Provisional text

delivered on 22 May 2025 (1)

Case C‑117/24

JYSK Kereskedelmi Kft.

Nemzeti Élelmiszerlánc-biztonsági Hivatal

(Request for a preliminary ruling from the Fővárosi Törvényszék (Budapest High Court, Hungary))

( Reference for a preliminary ruling – Environment – Obligations of operators placing timber and timber products on the market – Use, maintenance and evaluation of a due diligence system – Scope – Access by an operator to its parent undertaking’s system )

This request for a preliminary ruling concerns the interpretation of the combined provisions referred to in Article 4(2) and (3) and in Article 6(1) of Regulation (EU) No 995/2010. (2) In the present case, the Court of Justice is required to give a ruling on the scope of the obligations of an operator who places timber and timber products on the internal market for the first time, in particular where that operator is part of a group of companies.

I.Legal framework

A.Regulation (EU) No 995/2010

Article 1 of Regulation (EU) No 995/2010, entitled ‘Subject matter’, states:

‘This Regulation lays down the obligations of operators who place timber and timber products on the internal market for the first time, as well as the obligations of traders.’

Article 2 of that regulation, entitled ‘Definitions’, provides:

‘For the purposes of this Regulation, the following definitions shall apply:

…

(b) ‘placing on the market’ means the supply by any means, irrespective of the selling technique used, of timber or timber products for the first time on the internal market for distribution or use in the course of a commercial activity, whether in return for payment or free of charge. …

(c) ‘operator’ means any natural or legal person that places timber or timber products on the market;

…’

Under Article 4 of the regulation, entitled ‘Obligations of operators’:

‘1. The placing on the market of illegally harvested timber or timber products derived from such timber shall be prohibited.

3. Each operator shall maintain and regularly evaluate the due diligence system which it uses, except when the operator makes use of a due diligence system established by a monitoring organisation referred to in Article 8. Existing monitoring systems under national legislation as well as any voluntary mechanism for monitoring the supply chain which meets the requirements of this Regulation may serve as a basis for the due diligence system.’

Article 6 of the regulation, entitled ‘Due diligence systems’, provides:

‘1. The due diligence system referred to in Article 4(2) shall contain the following elements:

(a) measures and procedures providing access to the following information concerning the operator’s supply of timber or timber products placed on the market:

–description, including the trade name and type of product as well as the common name of tree species and, where applicable, its full scientific name,

–country of harvest, and where applicable:

(i)sub-national region where the timber was harvested; and

(ii)concession of harvest,

–quantity (expressed in volume, weight or number of units),

–name and address of the supplier to the operator,

–name and address of the trader to whom the timber and timber products have been supplied,

–documents or other information indicating compliance of those timber and timber products with the applicable legislation;

(b) risk assessment procedures enabling the operator to analyse and evaluate the risk of illegally harvested timber or timber products derived from such timber being placed on the market.

Such procedures shall take into account the information set out in point (a) as well as relevant risk assessment criteria, including:

–assurance of compliance with applicable legislation, which may include certification or other third-party-verified schemes which cover compliance with applicable legislation,

–prevalence of illegal harvesting of specific tree species,

–prevalence of illegal harvesting or practices in the country of harvest and/or sub-national region where the timber was harvested, including consideration of the prevalence of armed conflict,

–sanctions imposed by the UN Security Council or the Council of the European Union on timber imports or exports,

–complexity of the supply chain of timber and timber products.

(c) except where the risk identified in course of the risk assessment procedures referred to in point (b) is negligible, risk mitigation procedures which consist of a set of measures and procedures that are adequate and proportionate to minimise effectively that risk and which may include requiring additional information or documents and/or requiring third party verification.

…

Article 7 of Regulation No 995/2010, entitled ‘Competent authorities’, provides, in paragraph 1 thereof:

‘Each Member State shall designate one or more competent authorities responsible for the application of this Regulation.

