EHRM, 16-10-2018, nr. 21623/13

The case originated in an application (no. 21623/13) against Hungary lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (‘the Convention’) by Könyv-Tár Kft, Suli-Könyv Kft and Tankönyv-Ker Bt (‘the applicant companies’), on 26 March 2013.

The applicant companies were represented by Mr P. Köves, a lawyer practising in Budapest. The Hungarian Government (‘the Government’) were represented by Mr Z. Tallódi, Agent, Ministry of Justice.

On 17 October 2013 the application was communicated to the Government.

Declares, unanimously, the complaint concerning Article 1 of Protocol No. 1 to the Convention admissible;

Declares, unanimously, the complaint concerning Article 13 of the Convention, read in conjunction with Article 1 of Protocol No. 1, inadmissible;

Holds, unanimously, that there is no need to examine separately the admissibility or the merits of the complaints under Article 6 § 1 of the Convention and Article 14 read in conjunction with Article 1 of Protocol No. 1;

Holds, by six votes to one, that there has been a violation of Article 1 of Protocol No. 1 to the Convention;

Holds, by six votes to one, that the question of the application of Article 41 is not ready for decision; and accordingly,

Done in English, and notified in writing on 16 October 2018, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

Marialena Tsirli

Registrar

Vincent A. De Gaetano

President

In accordance with Article 45 § 2 of the Convention and Rule 74 § 2 of the Rules of Court, the following separate opinions are annexed to this judgment:

V.D.G.

M.T.

Könyv-Tár Kft and Others v. Hungary is a remarkable case for various reasons. It deals for the first time with the creation of a de facto State monopoly in a delicate, profitable economic area, that of schoolbook distribution, in the context of successive State interventions in a particularly sensitive social and political area, that of public school management. Ultimately, what is at stake in this case, and remained unnoticed in the majority judgment, is also the freedom of choice for schools and teachers in Hungary to decide what is taught and how it should be taught. This alone would have prompted me to write separately. But there are additional reasons for me to do so, which relate to the nature of the State's intervention in this case and the width of its margin of appreciation.

I agree with the majority that the Government's New Regulations1. amounted to a violation of Article 1 of Protocol No. 1 to the Convention. However, I write separately to argue that this legislation amounted to a calculated measure of deprivation of a possession (the applicant companies' clientele) and not a mere measure of control of the use of their possession. From this perspective, I am of the view that the margin of appreciation afforded to the first of these two forms of State intervention in the economy is narrower than the one accorded to the second, and that the case-law on compensation was directly applicable to the case at hand.

In essence, I agree with the arguments expounded in the separate opinion of Judge Wojtyczek, in particular those pertaining to the obscurity of the notion of clientele, as employed in the judgment; the unwillingness of the majority to openly recognise that prior to the adoption of the impugned legislative measures the Hungarian schoolbook market was distorted; and the reproaching of the respondent State for the de facto monopolisation of the schoolbook market without acknowledgment of the fact that that market was already — also de facto — monopolised by some ‘players’, including the applicant companies (see especially paragraph 11 of the judgment). To give just one example, the judgment states that ‘the schoolbook market indeed had some special attributes’, but then it adds that ‘these did not yield any special or privileged market situation for the applicant companies which would have justified in itself the impugned State's intervention’ (see paragraph 53). ‘Special attributes’ is nothing but a euphemism; it covers not only the ‘unusual’ character of the textbook market as such (see paragraph 52), but also its factual monopolisation by some of the existing ‘players’.

