taken. It is merely necessary that a certain time period elapses for the text of the law to be adopted.

B Assessment

35. In the event that the Court should find that the Portuguese Republic has not complied with its judgment in Case C-275/03, the Court may, under the third subparagraph of Article 228(2) EC, impose on that Member State a lump sum and/or penalty payment. (18)
36. According to its settled case-law, it is for the Court to assess in each case, in the light of the circumstances of the case, the financial penalties to be imposed. (19) The fixing of a sanction pursuant to Article 228 EC thus lies within the exclusive remit of the Court. In exercising its discretion, it is for the Court to fix the lump sum and/or penalty payment that is appropriate to the circumstances and proportionate both to the breach that has been found and to the ability to pay of the Member State concerned. In that regard, the Commission's proposals with regard to financial penalties do not bind the Court and merely constitute a useful point of reference. (20) Moreover, the Commission's communications in relation to Article 228 EC are not binding on the Court but serve to ensure the transparency, predictability and legal certainty of that institution's actions. (21)
37. In the present case, the Commission in its application based its proposal on the financial penalties to be imposed on Portugal, inter alia, on its Communications 96/C-242/07 and 97/C-63/02. It should be noted that on 7 February 2006, the date when the application in the current proceedings was lodged before the Court, those communications were no longer in force and had been replaced by the 2005 Communication with effect from 1 January 2006. (22)
38. I consider that in the context of the present proceedings it would be appropriate for the Court to use, inter alia, the more recent 2005 Communication, together with the submissions of the parties, as a useful point of reference for establishing whether a financial sanction should be imposed in the present case, and if so, the amount of that sanction. In reaching this finding, I consider that the reference by the Commission to its earlier communications did not hinder Portugal in defending its interests in the course of the current proceedings and that the principles of transparency, predictability and legal certainty have been observed. Portugal itself, in its written pleadings, highlighted the fact that the 2005 Communication had replaced the Commission's earlier communications and indeed, as can be seen from Portugal's pleadings, that Member State specifically relied on paragraphs 13.3 and 13.4 of the 2005 Communication. In my opinion, Portugal was fully aware of the contents of the 2005 Communication and that it could be used as a point of reference in relation to the imposition of financial sanctions by the Court.
39. In my view, in order to apply the enforcement procedure provided by Article 228 EC in a consequent manner, that procedure must be understood as a tool for fully realising the objective of Article 226 EC proceedings, which is to bring infringements of Community law to an end, and at the same time as a means of dissuading Member States from failing to comply with the judgments of the Court establishing a breach of Community law pursuant to Article 226 EC.
40. In concrete terms, the procedure laid down in Article 228(2) EC is aimed at inducing a defaulting Member State to comply with a judgment establishing a failure to fulfil obligations, thereby ensuring that Community law is in fact applied by that State. The sanctions provided for by that provision, namely a lump sum and a penalty payment, are both intended to achieve this objective. The purpose of imposing a penalty payment and/or a lump sum is to place a Member State under economic pressure which induces it to put an end to the infringement that has been established. The financial penalties imposed must therefore be decided on according to the degree of persuasion needed for the Member State in question to alter its conduct. (23)
41. In Case C-304/02 Commission v France, the Court stated that while the imposition of a penalty payment seems particularly suited to inducing a Member State to put an end as soon as possible to a breach of obligations which, in the absence of such a measure, would tend to persist, the imposition of a lump sum is based more on assessment of the effects on public and private interests of the failure of the Member State concerned to comply with its obligations, in particular where the breach has persisted for a long period since the judgment which initially established it. (24)
42. I consider in the light of the circumstances of the case that the imposition of a penalty payment is a suitable means to induce or persuade Portugal to alter its conduct and to comply with its obligations pursuant to Articles 1(1) and 2(1)(c) of Directive 89/665. In my view, there is sufficient evidence in the present proceedings to suggest that there is a real danger that the infringement in question will persist unless a penalty payment is imposed on Portugal. In that regard, at the oral hearing on 5 July 2007 it was evident that the Portuguese Republic had not taken the necessary action to comply with the judgment in Case C-275/03, despite its repeated earlier statements that such action was imminent.
43. As regards the amount of the penalty payment, the basic criteria which must be taken into account in order to ensure that such payments have coercive force and Community law is applied uniformly and effectively are, in principle, the duration of the infringement, its degree of seriousness and the ability of the Member State to pay. In applying those criteria, regard should be had in particular to the effects of failure to comply on private and public interests and to the urgency of getting the Member State concerned to fulfil its obligations. (25)
