U-I-296/96

Reference no.:
U-I-296/96
Objavljeno:
Official Gazette RS, no. 42/98 and OdlUS VII, 53 | 19.03.1998
ECLI:
ECLI:SI:USRS:1998:U.I.296.96
Act:
Order on procedures and conditions for leasing areas beside motorways for the construction of facilities for associated activities and on determining the level of rent for the use of these areas (Official Gazette RS, no. 25/96), para. 2 of article 3.
Operative provisions:
The second paragraph of article 3 of the Order on procedures and conditions for leasing areas beside motorways for the construction of facilities for associated activities and on determining the level of rent for the use of these areas was not in conflict with the Constitution and Law.
Abstract:
Because the Order on procedures and conditions for leasing areas beside motorways for the construction of facilities for associated activities and on determining the level of rent for the use of these areas ceased to apply during the proceedings, the Constitutional Court may judge it if legal interest in such a decision exists on the part of the initiator. For this to exist there must be a causal link between the asserted unconstitutionality and illegality of the regulation on the one hand and possible damage to the initiator on the other. It must be shown as probable that a finding on the initiative in favour of the initiator would signify specific legal benefit which he could not achieve without this. When the unconstitutionality and illegality of an executive regulation is found, a finding of non- conformity with the Constitution and with law is also possible with the effect of annulment ab initio. Since such a decision could effect the initiator's legal position in a possible civil action for compensation of damage which is claimed to have occurred because he was not chosen as the most advantageous bidder, the competence of the Constitutional Court for a judgement of the Order is given.

Entrepreneurial or business freedom under article 74 of the Constitution guarantees above all protection of the free operation of private economic subjects against state infringement. Freedom of enterprise guarantees in particular the right to found a company (under statutory conditions), to manage it in conformity with business principles (respecting mandatory regulations) and also if so desired to close it. It also embraces the right to choice of activity of economic subjects and to the choice of business partners etc. According to the third paragraph of the cited article of the Constitution, in particular, unfair competition and activities which, in conflict with the law, restrict competition are in particular banned. By determining mandatory references by which a bidder must prove a base for the supply of oil derivatives in the country and that he already manages the distribution of oil derivatives to at least three petrol service stations in the country, the offence of unfair competition cannot be committed because the perpetrator of such an offence can only be another participant on the market. So the provision of the Order which contained the cited mandatory references was not in conflict with the third paragraph of article 74 of the Constitution.

According to the Protection of Competition Act, state organs may not restrict the free appearance of companies on the market. The impugned provision is not in conflict with the cited statutory arrangement because it does not regulate the free appearance of companies on the market but determines conditions for their equal appearance in a public call for tenders in which they are applying for the lease of areas beside motorways. Since it is the arrangement of conditions for competition in public calls for tender, "free appearance on the market" is not restricted by the regulation which determines such conditions, but by regulations which subordinate the conclusion of the transaction to the regime of public calls for tenders.

In respect to the impugned Order it was therefore necessary to try only whether the impugned provisions perhaps signify violation of equality of competition in a public call for tenders. After excluding the possibility of violation of the ban on discrimination under the first paragraph of article 14, it was necessary also to reach a judgement on whether it was violation of the general principle of equality before the law under the second paragraph of article 14 of the Constitution, thus a judgement on the basis of the so-called test of arbitrariness. The maker of the Order drew a distinction in the impugned arrangement between market subjects who have a supply base for oil derivatives in Slovenia, and at least three petrol service stations, and those who do not. However, this distinction is constitutionally permissible and thus is not in conflict with the second paragraph of article 14 of the Constitution. With the Order, the maker of the Order did not make the distinction arbitrarily, because he had well-founded reasons for the distinction:

- legitimate interest of the state that public services be leased to a bidder who would be capable in conformity with the public interest in undisturbed and safe traffic, of guaranteeing undisturbed supply of fuel to motorway users,

- legitimate interest of the state in guaranteeing national security in the event of possible military or other states of emergency,

- public interest in balanced supply over the entire territory of the state, including places which would be less profitable than beside motorways, or would even be unprofitable, in conformity with the principle of a social state (article 2 of the Constitution) as well as the obligation of the state to ensure economic, cultural and social progress in mountain and hilly regions (third paragraph of article 71 of the Constitution), - the legitimate interest of the state for balanced supply of fuel over the entire territory of the state and the interest that users of all roads (including regional and local) and the inhabitants of all regions have an undisturbed and equal supply of fuel.
Password:
Principle of a state ruled by law and a social state.
Principle of equality before the law.
Protection of land.
Principle of free enterprise.
Motorways, construction of facilities for associated activities, petrol service stations.
Free competition, restriction
Assessment of the conformity of a regulatory act with legislation of the European Community.
General freedom of behaviour.
General benefit.
Discrimination, ban on discrimination.
Public interest.
National interest.
Obligations, principle of conscientiousness and honesty.
Obligations, principle of pacta sunt servanda.
Concurring opinion of a constitutional judge.
Legal basis:
Constitution, articles 2, 14, 71, 74 and 160.
Public Services Act (ZGJS), articles 68 and 81.
Power Economy Act (ZEG), articles 2-10, 12, 13, 19, 21, 63, 64, 65-68.
Protection of Competition Act (ZVK), articles 17, 18, 19, 20.
Constitutional Court Act (ZUstS), articles 21, 26 and 47.
Note:
In the reasoning of its decision, the Constitutional Court refers to its case no. U-I-52/90 of 26.3.1992 (OdlUS I, 18).
Document in PDF:
The full text:
U-I-296/96-41
19.3.1998


DECISION

At a session held on 19 March 1998, in a proceeding for assessing constitutionality and legality commenced on the initiative of Shell Slovenija d.o.o., Ljubljana, represented by Rudi Šelih, Nina Remec - Šelih and Aleksandra Janežič, attorney in Ljubljana, the Constitutional Court

reached the following decision:

The second paragraph of article 3 of the Order on procedures and conditions for leasing areas beside motorways for the construction of facilities for associated activities and on determining the level of rent for the use of these areas (Official Gazette RS, no. 25/96) was not in conflict with the Constitution and law.