The judgment is not only business-friendly (as Judge Wojtyczek points out and rightly welcomes), but is also permeated with unfriendliness towards State regulation of certain markets (and maybe not only the schoolbook market). Some of the expressions used and the flow of reasoning as a whole create an impression that the introduction of State regulation of specific markets is an unwelcome enterprise under the Convention, even where the insufficiency or complete absence of regulation has resulted in market distortion and the factual impossibility for new competitors to enter the market — with all the negative consequences for the end-users. For instance, in paragraph 56 of the judgment, the impugned legislative intervention is held to be not ‘justified in itself’ (emphasis added) and ‘arbitrary’; the latter label is also present in paragraph 59, which concludes the reasoning. In paragraph 58 this intervention is stamped as ‘drastic’. This is much too much. How can one speak of a measure as such being ‘arbitrary’ or ‘drastic’, if the situation commands legislative intervention on the part of the State? To continue, in paragraph 59, the majority uncritically accept the applicant companies' assertion that the impugned measures brought no ‘real benefits for the parents or pupils’. On this point, I refer to Judge Wojtyczek's insistence on not ignoring the broader context when introducing an economic rationality analysis into the proportionality assessment under Article 1 of Protocol No. 1.

My approach is different from that of my prominent colleague only in so far as I, like the majority, consider that the legislative measures complained of were rather abrupt and not supported by a proper transitional period and/or certain other ‘positive’ schemes, which would have allowed the applicant companies to adjust to the new regulations. There is no doubt that the Hungarian schoolbook market was distorted before the State intervened, and that the applicant companies benefited from this distortion. However, it was not the companies (or other such ‘players’) who were at the root of that distortion — they only made use (most likely, quite legitimately) of the absence of relevant legal regulation. They should not therefore bear all the burden of the State's intervention, the aim of which, as the Government asserted, was to straighten out something that had become crooked. Consequently, I voted with the majority in favour of finding a violation of Article 1 of Protocol No. 1.

The majority state that ‘[e]ven assuming that [the impugned] reform was aimed at ensuring a more efficient spending of public funds, the Court is not convinced that this aim consisted in protecting the end-users' … interests, given that the prices of schoolbooks were and remained State-regulated’ and magnanimously concede that there might have been some ‘legitimate aim pursued by those measures’ (see paragraphs 46 and 47 of the judgment). The ‘even assuming’ clause allows the majority to conclude that there is no ‘need to determine whether the implementation of the impugned reform pursued a legitimate aim’ (see paragraph 46). I cannot agree with such an approach. There is such a need! And a legitimate aim was pursued by the respondent State, even if the measures implemented appeared to be disproportionate. By resourcefully avoiding to acknowledge that there was such an aim, that is to say, that the impugned measures were prompted by the already existing distortion of the schoolbook market, the judgment uses Article 1 of Protocol No. 1 as a tool for favouring one extreme version of economic liberalism against those versions which do not turn a blind eye to markets’ social dimension(s). Throughout the whole text of the judgment, the promotion of this approach is not even camouflaged.

One last remark — an optimistic one. In paragraph 26 of the judgment it is stated that the Court will not address the ‘question as to whether in general a constitutional complaint to the Hungarian Constitutional Court is an effective remedy for the purposes of Article 35 § 1 of the Convention’. This stance is a step forward from the disdainful disqualification, in a number of the Court's previous (even recent) judgments, of Hungary’s Constitutional Court as something not relevant to the protection of human rights (I refer to my dissenting opinion in Király and Dömötör v. Hungary, no. 10851/13, 17 January 2017). The instant case was last deliberated on by the Chamber on 12 June 2018, but (for organisational reasons) the time span between the adoption of the judgment and its delivery turned out to be quite lengthy. In the meantime, the Court has delivered its decision in Mendrei v. Hungary ((dec.), no. 54927/15, 19 June 2018), in which it has been acknowledged (at last!) that a complaint to Hungary’s Constitutional Court is such an effective remedy. I hope that the present judgment is the last one to bear a slight trace of the previous distrust of the most important national constitutional instrument of this particular respondent State.

I respectfully disagree with the view of the majority that in the instant case there has been a violation of Article 1 of Protocol No. 1 to the European Convention on Human Rights. The majority made a genuine attempt to develop the interpretation of the Convention in a business-friendly manner. I welcome this general approach but the detailed methodology applied by the majority and expounded in the reasoning prompts a series of objections. In my view, the case reveals all the weakness of the approach adopted by the Court towards economic liberty.

