Notice from the Commission on the application of the competition rules to the postal sector and on the assessment of certain State measures relating to postal services
C 39/2 EN Official Journal of the European Communities 6. 2. 98 Notice from the Commission on the application of the competition rules to the postal sector and on the assessment of certain State measures relating to postal services (98/C 39/02) (Text with EEA relevance) PREFACE to Subsequent to the submission by the Commission of a Green Paper on the development of the single market for the postal servicesØ(˛) and of a communication European Parliament and the Council, setting out the results of the consultations on the Green Paper and the measures advocated by the CommissionØ(ˇ), a substantial discussion has taken place on the future regulatory environment for the postal sector in the Community. By Resolution of 7 February 1994 on the development of Community postal servicesØ(—), the Council invited the Commission to propose measures defining a harmonised universal service and the postal services which could be reserved. In July 1995, the Commission proposed a package of measures concerning postal services which consisted of a proposal for a Directive of the European Parliament and the Council on common rules for the the development of Community postal services and improvement of quality of serviceØ(Ñ) and a draft of the present Notice on the application of the competition rulesØ(Ò). This notice, which complements the harmonisation measures proposed by the Commission, builds on the results of those discussions in accordance with the prinÜ ciples established in the Resolution of 7 February 1994. It takes account of the comments received during the public consultation on the draft of this notice published in December 1995, of the European Parliament’s resolutionØ(Ó) on this draft adopted on 12 December 1996, as well as of the discussions on the proposed Directive in the European Parliament and in Council. The Commission considers that because they are an essential vehicle of communication and trade, postal services are vital for all economic and social activities. New postal services are emerging and market certainty is needed to favour investment and the creation of new employment in the sector. As recognized by the Court of Justice of the European Communities, Community law, and in particular the competition rules of the EC Treaty, apply to the post sectorØ(Ô). The Court stated that "in the case of public undertakings to which Member States grant special or exclusive rights, they are neither to enact nor to maintain in force any measure contrary to the rules contained in the Treaty with regard to competition’ and that those rules "must be read in conjunction with Article 90(2) which provides that undertakings entrusted with the operation of services of general economic interest are to be subject to the rules on competition in so far as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them. ’ Questions are therefore frequently put to the Commission on the attitude it intends to take, for purposes of the implementation of the competition rules contained in the Treaty, with regard to the behaviour of postal operators and with regard to State measures relating to public undertakings and undertakings to which the Member States grant special or exclusive rights in the postal sector. This notice sets out the Commission’s interpretation of the relevant Treaty provisions and the guiding principles according to which the Commission intends to apply the competition rules of the Treaty to the postal sector in individual the necessary safeguards for the provision of a universal service, and gives to enterprises and Member States clear guidelines so as to avoid infringements of the Treaty. This Notice is without prejudice to any interpretation to be given by the Court of Justice of the European Communities. cases, while maintaining to intends take when applying Furthermore, this Notice sets out the approach the the Commission competition rules to the behaviour of postal operators and when assessing the compatibility of State measures restricting the freedom to provide service and/or to compete in the postal markets with the competition rules and other rules of the Treaty. In addition, it addresses the issue of non discriminatory access to the postal network and the safeguards required to ensure fair competition in the sector. (˛) COM(91) 476 final. (ˇ) "Guidelines for the development of Community postal services’ (COM(93) 247 of 2 June 1993). (—) OJ C 48, 16. 2. 1994, p. 3. (Ñ) OJ C 322, 2. 12. 1995, p. 22. (Ò) OJ C 322, 2. 12. 1995, p. 3. (Ó) OJ C 20, 20. 1. 1997, p. 159. (Ô) In particular in Joined Cases CÜ48/90 and CÜ66/90, Netherlands and Koninklijke PTT Nederland and PTT Post BV v. Commission [1992ü ECR IÜ565 and Case CÜ320/91 Procureur du Roi v. Paul Corbeau [1993ü ECR IÜ2533. 6. 2. 98 EN Official Journal of the European Communities C 39/3 Especially on account of the development of new postal services by private and public operators, certain Member States have revised, or are revising, their postal legisÜ lation in order to restrict the monopoly of their postal organisations to what is considered necessary for the realisation of the public interest objective. At the same time, the Commission is faced with a growing number of complaints and cases under competition law on which it must take position. At this stage, a notice is therefore the appropriate instrument to provide guidance to Member States and postal operators, including those enjoying special or exclusive rights, to ensure correct implemenÜ tation of the competition rules. This Notice, although it cannot be exhaustive, aims to provide the necessary guidance for the correct interpretation, in particular, of Articles 59, 85, 86, 90, and 92 of the Treaty in individual cases. By issuing the present notice, the Commission is taking steps to bring transparency and to facilitate in the investment decisions of all postal operators, interest of the users of postal services in the European Union. As the Commission explained in its communication of 11 September 1996 