Reasoning

A.

1. The initiator impugned the second paragraph of article 3 of the Order on procedures and conditions for leasing areas beside motorways for the construction of facilities for associated activities and on determining the level of rent for the use of these areas (Official Gazette RS, no. 25/96 - hereinafter: the Order) with an initiative for assessing constitutionality and legality. It was disputed by the initiator that, according to this provision, it was considered that the condition of "references" in a public call for tenders by Družbe za avtoceste v Republiki Sloveniji d.d. (hereinafter: DARS) is shown by those who, in addition to other references, also meets the conditions: - that he has a base for the supply of oil derivatives on the territory of the Republic of Slovenia, which must guarantee him at least one month's supply for already constructed petrol service stations in the Republic of Slovenia and for the supply of petrol service stations for which tenders are called; - that he already has at least three petrol service stations on the territory of the Republic of Slovenia for carrying out the supply of oil derivatives.

2. The initiator believes that by determining such conditions, the Order essentially restricted free competition in conflict with the law (third paragraph of article 74 of the Constitution) as well as the constitutionally guaranteed freedom of enterprise (first paragraph of article 74 of the Constitution). The setting of such conditions is claimed to be in conflict with the constitutional principle of equality before the law (article 14 of the Constitution) since it is claimed to place in an unequal position companies which are potential bidders but who do not meet the "discriminatory" conditions of the impugned provisions, since either they do not have a base for the supply of oil derivatives on the territory of Slovenia or they are not yet present on the market. In the opinion of the initiator, such a provision in no way contributes to the selection of a better bidder or to undisturbed supply, security, environmental protection or consumers. In connection with the third paragraph of article 74 of the Constitution, the initiator also refers to the Protection of Competition Act (Official Gazette RS, no. 18/93 - hereinafter: ZVK), and in particular to the provisions of the first and second paragraphs of article 17, articles 18 and 19 and the third and fourth paragraphs of article 20 ZVK. In connection with the first paragraph of article 74 of the Constitution, the initiator also refers to decision of the Constitutional Court no. U-I-52/90 of 26.3.1992 (Official Gazette RS, no. 19/92) and the opinion expressed there that unfounded accumulation of conditions for performing some activity may prevent the exercise of rights which are based on the Constitution and Law. In the opinion of the initiator, with the cited Order there is a disproportionate infringement of free business initiative, unnecessary for protecting the public interest. This is claimed to have caused inequality of business subjects and the unfounded exclusion of competition.

3. At the time of submitting his initiative, the initiator showed his legal interest by the fact that he is himself a registered legal person in Slovenia whose activities among others are retail trade in motor fuel, wholesale trade of solid, liquid and gas fuels, obtaining oil and household gas and the production of oil derivatives. This also derives from the attached copy of the entry of the Circuit Court in Ljubljana, registration application no. 1/25008/00. He stated that he wishes to participate in public calls for tenders and to compete as a bidder for the lease of areas which are determined for the construction of facilities for associated activities. The impugned provision, with references so defined, is claimed to have prevented successful competition. He also refers to thirteen public calls for tenders for the lease of areas for the construction of facilities for accompanying activities which DARS published in Official Gazette RS, no. 46/96. From the tender documentation of DARS, it follows that in conformity with the impugned provisions of the Order, a bidder had to submit evidence of references. Among the measures for the selection of the best bidder, in first place is stated the proffered amount of rent, and the next criteria are the references of the bidder. It derives mutatis mutandis from the initiative that, at the time of submitting the initiative and the publication of the public calls for tenders, the initiator did not yet perform the distribution of oil derivatives at at least three petrol service stations, nor had a guaranteed base for the supply of oil derivatives on the territory of the Republic of Slovenia.

4. By resolution no. U-I-269/96 of 24.10.1996, the Constitutional Court rejected the initiator's proposal for a restraint of implementation of the Order for reasons which are cited in the reasoning of that resolution. After the issue of the cited resolution, the Government itself amended the impugned disputed part of the provisions of the second paragraph of article 3 of the Order, with the Amending and Supplementing Order to the Order on procedures and conditions for leasing areas beside motorways for the construction of facilities for associated activities and on determining the level of rent for the use of these areas (Official Gazette RS, no. 77/96 - hereinafter: Amendments and Supplements to the Order). The Amendments and Supplements to the Order deleted the second indent of the second paragraph in entirety. A reference therefore is no longer required that at the time of the public call for tenders, a bidder already carries out distribution of oil derivatives at at least three petrol service stations on the territory of the Republic of Slovenia. To the reference that he has a base for the supply of oil derivatives on the territory of the Republic of Slovenia which guarantees at least one month's supply for already constructed petrol service stations was added the words "or binds himself that within a time limit of three years from the signing of a contract he will have a base for the supply of petrol derivatives on the territory of the Republic of Slovenia which shall guarantee at least one month's supply to his petrol service stations in the Republic of Slovenia; with this intention to attach to the bid a non-retractable bank guarantee of a bank of first rank, realisable at the first appeal, to the value of amounts which will derive from the contract". A reference is therefore no longer necessary that a bidder should already have, at the moment of the call for tenders, a base for the supply of oil derivatives on the territory of Slovenia. He must only bind himself that he will have it within a time limit of three years from the signing of a contract, for which he must deposit a suitable bank guarantee.

5. The Government thereafter responded to the initiative and to the specific request of the Constitutional Court for a clarification also of the reasons for the Amendments and Supplements to the Order. It thus explained that the Order took effect on 25.5.1996, therefore still prior to the Association Agreement which the Republic of Slovenia signed on 10.6.1996. In the first paragraph of article 3, the Order enumerates the conditions which a bidder must fulfil in a public call for tenders. Among the conditions are under point d) also the demand for references obtained in the construction of similar facilities and management, administration and maintenance of them. The definition of the concept "references" is defined in detail in the second paragraph of article 3, which clarifies the provisions of the first paragraph. In the opinion of the Government, it would be possible to recognise the references of those bidders who have a base for the supply of oil derivatives on the territory of the Republic of Slovenia, that he already carries out distribution of oil derivatives at petrol service stations in the Republic of Slovenia, that he has guaranteed long term supplies of oil derivatives and that he regularly pays rent for the use of areas for already constructed associated facilities. The government believes that the provisions of the second paragraph cannot be interpreted as additional conditions but only as an analysis of the conditions of point d) of the first paragraph of article 3.