…’

Article 8 of the regulation, entitled ‘Monitoring organisations’, states:

‘1. A monitoring organisation shall:

(a) maintain and regularly evaluate a due diligence system as set out in Article 6 and grant operators the right to use it;

(b) verify the proper use of its due diligence system by such operators;

(c) take appropriate action in the event of failure by an operator to properly use its due diligence system, including notification of competent authorities in the event of significant or repeated failure by the operator.

…’

Article 10 of the regulation, entitled ‘Checks on operators’, provides:

‘1. The competent authorities shall carry out checks to verify if operators comply with the requirements set out in Articles 4 and 6.

3. The checks referred to in paragraph 1 may include, inter alia:

(a) examination of the due diligence system, including risk assessment and risk mitigation procedures;

(b) examination of documentation and records that demonstrate the proper functioning of the due diligence system and procedures;

(c) spot checks, including field audits.

…’

B.Implementing Regulation (EU) No 607/2012

Article 5 of Implementing Regulation (EU) No 607/2012, (3) entitled ‘Record keeping by operators’, provides:

‘1. Information concerning the operator’s supply as provided for in Article 6(1)(a) of Regulation [No 995/2010] and application of risk mitigation procedures shall be documented through adequate records, which shall be stored for five years and made available for checks by the competent authority.

II.The facts in the dispute in the main proceedings, the question referred for a preliminary ruling and the proceedings before the Court of Justice

JYSK Kereskedelmi Kft (‘JYSK Hungary’) is a company incorporated under Hungarian law that markets timber and timber products and, in that context, imports timber and timber products from third countries. It is wholly owned by its parent undertaking LLG A/S (‘the parent undertaking’), registered in Denmark and active in the sale of timber products. JYSK Hungary carries out import operations independently, without any involvement by its parent undertaking.

In 2023, the Nemzeti Élelmiszerlánc-biztonsági Hivatal (National Food Chain Safety Office) (‘the National Office’), which is the competent authority designated to enforce Regulation No 995/2010 in Hungary, carried out a check at the premises of JYSK Hungary in which, inter alia, it examined whether the applicant had a due diligence system (‘DDS’) within the meaning of that regulation. During that inspection, it became apparent that JYSK Hungary uses a DDS established by its parent undertaking which is based on risk analyses carried out both by the parent undertaking and by Preferred by Nature, a monitoring organisation within the meaning of Article 8 of the abovementioned regulation. The parent undertaking is said to have numerous subsidiaries in Europe all using the same DDS.

By decision of 26 May 2023, the National Office found that JYSK Hungary had infringed Regulation No 995/2010, imposed a fine on it, and ordered it to put in place its own DDS on the grounds that it did not have a DDS deployed on its own behalf and established expressly in relation to the business it undertakes, nor did it use a DDS established by a monitoring organisation within the meaning of Article 8 of Regulation No 995/2010.

JYSK Hungary is challenging that decision before the Fővárosi Törvényszék (Budapest High Court, Hungary), which is the referring court in the present case, arguing that the DDS maintained by its parent undertaking can be considered as its own system. Regulation No 995/2010, it claims, merely imposes an obligation to use a DDS, not to set one up.

However, the National Office submits that an operator within the meaning of Regulation No 995/2010 is itself required to maintain a DDS. In so far as the parent undertaking assigns autonomous tasks to its subsidiaries as importers, which is the case with JYSK Hungary, which itself makes imports directly into the European Union, the regulation requires the subsidiaries, and thus JYSK Hungary in particular, to maintain their own DDSs.

In that context, the referring court is uncertain as to the scope of the obligations imposed on the operator in relation to the DDS, laid down by Regulation No 995/2010, and in particular whether, in order to comply with those obligations, it is sufficient for an operator to use a DDS by means of which data are collected and risks are assessed and reduced in relation to timber and timber products placed on the internal market for the first time by that operator, or whether, conversely, such an operator is required to have a DDS in place on its own behalf established expressly in relation to the business it carries out.