on "Services of general interest in Europe’Ø(Õ), solidarity and equal treatment within a market economy are fundamental Community objectives. Those objectives are furthered by services of general interest. Europeans have come to expect high quality services at affordable prices, and many of them even view services of general interest as social rights. As regards, in particular, the postal sector, consumers are becoming increasingly assertive in exercising their rights and wishes. Worldwide competition is forcing companies to seek out better price deals using such services comparable to those enjoyed by their competitors. New technologies, such as fax or electronic mail, are putting enormous pressures on the traditional postal services. Those developments have given rise to worries about the future of those services accompanied by concerns over employment and economic and social cohesion. The economic importance of those services is considerable. Hence the importance of modernising and developing interest, since they contribute so services of general much to European competitiveness, social solidarity and quality of life. The Community’s aim is to support the competitiveness of the European economy in an increasingly competitive world and to give consumers more choice, better quality and lower prices, while at the same time helping, through its policies, to strengthen economic and social cohesion between the Member States and to reduce certain inequalities. Postal services have a key role to play here. The Community is committed to promoting their functions of general economic interest, as solemnly confirmed in the new Article 7d, introduced by the Amsterdam Treaty, while improving their efficiency. Market forces produce a better allocation of resources and greater effectiveness in the supply of services, the principal benficiary being the consumer, who gets better quality at a lower price. However, those mechanisms sometimes have their limits; as a result the potential benefits might not extend to the entire population and the objective of promoting social and territorial cohesion in the Union may not be attained. The public authority must then ensure that the general interest is taken into account. The traditional structures of some services of general economic interest, which are organised on the basis of national monopolies, constitute a challenge for European economic integration. This includes postal monopolies, even where they are justified, which may obstruct the in particular by smooth functioning of the market, sealing off a particular market sector. The real challenge is to ensure smooth interplay between the requirements of the single market in terms of free movement, economic performance and dynamism, free competition, and the general interest objectives. This interplay must benefit individual citizens and society as a whole. This the goalposts are constantly moving: the single market is continuing to expand and public services, far from being fixed, are having to adapt to new requirements. is a difficult balancing act, since in is defined The basic concept of universal service, which was origÜ inated by the CommissionØ(Ö), is to ensure the provision of high quality service to all prices everyone can afford. terms of principles: Universal service equality, universality, continuity and adaptability; and in terms of sound practices: openness in management, price setting and funding and scrutiny by bodies indeÜ pendent of those operating the services. Those criteria are not always all met at national level, but where they have been introduced using the concept of European universal service, there have been positive effects for the development of general services. Universal service is the expression in Europe of the requirements interest (Õ) COM(96) 443 final. (Ö) See footnote 8. C 39/4 EN Official Journal of the European Communities 6. 2. 98 and special features of the European model of society in a policy which combines a dynamic market, cohesion and solidarity. HighÜquality universal postal services are of great importance for private and business customers alike. In view of the development of electronic commerce their importance will even increase in the very near future. Postal services have a valuable role to play here. rules concerning the reserved area. It therefore increases legal certainty as regards the legality of some exclusive and special rights in the postal sector. There are, however State measures that are not dealt with in it and that can be in conflict with the Treaty rules addressed to Member States. The autonomous behaviour of the postal operators also remains subject to the competition rules in the Treaty. (hereinafter As regards the postal sector, Directive 97/67/EC has been adopted by the European Parliament and the Council "the Postal refferred as introduce common rules for Directive’). It aims to developing the postal sector and improving the quality of service, as well as gradually opening up the markets in a controlled way. to services including a high quality The aim of the Postal Directive is to safeguard the postal service as a universal service in the long term. It imposes on Member States a minimum harmonised standard of universal service countrywide with regular guaranteed deliveries at prices everyone can afford. This the collection, transport, sorting and delivery of letters as well as cataÜ logues and parcels within certain price and weight limits. It also covers registered and insured (valeur d~clar~e) items and applies to both domestic and cross border is given to considerations of deliveries. Due regard equal continuity, treatment as well as adaptability. confidentiality, impartiality involves and To guarantee the funding of the universal service, a sector may be reserved for the operators of this universal service. The scope of the reserved sector has been harmonised in the Postal Directive According to the Postal Directive, Member States can only grant exclusive rights for the provision of postal services to the extent that this is necessary to guarantee the maintenance of the universal service. Moreover, the Postal Directive