This defines what under the Order must be considered as "references". The Order defines the concept "references" concretely since it is claimed only thus to be possible to guarantee that public areas would not be leased to a bidder who would not be capable, in conformity with the public interest in undisturbed and safe flow of traffic, of guaranteeing undisturbed supply of fuel to motorway users. At the same time, the Government also explained that, on the basis of the Order (and references so defined), the first public call for tenders for the lease of thirteen areas for carrying on associated activities beside motorways had already been held.

6. The Government explained that in the phase of approaching the European Union and ratifying the European Agreement on associate membership between the European Community and its member states which operate in the framework of the European Union, on the one hand, and the Republic of Slovenia on the other, signed on 10.6.1996, therefore because of conducting policies in the foreign policy sphere, it dealt with the Order again on the proposal of the Ministry of Foreign Affairs. At a session held on 27.11.1996, the Government adopted the text of the Amendments and Supplements to the Order, which applies for future public calls for tenders. It was published in the Official Gazette RS, no. 77/96 of 28.11.1996. The Government stresses that because of conducting foreign policies in the foreign policy sphere and in compliance with jurisdictions it has on the basis of the first paragraph of article 21 of the Government of the Republic of Slovenia Act (Official Gazette RS, no. 4/93 and 23/96), it decided on the Amendments and Supplements to the Order, whereby it again behaved in conformity with the interest of public benefit. The indent which refers to the prior performance of distribution of oil derivatives at at least three petrol service stations in the Republic of Slovenia is deleted. A bidder will have to have a base for the supply of oil derivatives which will guarantee at least one month's supply of his petrol service stations in the Republic of Slovenia, whereby with the Amendments and Supplements to the Order, on the lodging of a guarantee, he is given the possibility of deferring fulfilment of this condition for three years. The Government also stress that nowhere is it established that irrespective of the Order, Shell Slovenija would be the most advantageous bidder. The Government believes that both the Order and the Amendments and Supplements to the Order are in conformity with valid legislation.

7. The initiator stated in response to the Government that the capabilities of a bidder are normally demonstrated with references for the same kind of facilities elsewhere in the world. The Government's suggestion that it amended the Order because of conducting policies in the foreign sphere is claimed to be irrelevant. Since the Amended Order will apply for future public calls for tenders, bidders who are not present in the Republic of Slovenia, will not in advance be excluded from bidding.

Irrespective of that, thirteen public calls for tenders were held on the basis of the impugned Order, and locations were issued.

Meanwhile, damage is claimed to have already been caused to the initiator because other bidders were chosen who offered a lower monetary compensation than the initiator.

8. In such circumstances, on the basis of article 35 of the Constitutional Court Act (Official Gazette RS, no. 15/94 - hereinafter: ZUstS) the Constitutional Court held a public hearing. It invited to it the participants in the proceeding, i.e., the initiator and the Government. Since it believed that their participation at the public hearing was urgently necessary, it also invited representatives of the Ministry of Transport and Communications (hereinafter: MPZ) and DARS. Those invited, except representatives of the Government, participated at the hearing on 1.12.1997. The initiator also persevered at the public hearing in requesting constitutional judgement of the impugned provisions of the Order which had ceased to apply. He proposed a finding of non- compliance with the Constitution or with Law with the effect of annulment ab initio under article 47 of ZUstS. To the explicit question of a judge, he answered that he does not impugn the Amendments and Supplements to the Order.

B. -I.

9. Under article 21 ZUstS (as well as under article 160 of the Constitution) the Constitutional Court has jurisdiction to try valid regulations and acts for the exercise of public authority. Article 47 of ZUstS determines exceptions to this rule. If a law, other regulation or general act issued for the exercise of public authority was adjusted to the Constitution and Law during the proceeding or ceased to apply, but the consequences of the unconstitutionality or illegality were not rectified, the Constitutional Court may find that it was not in conformity with the Constitution and Law. With statutory regulations or general acts issued for the exercise of public authority, the Constitutional Court decides whether its finding has the effect of annulment or annulment ab initio. The content of deciding on the constitutionality and legality of regulations which at the time of reaching a decision no longer apply is thus only possible insofar as the conditions of article 47 ZUstS are met.

10. Since the Amendments and Supplements to the Order were not impugned, the Constitutional Court did not enter into a constitutional judgement of the now valid provisions. These will therefore apply for all future public calls for tenders. The impugned provision of the Order in the disputed part no longer applies. The Constitutional Court has in practice to date linked judgement of the consequences of the asserted unconstitutionality and illegality (article 47 ZUstS) to an existing legal interest on the part of the initiator in such a decision. The asserted unconstitutionality and illegality must have had damaging consequences for the initiator. There must therefore exist a causal link between the asserted unconstitutionality and illegality of the Order, on the one hand, and possible damage on the other. It must also be shown as probable that the finding would signify for the initiator a specific legal benefit, which he would not achieve without it.

11. As also derives from the statements in the application and at the public hearing, the standpoints of the parties to these questions part. The Government already stressed in its written answer that it has nowhere been established that irrespective of the Order Shell Slovenija would have been the most advantageous bidder. The representative of DARS explained at the public hearing, in connection with the concrete public calls for tenders at which the initiator unsuccessfully participated and in which the disputed provisions of the Order were used, that the provision in the tender documentation required that there could be no susequent departure of the selected bidder from the conditions (as in the tender conditions), nor a demand for changes to the content of this contract. Contracts which were later signed with the selected bidders were signed in the wording in which the tender conditions were given. In the call for tenders were therefore also required specific statements of the bidders. The representative of DARS read the letter of the initiator which it submitted with its bid in connection with these requirements of the call for tenders. "For the bid submitted below the following qualifications apply. In connection with the statement of Shell Slovenija TP d.o.o.