Article 1 of Protocol No. 1 guarantees every natural and legal person the ‘peaceful enjoyment of his possessions’ (‘respect de ses biens’). The Court has explained the meaning of this provision in the following terms:

The content of the right in question has been summarised as follows:

Moreover, in numerous cases the Court has found that undue restrictions on the ability to use and dispose of possessions amounted to a breach of Article 1 of Protocol No. 1 (see, for instance, Papamichalopoulos and Others v. Greece, 24 June 1993, Series A no. 260-B). Similarly, in many cases restrictions on the possibility of receiving income from possessions have led to a finding of a violation of Article 1 of Protocol No. 1 (see, for instance, Hutten-Czapska v. Poland [GC], no. 35014/97, ECHR 2006-VIII).

It is clear that Article 1 of Protocol No. 1, by protecting ius abutendi and ius fruendi, encompasses the freedom to conclude contracts concerning possessions, that is to say, contractual freedom. By protecting ius utendi, it protects inter alia the freedom to use possessions for the purpose of developing income-earning activities. More generally, it encompasses the freedom to conduct business activities upon the economic basis of possessions. As a result, the right of ownership enshrined in Article 1 of Protocol No. 1 implies as an inherent element the freedom to conduct business activities.

Economic liberty is indeed a human right of fundamental importance for the enjoyment and protection of all the other rights guaranteed in the Convention. There is neither freedom nor democracy, nor the rule of law, without economic liberty. First and foremost, there is no prosperity without economic liberty. There cannot be meaningful social rights without economic liberty as a conditio sine qua non for creating wealth. The freedom to create and conduct one's own business is also an essential element of personal self-fulfilment and happiness. Effective legal protection of economic liberty is particularly important for physical persons conducting business activities individually, for micro-enterprises, for family enterprises and for small enterprises, that is, for the types of businesses which are crucial for economic development but which — unlike big companies — often lack the capacity to successfully lobby for a favourable legislative framework and advantageous administrative measures.

Moreover, economic liberty is part of the ‘common heritage of political traditions, ideals, freedom and the rule of law’ referred to in the Preamble to the Convention. The Charter of Paris for a New Europe, adopted on 21 November 1990 by the States participating in the Conference on Security and Co-operation in Europe — a group of States even broader than the Council of Europe — expressed this common heritage in the following terms:

Economic liberty has been reaffirmed several times by the Conference on Security and Co-operation in Europe and, later, by the Organization for Security and Co-operation in Europe, for instance in 1992 in the Helsinki Document and in 1999 in the Istanbul Document.

It is a pity that the Court — for ideological reasons — was and still is reluctant to draw the obvious conclusion from the wording of the Convention and the Protocols thereto by overtly recognising economic liberty as a fundamental human right encompassed by the guarantees of Article 1 of Protocol No. 1. Instead, it has preferred and still prefers to resort to subterfuge to protect certain elements of economic liberty by using the concepts of clientele and goodwill.

It has to be added that Article 1 of Protocol No. 1 empowers States to control the use of property in accordance with the general interest. It is therefore obvious that this provision, while protecting economic freedom, entitles States to set clear rules for business activities, provided that such rules are necessary to protect the general interest. Economic liberty means freedom from unnecessary restrictions. Restrictions on economic liberty may be justified by the necessity to protect fundamental values such as, in particular, human dignity, the rights and freedoms of others, national security or the environment. The State is also entitled to intervene in order to correct the detrimental effects of market distortions. The higher the level of such distortions, the stronger the entitlement to interfere. The closer the market to the perfect competition pattern, the stronger the justification required for the interference. In exceptional circumstances — in particular, in the case of severe and unavoidable market distortions — the State may decide to establish a State monopoly.

In any event, business activities are carried out in a quickly changing world and require incessant innovation and adaptation to the changing environment. The free market eliminates companies which are not able to adapt and constantly reinvent their business. Furthermore, technical progress and social changes may justify changes to legislation regulating business activities. All those factors limit the legitimacy of the entrepreneurs’ expectation that the existing regulations will remain unchanged.