estabÜ lishes the maximum scope that Member States may reserve in order to achieve this objective. Any additional funding which may be required for the universal service may be into commercial operator’s franchises; for example, they may be required to make financial contributions to a compeÜ sation fund administered for this purpose by a body independent of the beneficiary or beneficaries, as foreseen in Article 9 of the Postal Directive. found by writing certain obligations Article 90(2) of the Treaty provides that suppliers of services of general interest may be exempted from the rules in the Treaty, to the extent that the application of those rules would obstruct the performance of the general interest tasks for which they are responsible. That exemption from the Treaty rules is however subject is to the priciple of proportionality. That principle designed to ensure the best match between the duty to provide general interest services and the way in which the services are actually provided, so that the means used are in proportion to the ends pursued. The principle is formulated to allow for a flexible and context sensitive balance technical and budgetary constraints that may vary from one sector to another. It also makes for the best possible interaction between market interest requirements, by ensuring that the means used to satisfy the requirements do not unduly the smooth running of the single European market and do not affect trade to an extent that would be contrary to the Community interestØ(˛˝). takes account of interfere with efficiency general that and the including the Treaty rules, the The application of possible application of the Article 90(2) exemption, as regards both behaviour of undertakings and State measures can only be done on a case by case basis. It seems, however, highly desirable, in order to increase legal certainty as regards measures not covered by the Postal Directive, to explain the Commission’s interpreÜ tation of the Treaty and the approach that it aims to follow those rules. In future application of particular, the Commission considers that, subject to the provisions of Article 90(2) in relation to the provision of the universal service, the application of the Treaty rules would promote the competitiveness of the undertakings active the postal sector, benefit consumers and contribute in a positive way to the objectives of general interest. its in in The postal sector in the European Union is characterised by areas which Member States have reserved in order to guarantee universal service and which are now being The Postal Directive lays down a minimum common standard of universal services and establishes common (˛˝) See judgment of 23 October 1997 in Cases CÜ157/94 to CÜ160/94 "Member State Obligations - Electricity’ Commission v. Netherlands (157/94), Italy (158/94). France (154/94), Spain (160/94). 6. 2. 98 EN Official Journal of the European Communities C 39/5 effects between Member in particular the competition rules, harmonised by the Postal Directive in order to limit distortive States. The Commission must, according to the Treaty, ensure that postal monopolies comply with the rules of the Treaty, in order to and ensure maximum benefit and limit any distortive effects for the consumers. In pursuing this objective by applying the competition rules to the sector on a case by caseÜ basis, the Commission will ensure that monopoly power is not used for extending a protected dominant position into liberalised activities or for unjustified discrimination in favour of big accounts at the expense of small users. The Commission will also ensure that postal monopolies granted in the area of cross border services are not used for creating or maintaining illicit price cartels harming the interest of companies and consumers in the European Union. facilities, "access points’: physical letter boxes provided for the public either on the public highway or at the premises of the universal service provider, where postal items may be deposited with the public postal network by customers; including "clearance’: the operation of collecting postal items deposited at access points; the process the "distribution’: distribution centre to delivery of postal items to their addresses; sorting at from the applicability of This notice explains to the players on the market the practical consequences of the competition rules to the postal sector, and the possible derogations from the principles. It sets out the position the Commission would adopt, in the context set by the continuing existence of special and exclusive rights in assessing as harmonised by the Postal Directive, individual cases or before the Court of Justice in cases referred to the Court by national courts under Article 177 of the Treaty. 1. DEFINITIONS In the context of this notice, the following defiÜ nitions shall applyØ(˛˛): "postal item’: an item addressed in the final form in which it is to be carried by the universal service provider. In addition to items of correspondence, such items also include for instance books, cataÜ logues, newspapers, periodicals and postal packages containing merchandise with or without commercial value; "item of corresondance’: a communication in written form on any kind of physical medium to be conveyed and delivered at the address indicated by the sender on the item itself or on its wrapping. Books, catalogues, newspapers and periodicals shall not be regarded as items of correspondence; services:’ services "postal sorting, transport and delivery of postal items; involving the clearance, "public postal nework’: the system of organisation and resources of all kinds used by the universal service provider(s) for the purposes in particular of: - the clearance of postal items covered by a universal service obligation from access points throughout the territory, - the routing and handling of those items from the postal network access point to the distribution centre, - distribution to the addresses shown on items; "direct mail’: a communication consisting solely of advertising, marketing or publicity material and identical message, except for the comprising an addressee’s