Ljubljana, that the bid is produced in compliance with the instructions to bidders for the production of bids with special conditions of the contract in connection with the bid, in connection with the form of the contract, the bidder states that with the signing of the cited documents he only confirms that he is acquainted with the their contents. In relation to the meeting of conditions determined in the Order on procedures and conditions of specific areas beside motorways for the construction of associated facilities and determining the compensation for the use of these areas, the bidder states that he fulfils these conditions to the extent and in the manner evident from the attached bid. The bidder further retains the right in the event of the client selecting his as the best bid, to conclude with the client instead of the prescribed form of contract such a contract as will be acceptable to both parties. In connection with the annexes to the bid, the bidder states that the cited annexes bind him to the construction of facilities to the extent evident from the annexes, on the premise that in connection with the construction of the facilities unenvisaged circumstances do not appear which were unknown to the bidder at the time of preparing the bid and because of which the costs of construction reach unenvisaged costs, e.g., archaeological excavations, underground waters, etc." In addition to this, the representative of DARS stated among other things (with concrete numbers) that nowhere (for no location) did the initiator (Shell Slovenija) offer the highest rent. The initiator answered to the statements of the representative of DARS at the public hearing that they are irrelevant for a judgement of the constitutionality and legality of the impugned provisions. What in concrete terms happened in connection with the procedure of public calls for tenders is claimed not to be the subject of this proceeding. The initiator believes that he has demonstrated his legal interest, which was to compete, and to compete under equal conditions. What were, and for what reasons, the decisions adopted by DARS in concrete procedures is claimed not to be relevant to a constitutional judgement.

12. The Constitutional Court did not decide on a narrow interpretation of legal interest which would derive from the actual circumstances in concrete procedures of public calls for tenders in which the impugned provision of the Order was used. The question of the existence of damaging consequences (damages) because of the Order was not therefore connected to the question of whether there existed on the part of the initiator in concrete procedures other reasons which would, in any case and irrespective of the impugned provisions of the Order, have prevented success in these public calls for tenders. The Constitutional Court believes that such a question could be settled in a possible civil action if the initiator were to initiate one in the event of success in the constitutional appeal proceedings. The Constitutional Court decided that for the existence of legal interest in this proceeding, it is sufficient that the initiator competed in public calls for tenders in which the impugned provision was used and was not successful in them. If the impugned provision had really been unconstitutional and illegal in the sense that the initiative suggests, a finding of non-compliance with the Constitution and with Law would also be possible, with the effect of annulment ab initio. This could effect the initiator's legal position in a possible civil action for the restitution of damages which are claimed to have been created because he was not selected as the most advantageous bidder.

B. - II.

13. Since the conditions under the fourth paragraph of article 26 ZUstS were also met, the Constitutional Court adopted the initiative and immediately continued with deciding on the matter itself.

14. The European Agreement on Association between the Republic of Slovenia on the one hand and the European Communities and their member states which operate within the framework of the European Union on the other, did not enter into validity with the concluding document signed on 10 June 1996 in Luxembourg (hereinafter: EA). It came into effect, namely, on the first day of the second month of the date on which the contract parties informed each other that the internal procedures for approving the agreement in Slovenia, on the one hand, and in all member states on the part of the European Union on the other (article 131 EA) were completed. The positive opinion of the European parliament is also required (article 228, third paragraph of the Treaty of Rome). The impugned provision of the Order also ceased to apply prior to the introduction (8.8.1997) of the Ratification Act of the European Agreement on Association between the Republic of Slovenia on the one hand and the European Communities and their Member States which operate within the framework of the European Union on the other, with final documents and protocols with which is adopted the European Agreement on Association between the Republic of Slovenia on the one hand and the European Communities and their member states which operate within the framework of the European Union on the other hand (MESP) (Official Gazette RS, no. 44/97 - International contracts, no. 13), whereby the National Assembly approved that the State of Slovenia binds itself in international law to fulfilling the EA. The impugned provision of the Order also ceased to apply prior to the Ratification Act of the Temporary Agreement on Trade and Affairs in Connection with Trade between the Republic of Slovenia, on the one hand, and the European Communities, the European Communities for Coal and Steel and the European Communities for Atomic Energy on the other hand (Official Gazette RS, no. 27/97 - International contracts no. 8), which covered only the trade part of the (association) agreement. This provision of the Order even ceased to apply prior to 1.1.1997, that is prior to the date from which this Temporary Agreement which was signed in Brussels on 11 November 1996, was temporarily used even prior to its ratification in the National Assembly1. So an investigation in the sense of whether the impugned provision of the Order was in conflict with adopted international obligations which derive from the EA was unnecessary, even if the initiator were to have introduced it.

15. In article 1, the Order determined that DARS shall lease areas determined for the construction of facilities for associated activities, on the basis of a public call for tenders, to the most advantageous bidder under criteria and under conditions determined by this Order. In the first paragraph of article 3, it is determined that a bidder must meet the conditions of the public call for tenders and submit specified documentation under a), b), c) and d). The documentation which must be submitted under d) embraces "references obtained in the construction of similar facilities and their business, management and maintenance". With the second paragraph of the Order, the Order determined that a bidder for the lease of a petrol service station must submit documentation or evidence from which it is evident that, in addition to other references, he also fulfils the following conditions:

- that he has a base for the supply of oil derivatives on the territory of the Republic of Slovenia which guarantees at least one month's supply of petrol to service stations already constructed in the Republic of Slovenia and for the supply of the petrol service station under tender;

- that he carries on the supply of oil derivatives at at least three petrol service stations on the territory of the Republic of Slovenia;

- that he has guaranteed long term supplies of oil derivatives from at least two suppliers;

- that he regularly pays compensation for the use of areas of already constructed associated facilities.