The referring court notes that, in view of the independent nature of JYSK Hungary’s business, it is itself, as an operator within the meaning of Regulation No 995/2010, subject to the obligations relating to DDSs. In addition, the referring court states that, during a check of the parent undertaking’s German subsidiary, the competent authority responsible for the application thereof in Germany concluded that that subsidiary complied with its obligations in relation to a DDS by using the system maintained by the parent undertaking.

In those circumstances, the Fővárosi Törvényszék (Budapest High Court) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:

‘Should Article 4(2) and (3) of [Regulation No 995/2010], read in conjunction with Article 6(1) thereof, be interpreted as meaning that it is consistent with those provisions for the operator to have access to the elements, referred to in Article 6(1) of that regulation, of the DDS maintained and evaluated by its parent undertaking or used by its parent undertaking and established by a monitoring organisation within the meaning of Article 8 [of that regulation]?’

The order for reference, dated 1 February 2024, was received at the Court Registry on 14 February 2024. Written observations were submitted by the National Office, the defendant in the main proceedings, by the Hungarian and Spanish Governments and by the European Commission. Those interested parties, as well as the applicant and defendant in the main proceedings, also took part in the hearing, which was held on 26 February 2025.

III.Analysis

By its question, the referring court seeks to ascertain, in essence, whether the practice of a subsidiary consisting of having access to the elements, referred to in Article 6(1) of Regulation No 995/2010, of a DDS maintained and evaluated by its parent undertaking or used by that parent undertaking and established by a monitoring organisation within the meaning of Article 8, complies with the requirements arising from that regulation. The referring court is therefore uncertain as to the scope of the obligations imposed on operators set out in Article 4(2) and (3) of the regulation. In particular, it asks whether Article 4(2) and (3) and Article 6(1) of the regulation require operators to have a DDS in place on their own behalf and established expressly in relation to the business they carry out.

It should be noted that the concept of a DDS, which is the focus of the question referred by the national court to the Court of Justice in the present case, is not defined in EU law. In that regard, Article 4(2) of Regulation No 995/2010 provides that it is a framework of procedures and measures, the criteria for which are listed in Article 6(1) of that regulation. Thus, it may be inferred from a combined reading of those articles that such a system is a step-by-step method by which operators can identify and mitigate a risk of illegally harvested timber or timber products being placed on the market. A Commission guidance document for the EU Timber Regulation (4) adds that such a step-by-step method, which is documented and tested, includes checks and aims to produce, in a business process, a result compatible with the desired outcomes.

That said, it was clarified at the hearing that the DDS, established by the parent undertaking and made available to its subsidiary, provided access to all of its elements within the meaning of Article 6(1) of Regulation No 995/2010, and that the parent undertaking carried out, inter alia, risk assessment and mitigation for its subsidiary. In order to provide a useful answer to the question raised by the referring court, when examining the scope of the obligations imposed on operators under Article 4(2) and (3) and Article 6(1) of that regulation, I will therefore take those clarifications into account.

According to settled case-law, in interpreting a provision of EU law, it is necessary to consider not only its wording but also the context in which it occurs and the objectives pursued by the rules of which it is part. (5)

A.Textual interpretation

As regards the wording of the provisions at issue, Article 4(2) of Regulation No 995/2010 states that, in order to exercise due diligence when placing timber or timber products on the market, operators ‘shall use’ a DDS. Paragraph 3 of that article provides that each operator ‘shall maintain and regularly evaluate the due diligence system which it uses, except where the operator makes use of a due diligence system established by a monitoring organisation referred to in Article 8’.