name, address and identifying number as well as other modifications which do not alter the nature of the message, which is sent to a significant number of addresses, to be conveyed and delivered at the address indicated by the sender on the item itself or on its wrapping. The National Regulatory Authority "significant number of addressees’ within each Member State and publish an appropriate definition. Bills, invoices, financial non identical and messages should not be regarded as direct mail. A communication combining direct mail with other items within the same wrapping should not be regarded as direct mail. Direct mail includes crossÜ border as well as domestic direct mail; statements interpret should other term the (˛˛) The definitions will be interpreted in the light of the Postal Directive and any changes resulting from review of that Directive. "document exchange’: provision of means, including the supply of ad hoc premises as well as transporÜ tation by a third party, allowing self delivery by C 39/6 EN Official Journal of the European Communities 6. 2. 98 mutual exchange of postal subscribing to this service; items between users "terminal dues’: the remuneration of universal service providers for the distribution of incoming crossÜ border mail comprising postal items from another Member State or from a third country; supplementary "express mail service’: a service featuring, in addition to greater speed and reliability in the collection, distribution, and delivery of items, all or some of the following facilities: guarantee of delivery by a fixed date; collection from point of origin; personal delivery to addressee; possibility of in transit; changing the destination and addresse item confirmation the to sender of receipt of items dispatched; monitoring and dispatched; personalised service for customers and provision of an { la carte service, as and when required. Customers are in principle prepared to pay a higher price for this service; tracking of "universal service provider’: the public or private entity providing a universal postal service or parts thereof within a Member State, the identity of which has been notified to the Commission; "exclusive rights’: rights granted by a Member State which reserve the provision of postal services to one undertaking through any legislative, regulatory or administrative instrument and reserve to it the right to provide a postal service, or to undertake an activity, within a given geographical area; "special rights’: rights granted by a Member State to a limited number of undertakings through any legisÜ lative, regulatory or administrative instrument which, within a given geographical area: - limits, on a discretionary basis, to two or more the number of such undertakings authorised to provide a service or undertake an activity, objective, otherwise proportional and non discriminatory criteria, or according than to - designates, otherwise than according to such criteria, competing undertakings as undertakings authorised to provide a service or undertake an acitivity, or several - confers on any undertaking or undertakings, otherwise than according to such criteria, legal or regulatory advantages which substantially affect the ability of any other undertaking to provide the same service or undertake the same activity in the same geographical area under substantially comparable conditions; the sender and "intermediary’: any economical operator who acts between service provider, by clearing, routing and/or pre sorting postal items, before channelling them into the public postal network of the same or of another country; the universal "national regulatory authority’: the body or bodies, in each Member State, to which the Member State entrusts, inter alia, the regulatory functions falling within the scope of the Postal Directive; general requirements’: "essential non economic reasons which cna induce a Member State to impose conditions on the supply of postal servicesØ(˛ˇ). These reasons are: the confidentiality of correspondence, security of the network as regards the transport of dangerous justified, data protection, environmental protection and regional planning. and, where goods protection may personal data Data protection, the confidentiality of information transÜ mitted or stored and protection of privacy. include 2. MARKED DEFINITION AND POSITION ON THE POSTAL MARKET a) Geographical and product market definition 2. 1. Articles 85 and 86 of the Treaty prohibit as incomÜ patible with the common market any conduct by one or more undertakings that may negatively affect trade between Member States which involves the prevention, restriction, or distortion of competition and/or an abuse of a dominant position within the common market or a substantial part of it. The terriÜ tories of the Member States constitute separate geographical markets with regard to the delivery of domestic mail and also with regard to the domestic delivery of cross border mail, owing primarily to the exclusive rights of the operators inward (˛ˇ) The meaning of this important phrase in the context of Community competition law is explained in paragraph 5. 3. 6. 2. 98 EN Official Journal of the European Communities C 39/7 referred to in point 4. 2 and to the restrictions imposed on the provision of postal services. Each of the geographical markets constitutes a substantial part of the common market. For the determination of "relevant market’, the country of origin of inward cross border mail is immaterial. communications services, as a complement to adverÜ tising in the media. Morevover, the senders of direct mail do not necessarily require the same short delivery times, priced at first class letter tariffs, asked for by customers requesting services on the market as referred to above. The fact that both services are not always directly interchangeable indicates the possibility of distinct markets. things, 2. 