The Court, as mentioned above, has often apprehended economic freedom through the notions of clientele and goodwill.

In the case of Van Marle and Others v. the Netherlands, the Court held that ‘by dint of their own work, the applicants had built up a clientèle; this had in many respects the nature of a private right and constituted an asset and, hence, a possession within the meaning of the first sentence of Article 1’ (see Van Marle and Others v. the Netherlands, 26 June 1986, § 41, Series A no. 101).

In another case it expressed the following views:

(Malik v. the United Kingdom, no. 23780/08, § 90, 13 March 2012)

(ibid., § 105)

The approach of the Court has been summarised in the following way:

(Oklešen and Pokopališko Pogrebne Storitve Leopold Oklešen S.P. v. Slovenia, no. 35264/04, § 54, 30 November 2010)

The case-law also affirms that goodwill is to be protected as a possession within the meaning of Article of Protocol No. 1 (see, for instance, Buzescu, cited above, § 83).

In the instant case, the Court, following one existing line of case-law, apprehends economic freedom through the concept of clientele. Under this approach, clientele acquired through a business activity is considered a possession protected by Article of Protocol No. 1. It is true that interference with economic liberty often affects an entrepreneur’s clientele (in every sense of the word). Loss of clientele may be an important indication of interference with economic liberty. There is therefore no doubt that effects on clientele have to be taken into account for the purpose of assessing the permissibility of measures affecting business activities. However, an approach consisting in using clientele as the main criterion for identifying the existence of interference with possessions in the sphere of economic liberty prompts several objections.

Firstly, the terms ‘clientele’ in English and ‘clientèle’ in French may be used in different meanings. In everyday language they usually mean the set of current clients. They may also refer to both current clients and potential future clients. Or they may designate the capacity to attract and retain clients. The Court does not explain the exact meaning of the term ‘clientele/ clientèle’ but the reference in the reasoning of certain judgments to the building up of clientele over a period of years (see, for instance, Iatridis v. Greece [GC], no. 31107/96, § 54, ECHR 1999-II) may suggest that it pertains to the current set of regular customers rather than to occasional clients or potential future clients. This raises the question whether protection through the instrument of clientele extends to businesses relying mainly on one-time clients. In any event, in the absence of a clear explanation, no one knows exactly what the Convention protects, what the obligations of the State are or what current and potential entrepreneurs may legitimately expect from the public authorities.

Secondly, the Court has often stressed that a claim may qualify as a possession only if it is sufficiently established to be enforceable (see, for instance, Polacek and Polackova v. the Czech Republic (dec.) [GC], no. 38645/97, 10 July 2002). I note in this context that clientele is a matter of fact. It may take years to build up and maintain a clientele, while it may take moments to lose it. Legal scholars have expressed strong scepticism about the idea that clientele may be the object of a subjective right (see, for instance, P. Roubier, Droits subjectifs et situations juridiques, Dalloz, Paris 2015, p. 352). In many European States it is neither a subjective right nor a possession. In those systems there is no enforceable claim to have one's clientele protected. The mere assertion in the Court's case-law that clientele ‘has in many respects the nature of private rights’, not based upon any reasoning, is devoid of any persuasive force. The Court, while admitting that clientele does not have the nature of private rights in all respects, does not explain what the common features of both clientele and private rights are and why the similarities prevail over the differences.

More importantly, the concept of clientele as used by the Court protects the established entrepreneurs who have operated on the market for some time and who might already have not only recovered the sums invested but also made a substantial profit. It leaves outside the scope of protection those who are just about to enter a specific market or have just entered it without having had the time to build up their clientele. Such entrepreneurs might have invested considerable sums over several years preparing to enter an existing market, relying upon the assumption that the existing regulations will be maintained. Yet the recourse to the notion of clientele will leave them outside the scope of any Convention protection. The approach adopted by the Court is therefore fundamentally unjust because it protects only the established market operators, and may even protect those operators to the detriment of newcomers. Under the approach adopted, rent-suppressing and market-restoring measures, which by their very nature affect established clientele, require special justification whereas the opposite should apply: the preservation of existing market distortions should require justification under the Convention. If for instance, a State decides to abolish certain import taxes and this decision affects the clientele of domestic companies, according to the existing case-law the State has to justify this ‘interference’ under the Convention and demonstrate that it complies with the principle of proportionality.