As a preliminary point, it should be noted that it is apparent from the wording of Article 4(2) and (3) that two types of obligation are imposed on operators who place timber and timber products on the market for the first time: the obligation to use a DDS, on the one hand, and the obligation to maintain and evaluate it, on the other. (6)

The first obligation relating to the use of a DDS is specified in Article 4(2), which expressly refers to Article 6 of Regulation No 995/2010, setting out the elements which that DDS must contain. It is apparent from a combined reading of those articles that the obligation to use a DDS is indissociable from the taking of appropriate measures based on all the elements making up that DDS. In that regard, those measures must (i) provide the operator with access to information relating to the timber and timber products which it places on the market, (ii) enable it, on the basis of that information, to analyse and evaluate the risk of illegally harvested timber or timber products derived from such timber being placed on the market, and (iii) enable it to mitigate any such risk, if it is not negligible. (7)

26.Moreover, the obligation to use a DDS relates directly to its content, namely the specific elements of which it is composed and which, logically, are likely to vary according to the commercial activity of each operator. I would add that, in the light of the wording of those elements, set out in Article 6(1) of Regulation No 995/2010, the DDS must, in my view, be linked to the commercial activity by which the operator places timber or timber products on the market. Those elements should lead, inter alia, to the assessment and mitigation of the specific risk generated by that activity. (8)

27.On the other hand, the second obligation, relating to the maintenance and evaluation of a DDS, applies, according to the wording of Article 4(3) of Regulation No 995/2010, to the very framework of which the elements of a DDS form part. Thus, because of the regular evaluations which it requires, that obligation affects, more generally than the obligation referred to in Article 4(2) of that regulation, the very operation of a DDS as a method, (9) which must, logically, be tailored to the commercial activity of an operator.

28.That being so, it should be noted that the regulation at issue does not define the terms ‘use’, ‘maintain’ or ‘evaluate’, which are used to describe the obligations which it imposes on operators. However, the usual meaning of those terms in the context of the placing on the market of timber or timber products suggests that they refer to the action of applying, sustaining and assessing a DDS.

29.In particular, the Commission stresses the difference between maintaining the DDS, which consists of ensuring the availability of the measures and procedures set out in Article 6 of Regulation No 995/2010, and is an obligation imposed on operators, and the establishment of that system, which is not their responsibility. (10) The National Office, for its part, distinguishes between the establishment, application and periodic supervision of its own DDS, on the one hand, and the use of a DDS, produced by a monitoring organisation specifically for the market activity in question, the proper use of which is regularly verified by that organisation, on the other. Moreover, as is apparent from the request for a preliminary ruling, JYSK Hungary was criticised, inter alia, for not having a DDS deployed on its own behalf and established in relation to the business it undertakes. (11)

30.In that regard, it should be noted, in the first place, that the obligation to establish a DDS is neither laid down nor defined by Regulation No 995/2010, which expressly limits the obligations of operators in the context of a DDS to its use, maintenance and evaluation. (12) It does not follow from the terms ‘use’, ‘maintain’ or ‘evaluate’ that they include the establishment of a DDS by the operator. On the contrary, the use of the words a ‘due diligence system which [the operator] uses’ as opposed to ‘a due diligence system established by a monitoring organisation’ in Article 4(3) of Regulation No 995/2010 serves to emphasise the difference between the respective duties of those actors.

31.In the second place, according to the wording of Article 4(2) and (3) of Regulation No 995/2010, operators are responsible for use, maintenance and evaluation. In particular, as regards the obligation to use a DDS, the wording employed in Article 4(2), as I understand it, imposes that obligation (13) unconditionally on the operator alone. In other words, the wording of that article does not give the operator the option to discharge that obligation by delegating it to another natural or legal person. (14)

32.That said, in so far as Article 4(2) must be read together with Article 6(1) of Regulation No 995/2010, that combined reading seems to suggest a degree of flexibility in the application of certain elements of a DDS, as referred to in the latter article. As regards, first, the element of a DDS relating to the taking of ‘measures and procedures providing access to information relating to the timber and timber products which the operator places on the market’, it should be noted that the wording of Article 6(1)(a) of Regulation No 995/2010 does not preclude the possibility that the information to which the operator must have access may be collected by a third party on behalf of that operator.

