UPC is a Luxembourg company which supplies, from Luxembourg, packages of radio and audiovisual broadcast services that can be received by satellite to subscribers in other Member States, including Hungary.

Following complaints by subscribers, the Hungarian communications regulatory authority asked UPC to provide them with information concerning its contractual relationship with one if its customers. However, UPC refused to provide that information claiming that, since it was registered in Luxembourg, the Hungarian authority did not have the power to commence surveillance proceedings against it. As a result of the refusal, the Hungarian authority imposed a fine on UPC. UPC challenged the fine and the Budapest Municipal Court made a reference for a preliminary ruling asking, in essence, whether the Hungarian regulator is allowed under EU law to exercise oversight over UPC’s business in Hungary.

Three main issues were addressed in the preliminary ruling.

1. Is UPC an electronic communications service provider within the meaning of the Framework Directive? The Court answered in the affirmative on the grounds that UPC did not itself produce the programs it distributed and did not exercise any editorial control over them. The fact that the subscription fee covered not only transmission costs but also fees paid to TV and radio broadcasters and collecting societies was not deemed relevant for the qualification of UPC as an electronic communications provider, nor the fact that UPC relied on the satellite infrastructure of a third party for the conveyance of its signal. In the Court’s view, what mattered was that UPC was responsible vis-à-vis end-users for the transmission of the signal which ensured that they were supplied with the service to which they had subscribed. According to the Court, this is the key parameter that brings a company like UPC under the scope of the Framework Directive.

2. Applicable rules: The Court noted that the issue whether national legislation in the electronic communications services sector (in this case, Hungarian Law C of 2003 transposing the new regulatory framework for electronic communications and establishing the NRA’s competences, including market surveillance) must be considered on the basis of Article 56 TFEU depends on the degree of harmonization within the European Union in that sector. Since the proceedings in Hungary concerned consumer protection, an area which has not been fully harmonized by either the Framework Directive or the Universal Service Directive (see Case C-522/08 Telekomunikacja Polska), the Court held that the Hungarian law must be considered in the light of Article 56 TFEU rather than the regulatory framework for electronic communications.

3. Are consumer protection-related surveillance proceedings subject to the administrative authorities of the State of reception or to those of the State of origin? This question arose from the dispute in the main proceedings regarding the competences of the Hungarian and Luxembourg authorities. Having established that UPC falls under the scope of the regulatory framework for electronic communications, the Court referred to Article 11(b) of the Authorization Directive which lays down that national authorities may request information to verify compliance with conditions relating to consumer protection. The Court then noted that as the Authorization Directive currently stands, national authorities do not have the obligation to recognize authorization decisions taken by the authority of the country of origin. In view of the above, the Court reached the conclusion that the State of reception may make the provision of those services subject to certain conditions in order to protect consumers’ interests.

This judgment may have far-reaching implications not only in terms of the monitoring power that national regulatory authorities of the State of reception may exercise over foreign providers, but also because it defines an undertaking which, while not producing the programs it distributes, puts together the content that is ultimately made available to consumers, as an electronic communications service (thus, falling under the scope of the regulatory framework for electronic communications) rather than an audiovisual media service (in which case it would be covered by the Audiovisual Media Services Directive).