Moreover, clientele may be acquired through different means. Clientele may be acquired through fair competition in an undistorted market. It may be acquired through unfair practices or as result of market distortions. It is highly problematic to protect clientele without looking at the way it was acquired.

By the way, in the instant case, the following inconsistency has to be pointed out. The majority found that the applicant companies were deprived of their clientele, viewing this as a possession (see paragraphs 32 and 43 of the judgment). Yet they characterise the interference not as a deprivation of possessions for the purposes of the second sentence of the first paragraph of Article 1 of Protocol No. 1, but as a control of the use of property referred to in Article 1 § 2 (see paragraph 43 in fine of the judgment).

For all the reasons set out above, it would be preferable if the case-law of the Court under Article 1 of Protocol No. 1 in respect of business activities, instead of focusing on the protection of clientele, finally started to recognise economic liberty overtly and to protect it effectively as a fundamental human right.

The majority rightly recognise certain specificities of the textbook market (see paragraphs 52–53 of the judgment).

As attending school is an obligation and schoolbooks are indispensable to fulfil this obligation, parents have no other option but to buy the schoolbooks chosen either by the State or by the schools. The parents who pay for the product neither decide whether to buy or not to buy it, nor can they choose between competing products. It may be debatable whether the sum paid by the parents for the schoolbooks is the price of a product or rather a fee for accessing educational services.

The main specificity of the Hungarian schoolbook market was that the main distribution channel was through schools. The schools chose not only the textbooks to be bought by the parents but also their distributors, while the pupils' parents had to pay for the schoolbooks. The final price for the consumer played only a limited role in the choice of the product. However, according to the submissions of the parties, the legislation in force imposed a predetermined price for schoolbooks which was lower than in retail trade in bookshops. At the same time, the mass scale of distribution through schools enabled the providers to generate profits within the economic margin of manoeuvre left by the predetermined price.

In such a market, schoolbook distributors have strong incentives to influence school headteachers and teachers, who in return do not have to bear any economic costs as a result of their choices and therefore do not have any motivation to care about the final price of the products. There is a very strong incentive to offer different types of advantages, not only to the schools as institutions but also to school staff members personally. Such practices, if they develop, further increase the economic burden which ultimately always shifts onto those who pay for the product and indirectly impacts on schoolbook prices, even if they are regulated.

I note in this context that, according to the applicant companies' submissions (document dated 16 May 2017, p. 3, paragraph 8), not only schools as such but also ‘school referents’ were paid a commission for their services (ibid., p. 3, paragraph 9, and p. 8, paragraph 30). Moreover, the owners and managers of the applicant companies have all worked or are still working as teachers (ibid., p. 3, paragraph 8). In any event, the applicant companies recognised that ‘the competition between the schoolbook distributors … had no effect on the schoolbook prices’ (ibid., p. 6, paragraph 19). It did not contribute to bringing the schoolbook prices down below the maximum price set by the authorities.

These features are not the only relevant ones. Firstly, Article 2 of Protocol No. 1 to the Convention provides:

Schoolbooks are an essential instrument of the education provided to children. The State has the obligation to set up a school system providing high-level educational services in conformity with the religious and philosophical convictions of parents and to ensure effective access to appropriate textbooks. These aims justify State interference in the schoolbook market even in the absence of any market distortions, provided it respects the right to education in conformity with the parents' religious and philosophical convictions. In particular, the State should create mechanisms ensuring that poor families can have all the schoolbooks necessary for their children.