33.As regards, second, the elements of a DDS relating, in essence, to ‘risk assessment procedures’ within the meaning of Article 6(1) of Regulation No 995/2010, it should be noted that the first indent of the second subparagraph of Article 6(1)(b) provides that one of the relevant criteria for the assessment of risk, namely the assurance of compliance with applicable legislation, may include certification or other third-party verified schemes. As for ‘risk mitigation procedures’ within the meaning of Article 6(1)(c) of that regulation, that article provides that they may include requiring third party verification. Thus, the wording of the first indent of the second subparagraph of point (b) and of point (c), in particular the use of the words ‘may include’ and ‘may include requiring … information … and/or requiring third party verification’, suggests that those options are left to the discretion of the operators, who may choose to be assisted by third parties in applying certain elements of a DDS. (15)

34.It will be recalled, as clarified at the hearing, that the parent undertaking carries out the risk assessment and mitigation procedures for its subsidiary and forwards the results of that assessment to it. However, the absence of an express prohibition relating to the fact the collection of the information referred to in Article 6(1)(a) of Regulation No 995/2010 by a third party for and/or on behalf of the operator, or on the operator being assisted, to a certain extent, by third parties in the risk assessment and mitigation provided for in Article 6(1)(b) and (c), cannot be interpreted, according to the wording of that article, read together with Article 4(2) of that regulation, as meaning that operators may discharge their obligation to use a DDS simply by having access to all the elements of that DDS, as in the present case. In my view, the obligation of use, within the meaning of Article 4(2), must be interpreted as meaning that operators are responsible for taking appropriate measures to prevent illegally harvested timber and timber products from being placed on the market, which ultimately implies proactive behaviour on the part of the operator.

35.In those circumstances, mere access to the elements of a DDS cannot be permitted in the light of a literal interpretation of Article 4(2) of Regulation No 995/2010, read together with Article 6(1) thereof, since it constitutes a complete discharge of an operator’s obligation of use within the meaning of those articles.

36.With regard to the second obligation, to maintain and regularly evaluate a DDS, although Article 4(3) of Regulation No 995/2010 states that such an obligation is imposed on ‘each operator’, it also provides for an exception, signalled through the conjunction ‘except’, namely, where an operator makes use of a DDS established by a monitoring organisation referred to in Article 8 of that regulation. (16) A literal interpretation of Article 4(3) suggests that the use of a DDS by a subsidiary, where the DDS is, in essence, maintained and evaluated by the parent undertaking, must be excluded, since the only exception provided for appears to relate to monitoring organisations.

37.Furthermore, where a subsidiary makes use of a DDS established by a monitoring organisation, and it is its parent undertaking that has been granted the right to use it, it should be noted that such a situation involves more actors than Regulation No 995/2010 expressly authorises. Moreover, such a situation is not expressly provided for in Article 4(2) and (3) and Article 6 thereof.

38.Consequently, in my view, the scope of the obligations incumbent on operators, namely the use of a DDS, in the sense that the operator is responsible for taking the appropriate measures in accordance with that DDS, on the one hand, and the maintenance and evaluation of that DDS, the performance of which may be entrusted, in place of the operator, to a monitoring organisation, on the other, follows expressly from the wording of Article 4(2) and (3) and Article 6(1) of Regulation No 995/2010. It also follows that the use, maintenance and evaluation must, logically speaking, be linked to the economic activity of that operator.

39.B.

39.A contextual interpretation of Articles 4(2) and (3) and 6(1) of Regulation No 995/2010 confirms, in my view, the scope of the obligations incumbent on operators, as derived from the textual interpretation of the provisions at issue.

40.In particular, it is apparent from recital 12 of Regulation No 995/2010, in essence, that the specific measures provided for in that regulation are concerned with the behaviour of operators. Recital 16 provides that operators importing timber are to take the appropriate steps in order to ascertain that they do not place illegally harvested timber or timber products derived from such timber on the internal market. Article 2(2) of Implementing Regulation No 607/2012 sets out the ‘operator’s obligation to maintain measures … referred to in Article 6(1)(a) of [Regulation No 995/2010] concerning each consignment of timber and timber products placed on the market by the operator’. (17) In addition, Article 5(1) of that implementing regulation imposes an obligation on operators to keep adequate records of the collection of information and the application of risk mitigation procedures, and Article 5(2) thereof states that operators must be able to demonstrate, in essence, how the information gathered was checked, how a decision on risk mitigation measures was taken and how the degree of risk was determined.