44. The Commission submits that the coefficient for duration of the infringement should be fixed at 1 in the present proceedings. As can be seen from the Commission's pleadings, that coefficient was calculated by reference, inter alia, to the date when the Commission decided to initiate the present proceedings, that is 12 October 2005. In my view, the proposal of the Commission in relation to duration is flawed. Aside from the fact that the Commission did not actually bring the present proceedings until 7 February 2006, the Court in Case C-177/04 Commission v France stated that the duration of an infringement pursuant to Article 228 EC must be assessed by reference to the time when the Court assesses the facts, not the time at which the case is brought before it by the Commission. (26)
45. In the present case, compliance with the judgment in Case C-275/03 only required the adoption by Portugal of measures of transposition into national law of Articles 1(1) and 2(1)(c) of Directive 89/665 and, in particular, the repeal of Decree-Law No 48051. It is clear that the failure by Portugal to definitely adopt the necessary legislative measures to comply with the judgment in Case C-275/03, which was handed down on 14 October 2004, has persisted for a substantial period of time. On the date of the oral hearing in the present case nearly three years had elapsed since the judgment in Case C-275/03 was delivered. (27)
46. In those circumstances, I consider that a coefficient of 2 appears appropriate to take account of the duration of the infringement.
47. As regards the seriousness of the infringement, I do not consider that the Commission's proposal of a coefficient of 11, on a scale of 1 to 20, for seriousness is correct. In my view, that coefficient is clearly excessive in the light of the circumstances of the present case and the previous case-law of the Court.
48. With regard to that case-law, the Portuguese Government in my view correctly pointed out that a lower coefficient for seriousness in cases involving for example a threat to public health, damage to the environment and the depletion of fishing stocks was applied by the Court. (28) I consider that the coefficient of 4 suggested by the Portuguese Government is thus more appropriate in the present case.
49. While the infringement of Directive 89/665 would appear to be partial, in that the present proceedings and the proceedings in Case C-275/03 relate to Articles 1(1) and 2(1)(c) of that directive rather than the directive in its entirety, the coefficient of 4 for seriousness is warranted given, in my view, the importance of the provisions in question which provide for the establishment of measures for the award of damages to persons injured by an infringement of the public procurement rules. (29)
50. In coming to this conclusion I would stress that I do not agree with the submissions of Portugal which would tend to suggest that the European Community's policy on public procurement is not of any great importance. Public procurement policy is, in my view, pivotal in ensuring that competition in the internal market is not distorted. (30) Moreover, contrary to Portugal's arguments, (31) I consider that the possibility for private actors to seek review of the decisions of contracting authorities and, where they have been injured by an infringement of the rules on public procurement, to obtain damages, is crucial to the proper functioning of those rules. The availability of such procedures not only safeguards the interests of the parties in question, but also guarantees the full effectiveness of the Community's public procurement policy.
51. The failure by Portugal to repeal Decree-Law No 48051 (32) would appear to render judicial actions in this field by private parties more difficult and indeed costly. This situation could, in my opinion, undermine the incentives of private parties to bring such actions and thus impair the full effectiveness of the Community's public procurement policy.
52. In the light of the foregoing, I consider that the penalty payment to be imposed in the present case should be derived by multiplication of the base amount of EUR 600 by the coefficients of 4.04 (ability to pay), (33) 4 (seriousness of the infringement) and 2 (duration of the infringement) which leads to an amount of EUR 19 392 for each day of delay.
53. As regards, the frequency of the penalty payment, in a case such as the present one concerning compliance with a judgment of the Court which involves the simple adoption of a legislative amendment in order to transpose a part of a directive, a penalty payment imposed on a daily basis should be chosen. (34) The arguments of the Portuguese Government based on paragraph 13.3 of the 2005 Communication should thus be rejected.
54. Moreover, I consider that there is no need to suspend the imposition of the penalty payment in the present case. The adoption of the necessary legislative amendment and thus compliance with the judgment in Case C-275/03 can be assessed immediately by the Commission upon notification of that amendment. The arguments of the Portuguese Government based on paragraph 13.4 of the 2005 Communication should therefore also be rejected.
55. As regards the possibility for the Court to impose a lump sum, I do not consider that such a sanction is warranted in the present proceedings despite the fact that the failure to transpose Articles 1(1) and 2(1)(c) of Directive 89/665 has persisted for almost three years since the judgment in Case C-275/03 was handed down and the public and private interests affected due to that failure are of some importance.
56. That reflexion is underpinned by the case-law of the Court, particularly by the judgment of the Court in Case C-304/02 and the very specific circumstances of that case which led the Court to impose a lump sum in addition to a penalty payment. (35) Indeed, the wording of Article 228(2) EC itself contemplates the imposition of only one of the two potential sanctions mentioned. Moreover, the Court has considered that both sanctions have their own autonomous function. (36)