16. In this proceeding, therefore, the first and second indents of the second paragraph of article 3 of the Order are disputed by the initiator. The "references are disputed: first, that the bidder must have a base for the supply of oil derivatives on the territory of the Republic of Slovenia which guarantee him at least one month's supply for his already constructed petrol service stations in the Republic of Slovenia and for the supply of the petrol service station under tender, and second, that the bidder must already carry on the distribution of oil derivatives at least three petrol service stations on the territory of the Republic of Slovenia. The initiator reproaches the specific "references" that they are in conflict with article 14 of the Constitution (principle of equality) because the impugned provision is claimed to be discriminatory; it is also claimed to be in conflict with the first and third paragraphs of article 74 of the Constitution and with ZVK.

17. The third part of the Constitution refers to economic and social relations. The provision of article 74 of the Constitution is also placed here, which determines:

"Free enterprise shall be guaranteed. The establishment of businesses shall be regulated by statute. Any business activity in conflict with the public interest may not be pursued.

Restrictive trading practices and other practices which restrict free competition, as specified by statute, shall be forbidden."

18. The placing of the above cited article outside the second part of the Constitution, which refers to human rights and freedoms already indicates the specificity of this provision in relation to the provisions of the second part of the Constitution. Article 74 of the Constitution represents above all a basic constitutional definition of the economic system in the state. This is based on free economic initiative or free enterprise (in distinction from the former socialist constitutional arrangement). Business or economic freedom under article 74 of the Constitution guarantees above all the protection of the free operation of private economic subjects against state intervention. Free enterprise guarantees in particular the right to found a company (under statutory conditions), to manage it in conformity with business principles (respecting mandatory regulations) and also if so desired, to close it. It also embraces the right to choice of activities of economic subjects and to the choice of business partners, etc. The third paragraph of article 74 of the Constitution in particular also bans activities of unfair competition and acts which restrict competition in conflict with law. Such a law is, of course, ZVK, to which the initiator also refers.

19. Comparatively, such provisions do not as a rule appear in constitutions. In western democracies, namely, such a nature of the economic system has never been in question. Free enterprise is also not a category which has been particularly protected, e.g., by the Convention on the Protection of Human Rights and Fundamental Freedoms (Official Gazette RS, International contracts no. 7/94) on which our constitution maker modelled himself. The constitutional court of Germany whose Constitution, in contrast to ours, does not recognise specific provisions on free enterprise, derives free enterprise from the general freedom of behaviour (as free entrepreneurial behaviour), whereby it is also understood in the above (under 18) described sense. In weighing between protected values (an individual's free behaviour) on the one and general benefits on the other, the German constitutional court differs among encroachments on the most intimate spheres of an individual, the wider fields of the personal sphere and the social spheres of an individual's activities.

20 In the case being tried, in connection with the asserted violation of the third paragraph of article 74 of the Constitution, it is necessary first to establish that here the act of unfair competition cannot be spoken of. The perpetrator of such a banned activity of unfair competition can only be another participant on the market. In the case under discussion, the content of the Order, which was issued by the Government is disputed. Acts which in conflict with law restrict competition may also be impermissible encroachments of the state on free competition. In connection with this, ZVK determines in article 17: "State organs and organs of local communities, companies and other organisations and individuals which exercise public authority may not restrict the free appearance of companies on the market.

As restricting the free appearance of companies on the market in the sense of the previous paragraph shall be considered general and individual acts and activities whereby, in conflict with the Constitution and law, the free exchange of goods, free access to markets are restricted, or any other prevention of competition.

As acts and activities which restrict the free access of companies to markets shall be considered in particular acts and activities: - with which companies are prevented from performing activities in any region or in relation to any kind of activity, although the companies fulfil the conditions determined by statute; - whereby procedures for the issuing of permission for performing activities or any other permits necessary for appearance on the market are unjustifiably delayed;
- whereby indirectly or directly discrimination is created between companies in relation to whether they have their seat on the territory of a local community or outside this territory; - whereby trade in goods outside the territory of a local community is banned."

21. Since the prohibition under this article ZVK refers to the activities of authority or activities in connection with authorised functions and also embraces general acts, a government order could of course be in conflict with these provisions of ZVK and, at the same time, represent the prohibited activity of restricting competition in conflict with law under the third paragraph of article 74 of the Constitution. However, the content of such an order would only be in conflict with the cited statutory provisions if it in any way restricted the "free appearance of companies on the market" (first paragraph of article 17 ZVK). The impugned order does not regulate the free appearance of companies on the market but determines conditions for their equal appearance in a public call for tenders in which they compete for the lease of areas beside motorways where they would then perform appropriate business activities. Where there is the regulation of conditions for competition in public calls for tenders "free appearance on the market" is not restricted by regulations which determine such conditions but by regulations which subordinate the regime of the public call for tenders to the conclusion of a business transaction. Such a regulation was not in this case impugned nor the fact that the leasing of areas beside motorways was decided on the basis of a public call for tenders.

22. It remains only to try whether the impugned provisions perhaps signify violation of the equality of competition in competing in a public call for tenders - either violation of the ban on discrimination "in relation to nationality, race, sex, language ... or any other personal circumstance" under the first paragraph of article 14 of the Constitution (a stricter ban in which "infringement" might be permissible at most under strict conditions of the "test of proportionality", thus only in a case of a necessary, unavoidable encroachment for the protection of other constitutional rights, which would also not be disproportionate) - or violation of the general principle of equality before the law under the second paragraph of article 14, in which the existence of a violation (impermissible infringement) is established on the basis on many less strict criteria or only on the basis of the so-called "test of arbitrariness" (for the permissibility of the infringement, its necessity and proportionality in the narrow sense is not necessary, it is sufficient that the encroachment is not arbitrary - that there thus exists a comprehensible reason for it, deriving from the nature of the matter regulated).

23. Articles 18, 19 and 20 ZVK, to which the initiator also refers, regulate the possibility of restriction on the market irrespective of the provisions of article 17 ZVK and thus its violation does not enter into consideration because it was not an impermissible restriction of free competition under article 17 ZVK, as will be explained below.