41.It is clear from that context, which, as I understand it, also requires proactive behaviour on the part of the operator, that the burden of the obligations under Regulation No 995/2010 falls on operators in connection with their commercial activity of placing timber or timber products on the internal market for the first time. It may therefore be inferred, in my view, that the important element is the effectiveness of the system of protection established by that regulation, which is intended to prevent the marketing of illegally harvested timber. It is logical that its effectiveness will not be ensured if the DDS used is unsuited to the economic activity of the operator, that is to say, if it is not based on information concerning its economic activity.

42.In that regard, even if, subject to verification by a referring court, it were to be held, as JYSK Hungary explained at the hearing, that the DDS is tailored to its commercial activity, in that the information collected by the parent undertaking for its subsidiary does indeed relate to the products purchased by the subsidiary, and that the risk assessment and mitigation are carried out on the basis of that information, it should be emphasised that it is not the operator within the meaning of Regulation No 995/2010 itself, namely the subsidiary, but its parent undertaking that uses the DDS within the meaning of Article 4(2), read in conjunction with Article 6(1) of that regulation. In effect, it is the parent undertaking that takes the measures on the basis of all those elements of the DDS; the subsidiary merely has access to those elements.

43.As is apparent from points 40 and 41 of the present Opinion, the context of Article 4(2) and (3) and Article 6(1) does not, in my view, allow the operator to discharge that obligation by transferring its performance in its entirety to any other natural or legal person. Indeed, subject to a degree of flexibility in the application of certain elements of the DDS, (18) the operator remains bound by an obligation to use it, as described in points 25, 26 and 34 of the present Opinion, which implies proactive behaviour on the operator’s part.

44.In the present case, a subsidiary which engages in commercial activity independently cannot, in a manner consistent with the system established by Regulation No 995/2010, transfer decision-making and, more generally, proactive behaviour, such as risk assessment and the adoption of risk mitigation measures, to its parent undertaking, which also engages in commercial activity independently. The system imposes a duty on the operator, in the present case the subsidiary, to adopt specific behaviour to prevent illegally harvested timber or timber products from being placed on the internal market for the first time.

45.That being so, it should be noted that Regulation No 995/2010 provides for the possibility of an operator being released from the obligation to maintain and regularly evaluate a DDS, provided that it makes use of a DDS established by a monitoring organisation. (19) However, it is clear from the context of Article 4(2) and (3) and Article 6(1) of that regulation that such a release applies only to that obligation of maintenance and regular evaluation. The obligation to use a DDS still rests with the operator. (20)

46.As its title indicates, Article 8 of Regulation No 995/2010 governs monitoring organisations and provides that they may be responsible for maintaining and evaluating their DDS made available to an operator. Paragraph 2 of the article imposes specific conditions on an organisation to be met in order to apply for recognition as a monitoring organisation. (21) The imposition of rigorous conditions on the functions of maintaining and evaluating due diligence systems by a body other than the operator himself stems from the responsibility associated with that task, namely that of ensuring that the method applied prevents illegally harvested timber or timber products from being placed on the internal market for the first time. Such an approach is justified by the importance attached to protection against illegal harvesting. In addition, Article 8(1) requires organisations to verify that operators are using their DDS properly and to take action in the event of failure to properly use the DDS.

47.In that regard, it might be considered whether an analogy may be drawn in the present case between a monitoring organisation and a parent undertaking which maintains and evaluates a DDS used by its subsidiary. (22) Admittedly, it cannot be ruled out, from a practical point of view, that any entity within a group of companies could, in view of the financial interests of that group, establish a DDS and grant the right to use it to another entity in the same group, while being responsible for its maintenance and evaluation, as a monitoring organisation would. However, it is important that the requirements imposed on that establishing entity be no less stringent than those set out in Article 8(2) of Regulation No 995/2010 for organisations wishing to be recognised as monitoring organisations.