Secondly, the facts established by the Court show that the textbook market had been monopolised by the second applicant company in six counties or regions (see paragraph 11 of the judgment). The Court has not tried to establish a broader picture of the market, but the fragmentary information shows the formation of regional monopolies which further affected the operation of the market. The sample data available in the instant case constitute a strong indication that such monopolies might also have existed in other regions. The applicant companies stated that ‘market shares were relatively stable and it was unlikely that a new competitor could successfully enter the market from one day to another’ (see the applicant companies' submissions dated 16 May 2017, p. 5, paragraph 16). It appears that the schoolbook market was based more on market sharing than on competition.

Thirdly, even if the conduct of the business was not dependent upon typical public orders placed and financed by public agencies, it was dependent upon the schools' choices of their business partners. The legislature has not only the power but also the duty to regulate such choices for the sake of the common good, striking an appropriate balance between the different private and public interests at stake.

Fourthly, the applicant companies alleged that they conducted only a seasonal business. Their activities slackened off during a substantial portion of the year. In other words, the applicant companies' business capacity was left unexploited for many months during the year. Prima facie, this choice of the companies' respective managers may be seen as surprising. It is not clear why the managers chose not to try to diversify the companies' activities, especially during the low season.

Fifthly, there are numerous other parameters which shape the textbook market, such as the frequency of changes to official school curricula, the frequency with which the publishers released revised editions and, in connection with this, the possibility of working in classes with second-hand books and their availability to parents. These aspects have not been examined in the proceedings before the Court.

There is no doubt that the textbook market was a distorted market. The parties did not submit any evidence as to how those distortions could have affected the number of companies active on the market and their profitability, but it would be difficult to conclude that the broken character of the market and the creation of monopolies in many regions did not contribute to increasing profits (in contrast to the view of the majority as expressed in paragraph 53 of the judgment). Whether the whole situation could be characterised as economic rent is a different question.

Moreover, the clientele of the schoolbook providers was very different from the clientele in other Article 1 of Protocol No. 1 cases decided by the Court. Neither the pupils' parents nor the schools can be regarded as a clientele acquired through free competition on the market. The parents constituted a ‘captive’ clientele acquired not through the attractiveness of the conditions offered to them by the distributors but as a result of choices made by other persons. Is this captive clientele a possession protected under the Convention? Does the Convention entrench this captivity?

Turning to the relations between distributors and schools, one has to stress that the underlying assumption in a democratic State ruled by law is that public institutions will permanently endeavour to lower the economic and social costs of the goods and services they contract. They always have the duty to find alternative, cheaper and better providers or, if the common good so requires, to completely reshape the regulation of the market segment concerned. In a public procurement market, nothing is guaranteed for the future. The distributors could not have had any legitimate expectation that schools would remain their clientele. They had to expect that the public authorities would always try to find better business partners.

In the circumstances explained above, although the entrepreneurs active in the schoolbook market in Hungary could legitimately expect that the existing business regulations would not be changed without sufficient reasons, they should not have been surprised by far-reaching State intervention in this market. In particular, the applicant companies, being aware of market distortions, which are a sufficient justification for changes to market regulations, could not reasonably expect that the State would preserve such distortions.

The Hungarian legislation passed in December 2011 and July 2012 (see paragraph 6 of the judgment) obliges schools to order schoolbooks for pupils through the newly created State-owned company. It de facto closed the most significant channel of textbook distribution to the applicant companies and guaranteed a privileged position to the official distributor by ensuring its monopoly over this distribution channel. As a result, the new State-owned distributor seized control of almost the whole textbook market. There can be no doubt that this legislative change adversely affected the conditions in which the applicant companies operated. Such types of legislative reforms may be excluded by bilateral treaties for the protection of foreign investments if they affect entrepreneurs from the other State party to the treaty, even if the measures pertain to distorted markets.

On the other hand, the legislative reforms did not legally close the schoolbook market to the applicant companies. The applicant companies are free to provide schoolbooks to bookshops, parents or private schools and to distribute schoolbooks through any other channels. All those channels of distribution were left untouched, but in the Hungarian context they were of minor economic importance as parents preferred to buy books ordered by the schools.