24. As the name already says, the Order determines the procedure and conditions for leasing areas beside motorways for the construction of facilities for associated activities. Thus it determines in advance conditions and criteria which DARS is bound to respect in future public calls for tenders. All such calls for tenders set specific criteria and conditions which undoubtedly, since that is their intention, restrict the circle of acceptable bidders. In the first paragraph of article 3, among mandatory annexes to the bid in public calls for tenders to which it refers, the Order also determines "references obtained in constructing similar facilities and with their business, management and maintenance". The second paragraph concretises this (among other things) with the disputed specified references. A bidder must thus submit evidence that he has a base for the supply of oil derivatives and that he already performs distribution of oil derivatives at at least three petrol service stations, all in the Republic of Slovenia. Mandatory references so specified may signify a decisive excluding factor in public calls for tenders to which the Order refers. If the initiator cannot show the references so specified, namely, he does not meet the conditions defined in the Order. The client may therefore reject such a bid as incomplete. The distinction which the legislator introduced between those market subjects who have in Slovenia a base for the supply of oil derivatives and at least three petrol service stations and those who do not thus indirectly prevents some market subjects from successfully competing in public calls for tenders to which the Order referred. The question of constitutional judgement is whether this was constitutionally permissible.

25. It was first necessary to try whether the cited distinction signifies violation of the ban on discrimination "in relation to nationality, race, sex, language ... or any other personal circumstance" under the first paragraph of article 14 of the Constitution. From the diction of the impugned provision itself, which determines the required references for all alike, discrimination in relation to the personal circumstances of the bidder does not follow (the initiator, e.g., is a registered company in Slovenia although one hundred percent in foreign ownership), which would require a strict constitutional judgement, or judgement by the test of proportionality. It is theoretically possible that the maker of the Order would have determined the required references at first sight for all equally but intentionally such that it would exclude in advance or prevent groups of bidders in terms of personal circumstances in relation to which it would be necessary with the distinction to use the strict test of constitutional judgement. The initiator did not assert in the procedure nor show evidence of possible suspect discriminatory motivation of the Government with such a determination of references in the impugned provision of the Order, whereby the burden of asserting and demonstrating this fact would be on the initiator. Irrespective of this, the judge rapporteur drew attention to this at the public hearing at that moment of the case. The judge rapporteur therefore appealed to him to say publicly whether his standpoint is that the Government had discriminated against foreign competition, and drew his attention that that was the right moment to declare and say whether he has any kind of evidence of suspected discriminatory government motivation in formulating the disputed tender conditions. The initiator did not react to this and in his answer neither asserted nor provided evidence in this direction At this objective moment, too, open discriminatory behaviour was not indicated in the cited sense. The representative of DARS at the public hearing, namely, explained that at the same public calls for tenders, the bidder Inter-Ina, similarly a company registered in Slovenia but owned by foreigners, fulfilled the requirements in relation to a base for the supply of oil derivatives and also in relation to the number of service stations, although in view of other deficiencies in the bid it was not selected at the call for tenders. The representative of MPZ added that Istrabenz also has foreign capital and that there is therefore no hindrance for an interested firm which could be connected to the question of foreign ownership of their capital. In view of the above, it was therefore necessary to exclude possible violation of the ban on discrimination under the first paragraph of article 14 of the Constitution.

26. There remains the judgement of whether there was violation of the general principle of equality before the law under the second paragraph of article 14, in which the existence of a violation (impermissible infringement) is established on the basis of milder criteria or only on the basis of the so-called test of arbitrariness.

27. Since the initiator asserts that the Government prevented him with the Order from performing activities, although he fulfils conditions prescribed by statute or is suitably registered (first indent of the third paragraph of article 17 ZVK) it is necessary to establish that the relevant type of activity which clearly refers to the distribution of oil derivatives (as well as trade and other activities), cannot be defined narrowly such that it would refer only to its performance beside motorways. Even the concept "region" under the first indent of the third paragraph of article 17 ZVK can only be understood in the sense of a rounded geographical entirety, so "region" can in no way only be "beside motorways". So also the relevant concept of market for this case does not refer only to the market of distribution of oil derivatives beside motorways. Neither the relevant activity (type of activity) nor the relevant market are thus covered by the subject of the Order, which referred only to the procedure and conditions for leasing areas beside motorways for the construction of facilities for associated activities, nor with the subject of already implemented public calls for tenders with which the Order has already been used.

28. It also follows from the above stated, together with consideration of the concept of relevant market in this case, that the impugned provision of the Order or disputed specific references did not in advance exclude from the market all those who at the time of the Order taking effect were not present on the market, and these could be pushed into a position in which they were completely unable to break onto the market2. It is important in this that there was never any similar restriction which could have prevented the opening of a petrol service station anywhere else in Slovenia (it was only necessary to show such references for business beside motorways). The possibility of inclusion on the Slovene market for the sale of oil derivatives at petrol service stations was thus throughout open to those newly interested, who could begin to do business without showing such references and could be involved in the described activities at petrol service stations in any other location (by local or regional roads, in towns, in settlements...). Even the fulfilling of the "references" determined in the Order was not impossible for newcomers. Anyone interested (suitably registered company) could have fulfilled the "references" cited in the Order. Anyone who did not already have or did not succeed in obtaining suitable references by the time of the first appropriate public call for tenders could obtain them by the following one. It was clear, namely, throughout, in connection with the further construction of the motorway network, that further similar public calls for tenders would be issued in the future. The initiator partially proved this himself because by his own statements he later nevertheless began to open petrol service stations at other locations.