48.It is legitimate to ask whether, within a group of companies, an entity which were authorised, in view of its expertise and capacity, to maintain and evaluate a DDS, as a monitoring organisation would do, would in fact notify the competent authorities of any significant or repeated failure of group entities to which it had granted the right to use that DDS. (23) That is all the more uncertain where those entities belong to the same economic unit, because of close links within that group. Such a notification to the competent authorities could ultimately result in a penalty liable to affect the financial interests of that unit as a whole. Under such circumstances, accepting, in the present case, that a parent undertaking may maintain and evaluate a DDS of its subsidiary could, given the commercial objective of generating profits, lead to circumvention of the system established by Regulation No 995/2010.

49.In addition, if a subsidiary were to use a DDS established by a monitoring organisation, whereas the right to use it had been granted to its parent undertaking, the situation would prove to be problematic. Where a monitoring organisation authorises an operator to use a DDS, it assumes specific obligations that it does not have in the absence of such an agreement, and, more generally, where it is not even aware of such use. Such an arrangement is therefore incompatible with the system established by Regulation No 995/2010.

50.As regards a teleological interpretation, it must be borne in mind that the objective of Regulation No 995/2010 is to combat illegal logging and related trade. (24) Thus, as an act in the field of environmental protection, that regulation pursues, more generally, objectives that differ from those pursued by companies.

51.In that regard, it should be noted that although, in the business sphere, it is important to be able to carry out cross-border activities, to adapt to market conditions and to find business opportunities, hence the interest in setting up a group of companies which is of benefit for those activities from an economic point of view, such considerations are, in my view, of little relevance in the field of environmental protection relevant in the present case.

52.It is true that the link between environmental protection and the development of companies must be approached in such a way as not to hinder the growth of companies in the internal market unnecessarily. For example, no unnecessary administrative burdens should be imposed on operators to set up new DDSs if they are already using systems which comply with the requirements of Regulation No 995/2010. (25) It is also essential to provide technical assistance to small and medium-sized enterprises and to facilitate the exchange of information in order to help them comply with the environmental obligations imposed on them under that regulation. (26) However, considerations relating to the interests of companies, and in particular the financial benefits that they derive from the use of a shared DDS, cannot under any circumstances take precedence over environmental protection considerations, or release operators from the obligation to exercise due diligence in accordance with the requirements laid down by that regulation.

54.In that regard, the measures introduced by Regulation No 995/2010 are intended to achieve an outcome consistent with the objectives pursued by that regulation. Operators ‘should take the appropriate steps in order to ascertain that illegally harvested timber and timber products derived from such timber are not placed on the internal market … through a system of measures and procedures to minimise the risk of placing illegally harvested timber and timber products derived from such timber on the internal market’. (27) In other words, operators are required, as part of their commercial activity, to achieve a specific result, namely to reduce to a negligible level the risk of placing on the market illegally harvested timber and timber products derived from such timber. The obligation to exercise due diligence under Article 4(2) and (3) and Article 6(1) of Regulation No 995/2010 is therefore akin to an obligation as to the result to be achieved.

55.First, the obligation to use a DDS must be regarded as satisfied where the operator is able to demonstrate that that use has enabled it to achieve the desired result, by indicating how the information gathered was checked against the risk criteria provided for in Article 6(1)(b) of that regulation, how a decision on risk mitigation measures was taken and how the operator determined the degree of risk. (28)

56.Second, the obligation to maintain and regularly evaluate a DDS, with a view to achieving the expected results, may be regarded as satisfied where it is demonstrated, by means of documentation relating thereto, that regular checks have been carried out, either by the operator himself or by a monitoring organisation, (29) in order to verify the proper functioning of a DDS in accordance with Regulation No 995/2010.