VI Conclusion

57. In the light of the foregoing considerations, I suggest that the Court should:

declare that, by failing to repeal Decree-Law No 48051 of 21 November 1967, making the award of damages to persons injured by a breach of Community law relating to public contracts, or the national laws implementing it, conditional on proof of fault or wilful misconduct, the Portuguese Republic has failed to fulfil its obligations under Article 1(1) and Article 2(1)(c) of Council Directive 89/665/EEC on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts and has accordingly failed to fulfil its obligations under Article 228 EC;

order the Portuguese Republic to pay to the Commission of the European Communities, into the account 'EC own resources', a penalty payment of EUR 19 392 for each day of delay in implementing the measures necessary to comply with the judgment in Case C-275/03 Commission v Portugal, from delivery of the present judgment until the judgment in Case C-275/03 has been complied with in full;

order the Portuguese Republic to pay the costs.

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1 Original language: English.

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2 Judgment of 14 October 2004, not published in the ECR.

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3 OJ 1989 L 395, p. 33.

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4 OJ 1971 L 185, p. 5.

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5 OJ 1993 L 199, p. 54.

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6 OJ 2004 L 134, p. 114.

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7 See Article 81 of Directive 2004/18.

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8 Case C-119/04 Commission v Italy [2006] ECR I-6885, paragraph 41.

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9 Those provisions have not been repealed in the meantime.

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10 See point 15 above.

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11 OJ 1996 C 242, p. 6.

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12 OJ 1997 C 63, p. 2.

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13 Which is slightly below the Community average of 16%.

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14 See point 33 below.

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15 SEC (2005) 1658.

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16 [2003] ECR I-14141, paragraph 51.

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17 See point 34 below.

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18 See Case C-304/02 Commission v France [2005] ECR I-6263, in particular paragraphs 80 to 82.

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19 Commission v France, cited in footnote 18, paragraph 86.

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20 See Case C-387/97 Commission v Greece [2000] ECR I-5047, paragraph 89.

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21 See Commission v Greece, cited in footnote 20, paragraph 87.

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22 See paragraph 25 of the 2005 Communication.

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23 Case C-177/04 Commission v France [2006] ECR I-2461, paragraphs 59 and 60.

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24 See paragraph 81.

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25 Commission v Greece, cited in footnote 20, paragraph 92.

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26 See paragraph 71. In my view, the date of the Court's assessment of the facts is an unidentifiable date which is not known by the parties. I consider therefore that for the purposes of imposing a penalty payment pursuant to Article 228 EC, the duration of the infringement must be assessed by reference to the date of the hearing in a case, or in the event that a hearing is not held, the date of the close of the written procedure.

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27 See by analogy Case C-177/04 Commission v France, cited in footnote 23, paragraphs 73 and 74. In that case the Court considered that a coefficient of 3 for duration should be applied where a failure to adopt measures of transposition into national law had persisted for nearly four years.

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28 In that regard, Portugal noted that in Commission v Greece (cited in footnote 20), the Commission proposed a coefficient of 6 for seriousness concerning a failure to fulfil obligations which threatened public health and where no action had been taken to execute the previous judgment. While in Commission v Spain (cited in footnote 16), a coefficient of 4 for seriousness was proposed by the Commission in relation to a failure to transpose a directive on the quality of bathing waters and thus concerned the protection of the environment and public health. In addition, in Case C-304/02 Commission v France (cited in footnote 18), which concerned the common fisheries policy, a coefficient of 10 for seriousness was proposed.

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29 See by contrast Case C-177/04 Commission v France (cited in footnote 23) where the Court considered that the infringement of Community law due to the partial non-transposition of a directive was not particularly serious and thus applied a coefficient for seriousness of 1. In that case, the Court found that France had failed to comply with the judgment in Case C-52/00 Commission v France ([2002] ECR I-3827) as regards the transposition of Article 3(3) of Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products (OJ 1985 L 210, p. 29), and had thus failed to fulfil its obligations under Article 228 EC as it continued to regard the supplier of a defective product as liable on the same basis as the producer where the producer cannot be identified, even though the supplier had informed the injured person within a reasonable time of the identity of the person who supplied him with the product.

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30 Indeed the sheer size of the public procurement sector, which would appear to represent 16% of the Community's GDP and 13.2% of Portugal's GDP, can not be overlooked.

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31 See point 31 above.

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32 Thereby making the award of damages to persons injured by a breach of Community law relating to public contracts, or the national laws implementing it, conditional on proof of fault or wilful misconduct on the part of the State or public entities.

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33 It should be noted that the base amount and the coefficient in relation to Portugal's ability to pay have been drawn from the 2005 Communication. See point 37 above.

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34 See Case C-177/04 Commission v France, cited in footnote 23, paragraph 77.

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35 See paragraphs 114 and 115 of Case C-304/02 Commission v France (cited in footnote 18).

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36 See Case C-304/02 Commission v France, cited in footnote 18, paragraph 84.