Moreover, the impugned measures started to produce their effects in September 2013 (see paragraph 6 of the judgment), more than twenty months after their publication. The applicant companies therefore had a relatively long period to adapt and reinvent their business. In particular, they could have used for this purpose the long periods when their activities slowed down. No obstacles to the diversification of their business activities have been demonstrated.

The majority point to the fact that the reform did not envisage any compensation for the companies affected (see paragraphs 51 and 57 of the judgment). In my view, in certain circumstances, past profits made in a distorted market may be seen as anticipated compensation for subsequent changes to legislation adversely affecting business conditions.

The majority rely on the data provided by the applicant companies, which allege that their margins were lower that the margin guaranteed legally to the State-owned distributor (see paragraph 46 of the judgment). This is indeed a relevant factor which has to be taken into account. I welcome the fact that the Court decided to introduce an economic rationality analysis as part of the proportionality assessment under Article 1 of Protocol 1. It is a major and positive development in human rights adjudication. Economically irrational interference with economic liberty cannot be justified under the Convention. At the same time, I consider that the concrete argument put forward is not decisive. Firstly, the economic rationality analysis should be carried out in a broader context; otherwise the balancing exercise becomes irrational. The Government argued that the reform measures had resulted in a broader group of parents having access to schoolbooks financed by the State. This element and other elements of the reform seen as a whole should also have been examined by the Court for the purpose of the proportionality assessment. Secondly, it is not clear whether the methodology of determining the maximum schoolbook prices has changed with the reform. The Court should also have established the actual pricing policy applied by the new distributor, and whether the margin guaranteed by law to the new State-owned distributor was effectively applied in practice or whether the newly created company provided schoolbooks to parents below the maximum price. Thirdly, before the reform the distributors offered a commission to schools in exchange for certain services (see paragraph 39 of the judgment). It is not clear to what extent the reform enabled the schools to get rid of these burdensome tasks and allocate the corresponding resources for educational purposes.

It has to be added here that the Court has established that the books went from the publishers to the parents through at least two distributors (see paragraph 8 in fine). According to the submissions of the applicant companies (as summarised in paragraph 39 of the judgment), the publishers granted the distributors a margin of 11 to 16%. It is not clear how this margin was divided between the subsequent distributors of the same product.

It is also important to take into account the following aspect in this context. The higher the margin legally guaranteed to the State-owned company, the greater the possibility for private distributors, operating with a lower margin, to creatively develop alternative channels for the distribution of schoolbooks, outplaying the official distributor.

In the instant case — as already mentioned above — the Government have convincingly shown that the schoolbook market in Hungary was distorted, although they have not been able either to present a detailed picture of the way the market operated or to establish the exact impact of those distortions on the business results of the applicant companies. My preference would have been for the Court to establish those elements of its own motion, and to assess the reform as a whole with all its costs and benefits. All those elements are relevant for the assessment of proportionality in the instant case, but they have not been established with sufficient clarity to decide the case. The Court could have commissioned expert opinions on those matters.

In conclusion, I would like to underline that protection of economic liberty is essential for preserving freedom as such. I fully share the majority’s reluctance to accept State economic monopolies, and I respect their endeavour to give economic liberty a more prominent place in international human rights law. However, in view of the high level of obscurity concerning important factual elements of the instant case, the benefit of the doubt concerning the economic rationality of the reform — considered as a whole — has to be given to the respondent Government, who are, after all, accountable to the nation for the conduct of State economic and social policy.

Although the new legislation adversely affected the conditions in which the applicant companies operated, I do not see any direct interference with the applicant companies' possessions or with any of their legitimate expectations. At the same time, there are no sufficient grounds to conclude that the indirect interference with economic liberty was really disproportionate. The fragmentary factual findings made by the Court do not enable me to conclude that the impugned measures, taken in reaction to market distortions, violated Article 1 of Protocol No. 1 to the Convention.