57.That conclusion is reinforced by the fact that the infringement of the prohibition on the placing on the internal market of illegally harvested timber or timber products is sanctioned by penalties laid down by the Member States. (30) The penalties apply to operators within the meaning of Regulation No 995/2010, since it is they who are subject to the obligations imposed by the regulation.

58.However, the Commission explains that the legislative history of Regulation No 995/2010 shows that it is intended to allow operators a degree of flexibility as to the choice of a DDS. It is apparent from the proposal for that regulation that, although the European legislature had initially wanted to impose a stricter obligation on operators, namely the establishment of a DDS, (31) that wish was abandoned during the legislative process, leaving operators free to choose between their own system, a DDS provided by a monitoring organisation or a system provided by a third party. (32)

59.In my view, the option of using a DDS provided by a third party which is not a monitoring organisation, in the present case another entity within a group of companies, cannot release the operator from its obligation to maintain and evaluate the DDS, contrary to what the Commission suggests. As demonstrated above, (33) such an interpretation would be contrary to both the wording and the context of the provisions concerned, according to which only monitoring organisations recognised by the Commission and regularly checked by the competent authorities of the Member States may assume those obligations. It follows that the legislature’s objective of not requiring operators to establish a DDS does not imply a decision on its part to release them from the obligation to maintain and evaluate the DDS which they use. In my view, that objective must be understood as having been attained through the possibility of having recourse to the DDSs provided for by Regulation No 995/2010, such as existing supervision systems under national legislation or voluntary chain of custody mechanisms, provided that those systems meet the requirements of that regulation, (34) namely DDSs which by their nature are not established by the operators using them.

60.That possibility cannot be understood, having regard to the objectives of Regulation No 995/2010, as leaving open the possibility of simply having access to a DDS provided by any third party, including a third party belonging to the same group of companies, which maintains and evaluates that DDS. Moreover, the conclusion that access by the subsidiary to the elements of a DDS established by a monitoring organisation, where it is the parent undertaking that has been granted the right to use that system, is not permissible in the light of the objectives of that regulation, which is also necessary for the reasons set out above. (35)

61.In addition, I also note that it is true that the referring court refers to a situation involving a parent undertaking and its subsidiary. However, it seems important to me, as I have already stated several times in the reasoning set out above, that the lessons to be drawn from the present case should not be limited to such an economic link between two entities. More generally, they must apply to all links and configurations within groups of companies. Regulation No 995/2010 does not define the concept of ‘parent undertaking’ (or ‘subsidiary’), but rather that of ‘operator’, on the basis of the commercial activity which it carries out and not on the basis of the economic links which it has with other entities. Thus, it seems to me to be more legitimate, in legal terms, to adopt an approach which is not strictly limited to the ‘parent undertaking-subsidiary’ link in examining the situation at issue, in particular for reasons of the sound administration of justice. (36)

62.Lastly, the points I have made above appear to me to be sufficient to answer the question referred to the Court of Justice by the referring court. There is little need to examine the arguments of the parties as to whether the national rules on due diligence fall within the scope of more stringent protective measures within the meaning of Article 193 TFEU. As it confirmed at the hearing, the National Office submits that JYSK Hungary infringed its obligation as an operator under Article 4(2) of Regulation No 995/2010, read in conjunction with Article 6(1) thereof, making such an analysis even less necessary.

63.In the light of the foregoing, I consider that the combined provisions referred to in Article 4(2) and (3) and Article 6(1) of Regulation No 995/2010 must be interpreted as incompatible with the fact that an operator, which is a company belonging to a group of companies, has access to the elements, referred to in Article 6(1) thereof, of a DDS maintained and evaluated by another company in the same group, or used by that other company and established by a monitoring organisation within the meaning of Article 8 of that regulation. While the possibility of some assistance from a third party when applying the elements of a DDS within the meaning of Article 6(1) is not excluded, the operator must behave proactively when taking measures in accordance with that DDS. Mere access to the elements of the DDS is incompatible with the requirements of that regulation.

IV.Conclusion