29. It is logical that with a public call for tenders, (the client) cannot wait for all interested parties equally to satisfy the criteria and measures which it has been considered bidders should satisfy. In the opposite case, namely, it would always be necessary to wait with a public call for tenders in order for possible new interested bidders perhaps to satisfy criteria and measures of these public calls for tenders. The Constitutional Court finds that the initiator, who had already been registered for suitable activities in Slovenia for three years prior to the introduction of the Order, in view of statements (at the public hearing) also himself slowly reacted. He states that he had first to view the Slovene market, make suitable analyses and prepare for business (although his activity is wider and embraces not only the opening of petrol pumps), in addition to which the procedures for obtaining suitable planning permission for constructing petrol service stations and the construction of these is claimed to be long (approximately one year and a half is claimed to be required). Although the procedures for obtaining planning permission and constructing petrol service stations really is as long as the initiator states, it would have been realistic to expect that the initiator would nevertheless have started to do business in the cited sense in the three years since his registration. His situation (when at the time of past public calls for tenders he had not available the required references) is thus also a result of his own past business decisions and chosen strategy in the approach to the Slovene market.

30 From what has been stated so far, it also follows that the initiator's reference to decision no. U-I-52/90 of 26.3.1992 (OdlUS 1,18) in connection with the asserted violation of article 74 of the Constitution, is unfounded. The case being tried is completely different from the case to which the initiator refers. In the given case, namely, it is not the prescribing of conditions for performing activities (which cannot be defined so narrowly as the initiator mutatis mutandis would like, as has already been argued above).

31. In view of the existence of a legitimate national (state) interest in the disputed distinction, the Government stated in a written reply that the Order defines the concept "references" concretely because only thus is it possible to ensure that the lease of public areas could not occur to bidders who were unable, in conformity with the public interest in undisturbed and safe flow of traffic, to ensure motorway users undisturbed supply of fuel. The representative of MPZ also explained at the public hearing that in preparing the impugned Order, they tried to follow the cited public interest, i.e., ensuring safe flow of traffic and supply of fuel.

32. The very existence of a legitimate national interest which the disputed arrangement wished to satisfy is actually not disputed between the parties. That there existed a legitimate national interest in the case is also recognised by the initiator. Thus at the public hearing, among other things he stated: "The Government clearly followed aims which are legally permissible. The aims are legitimate, they are justified and they are aims which rely on the undisturbed supply of oil derivatives, on the safe flow of traffic and other aims already enumerated." However, the initiator believes that the public interest is wider than that considered by the Government. The Government is thus claimed not to have considered the interest of protection of the environment (it is claimed that it would be more beneficial for the environment to import fuel from other countries than to have a base in the country) and interests in relation to the level of rent (mutatis mutandis the interest of the taxpayer to obtain the highest rent possible). The Constitutional Court judges on this that it is a matter of assessment for the Government, whose perception of the public interest is given priority in its decision making. The Order, too, in no way excludes respecting the level of rent as a measure in the selection of the most advantageous bidder. From the statements and documents it is evident that in the procedures of public tenders to date in which the initiator took part, the level of rent offered was taken into account as a measure in selecting the bidder. Insofar as the initiator mutatis mutandis suggests that this should be the only criterion and this is claimed to be in the public interest, he is not correct; the public interest does not only cover the level of rent.

33. It is not possible to doubt the existence of a legitimate national interest in the extent, such as the Government introduced, namely, ensuring undisturbed and safe flow of traffic and undisturbed supply of fuel for users of motorways. The national interest in ensuring national security in cases of possible war or states of emergency is also clearly legitimate.

This is also clearly connected with the interest in at least minimum stocks of fuel on national territory. Business beside motorways is of course exceptionally profitable business, setting up petrol service stations and supply of fuel beside other roads (especially outside town centres) is essentially less profitable. Setting up petrol stations and supply of fuel, for example ,in demographically threatened, mountain and hilly regions and economically retarded regions, can even be unprofitable. The pursued public interest is thus also the interest in the balanced supply over the entire state territory with fuel, thus also places in which business would be less profitable than beside motorways or would even be unprofitable. There is also a clear legitimate national interest that users of roads (including regional and local roads) and the inhabitants of all regions are provided with undisturbed and equal supply of fuel. This is also in conformity with the principle of a social state (article 2 of the Constitution) as well as with the obligation of the state to look after economic, cultural and social progress in mountainous and hilly regions (third paragraph of article 71 of the Constitution).

34. Together with all this, in connection with the reproached violations, it is also not unimportant that for the activity of distribution of oil derivatives there is already a statutorily expressed requirement for reliable and high quality supply for users and a stressed requirement that the public interest or public benefit be respected in this. According to point 1 of the first paragraph of article 81 of the Public Services Act (Official Gazette RS, no. 32/93 - hereinafter: ZGJS), the provisions of the Power Economy Act (Official Gazette SRS, no. 33/81 and 29/86) ceased to apply on the day of the former taking effect, except for the provisions of articles 2 to 10. 12. 13, 19, 21, 63 and 65 to 88. Under the provisions of article 2 of the Power Economy Act this also includes oil-gas activities. Performing energy activities must enable the economic, safe and optimal exploitation of sites of energy sources as well as facilities, equipment and installations and the reliable and high quality supply to users of sources of energy. Under the provisions of the third paragraph of article 2, energy activities were defined as matters of particular social importance which, on the basis of article 68 ZGJS, are considered to be public services. According to the provisions of article 5 of the Power Economy Act, in connection with article 68 ZGJS, the distribution of oil derivatives is a public service.

According to article 10 of the Power Economy Act, distribution under article 5 means forming and conducting policies of supply to users with these types of energy. In the second paragraph of article 1 ZGJS, the obligation of the Republic of Slovenia to ensure in the public interest permanent and undisturbed material public welfare with public services is specifically determined.

From what has been said, it follows not only that this activity may not be carried out in conflict with the public well-being (second paragraph of article 74 of the Constitution) but the maker of the Order was even bound by statute to consider most carefully the public interest or public benefit expressed in this field.

This, of course, had also to be reflected in the forming of conditions and criteria defined in the Order.

35. It is therefore necessary further to establish whether the disputed distinction is comprehensibly connected with the described legitimate national interest. In relation to the requirement of a base for the supply of oil derivatives on the territory of the Republic of Slovenia, the representative of MPZ explained at the public hearing that in the preparation of this Order, what was actually of concern was how there would be undisturbed supply of fuel in the case of a blockade of the border, and even more in the event of possible strikes in neighbouring states if fuel was transported from there. It is clear that the minimum stock of fuel (one month's supply for already constructed petrol stations and for the supply of the petrol station under tender) which the disputed arrangement implicitly requires with references so determined, is in comprehensible connection with legitimate national interests, i.e., the undisturbed supply of oil derivatives and safe flow of traffic. The provision which requires at least minimum stocks of fuel on national territory is also in comprehensible connection with the legitimate state interest of national security, especially in cases of any kind of state of emergency, when a lack of fuel could also clearly have negative consequences on national security. The initiator stated at the public hearing that he would himself need a very small base for the supply of a single or even three petrol stations which he would supply, which in no case could affect national use or supply of fuel. The disputed "reference" is thus claimed not to be comprehensible. The reproach is unfounded. It is clear that the position of each individual bidder and the quantity of fuel which they would supply is not relevant to the existence of an understandable connection with the stated legitimate state interests. It is sufficient that the total effect of "references" so determined is in understandable connection with the cited public interest.

36. Since only the test of arbitrariness is indicated, it is not necessary that the mildest means for realising the legitimate national interest be used. Nevertheless, it seems necessary to react to the initiator's statement at the public hearing, that the Government had withdrawn the demand for a base because it is claimed that instead of a base, it required by the Amendments and Supplements to the Order only higher payment in the form of a bank guarantee which would be realised because there will still not be a base. Such an interpretation of the amended provision on the part of the initiator is, in the opinion of the Constitutional Court, in conflict with the principle of "pacta sunt servanda" as well as the principle of conscientiousness and honesty in contract law. Under the Amendments and Supplements to the Order, namely, a bidder who does not have such a base must bind himself that he will have one within a time limit of three years from the signing of the contract, and for this purpose, shall lodge an unrecallable bank guarantee of a bank of first order, redeemable at the first appeal, to the value of the amount which derives from the contract. The bidder thus in good faith binds himself that he will have such a base. That is also the purpose of the provision.

37. The references that a bidder already performs distribution of oil derivatives at at least three petrol service stations on the territory of the Republic of Slovenia (second paragraph of article 3 of the Order) is a concretisation of the first paragraph of article 3 of the Order that references are required obtained in the construction of similar facilities and in their business, management and maintenance. The representative of MPZ explained at the hearing that they decided so because "we are already familiar with petrol stations in Slovenia, we know what is provided and the quality, how they are prepared to operate". From the answer of the Government it follows that it wished to ensure that there would not be the lease of public areas to a bidder who was not capable, in conformity with the public interest for undisturbed and safe flow of traffic, to guarantee to users of motorways undisturbed supply of fuel. The standpoint of the initiator is different. He maintains that the capacity of the bidder should be shown with references for the same kind of facility elsewhere in the world, as this is claimed to be normal elsewhere. The Constitutional Court finds that any experience, thus also the experience of bidders, obtained on the home market is in understandable connection with the requirement for demonstrated quality which is supposed to contribute to the selection of a candidate who is capable, in conformity with the public interest for undisturbed and safe flow of traffic to guarantee to users of motorways undisturbed supply of fuel. That only experiences obtained on the home market were relevant for the Government, because these are easier to evaluate (in view of the statements of the representatives of MPZ), at the time of validity of the Order could not be disputed in international law (in relation to possible various state undertakings of obligations which derive from ratified international contracts - see point 14 of this reasoning). In order to satisfy the requirements of the test of arbitrariness, this finding alone is sufficient. The fact that the Government later abandoned the references so determined is not connected with the satisfaction of this test.

38. The reference so determined was also in understandable connection with legitimate national interests. It is, namely, in understandable connection with the legitimate national interest for balanced supply over the entire territory of the state with fuel and the interest that users of all roads (including regional and local) and the inhabitants of all regions receive undisturbed and balanced supply of fuel. Those who wish to conduct business beside motorways, where business is profitable, should previously demonstrate at least minimum interest (only three petrol stations were required) in supplying also the remainder of the state territory. Otherwise, those distributors of oil derivatives who only had petrol stations beside motorways would also be privileged in relation to the possibility of profit in comparison with others who also do business in the least profitable locations and are thus prepared to supply the entire territory of the state with oil derivatives. The fact that the Government later "for reasons of foreign policy"3 abandoned the requirement to show such references, has no effect on the understandability of the described connection.

39. In view of all that has been stated, the Constitutional Court decided that the impugned provision of the Order was not in conflict with the Constitution and Law.

C.

40 The Constitutional Court adopted this decision on the basis of articles 21 and 47 of ZUstS, composed of: president Dr. Lovro Šturm and judges Dr. Peter Jambrek, Dr. Tone Jerovšek, Mag. Matevž Krivic, Mag. Janez Snoj, Franc Testen, Dr Lojze Ude and Dr. Boštjan M. Zupančič. The resolution was adopted unanimously. Judge Ude gave a concurring opinion.


P r e s i d e n t:
Dr. Lovro Šturm



Notes:
1. According to article 1 of the Order on the temporary use of the temporary agreement on trade and matters in connection with trade between the Republic of Slovenia on the one hand and the European Communities, European Communities for coal and steel, and the European Communities for atomic energy on the other (Official Gazette RS, no. 67/96).
2. It was not therefore a so-called "grandfather clause" as foreign constitutional judiciaries (USA) recognise it.
3. This was clearly a reaction to the negative response which the impugned arrangement of the Order had in EU countries.
Type of procedure:
review of constitutionality and legality of regulations and other general acts
Type of act:
executive regulation
Applicant:
Shell Slovenija d.o.o., Ljubljana
Date of application:
09.09.1996
Date of decision:
19.03.1998
Type of decision adopted:
decision
Outcome of proceedings:
establishment – it is not inconsistent with the Constitution/statute
Document:
AN01473