2. As regards the product markets, the differences in practice between Member States demonstrate that recognition of several distinct markets is necessary in some cases. Separation of different product markets is relevant, among, other to special or exclusive rights granted. In its assessment of indiÜ vidual cases on the basis of the different market and regulatory situations in the Member States and on the basis of a harmonised framework provided by the Postal Directive, in principle consider that a number of distinct product markets exist, like the clearance, sorting, transport and delivery of mail, and for example direct mail, and cross border mail. The Commission will take into account the fact that these markets are wholly or partly liberalised in a number of Member States. The Commission will consider the following markets when assessing individual cases. the Commission will 2. 3. The general letter service concerns the delivery of items of correspondence to the addresses shown on the items. 2. 4. Other distinct markets from include, for example, the express mail market, the document exchange market, as well as the market for new services (services quite distinct services). Activities combining the new telecommunications technologies and some elements of the postal services may be, but are not necessarily, new services within the meaning of the Postal Directive. Indeed, they may reflect the adaptability of traditional services. conventinal items transported. It A document exchange differs from the market referred to in point 2. 3 since it does not include the collection and the delivery to the addressee of the postal involves only means, including the supply of ad hoc premises as well as transportation by a third party, allowing self delivery by mutual exchange of postal items between users subscribing to this service. The users of a document exchange are members of a closed user group. incluce It does not the provision of postal services by the natural or legal person (including a sister or subsidiary organisation) who is the originator of the mail. self provision, that is Also excluded, in accordance with pratice in many Member States, are such postal items as are not items of correspondence, considered they consist of identical copies of the same written communication and have not been altered by additions, deletions or indications other than the name of the addressee and his address. Such items are magazines, newspapers, printed periodicals cataÜ logues, as well as goods or documents accomÜ panying and relating to such items. since the The express mail service also differs from the market referred to in point 2. 3 owing to the value added by comparison with the basic postal serviceØ(˛—). In addition to faster and more reliable collection, transÜ portation and delivery of the postal items, an express mail service is characterised by the provision of some or all of following supplementary services: guarantee of delivery by a given date; collection from the sender’s address; delivery to the addressee in person; possibility of a change of destination and addressee in transit; conformation to the sender of delivery; personalised treatment for customers and the offer of a range of services according to requirements. Customers are in principle prepared to pay a higher price for this service. The reservable services as defined in the Postal Directive may include accelerated delivery of items of domestic correspondence falling within the prescribed price and weight limits. tracking tracing; and Direct mail is covered by the definition of items of correspondence. However, direct mail items do not contain personalised messages. Direct mail addresses for commercial the needs of specific operators (˛—) Commission Decisions 90/16/EEC (OJ L 10, 12. 1. 1990, p. 47) and 90/456/EEC (OJ L 233, 28. 8. 1990, p. 19). C 39/8 EN Official Journal of the European Communities 6. 2. 98 in in this integrated 2. 5. Without prejudice to the definition of reservable services given the Postal Directive, different activities can be recognised, within the general letter service, which meet distinct needs and should in principle be considered as different markets; the markets for the clearance and for the sorting of mail, the market for the transport of mail and, finally, the delivery of mail (domestic or inward cross border). Different categories of customers must be distinguished respect. Private customers demand the distinct products or services as one service. However, business customers, which represent most of the revenues of the operators referred to in point 4. 2, actively pursue the distinct components of the final service alternative solutions (with regard to quality of service levels and/or costs incurred) which are in some cases provided by, or to, different operators. Business sub contracted customers want to balance the advantages and disadÜ vantages of self provision versus provision by the postal operator. The existing monopolies limit the external supply of those individual services, but they would otherwise limit the external supply of those individual according to market conditions. That market reality supports the opinion that clearance, items sorting, a different constitute From competition law point of view, the distinction between the four markets may be relevant. transport and delivery of postal marketsØ(˛Ñ). substituting possibilities for of than the one providing That is the case for cross border mail where the clearence and transport will be done by a postal the operator other distribution. This is also the case as regards domestic mail, since most postal operators permit major customers to undertake sorting of bulk traffic in return for discounts, based on their public tariffs. The deposit and collection of mail and method of payment also vary in these circumstances. Mail rooms of larger companies are now often operated by intermediaries, which prepare and pre sort mail before handing it over to the postal operator for final distribution. Moreover, all postal operators allow to distribution. Moreover, all postal operators allow some kind of downstream access to their postal even network, demanding (sorted) mail to be deposited at an expediting or sorting centre. This permits in many cases a higher reliability (quality of service) by bypassing any sources of the postal network upstream. some kind of downstream allowing or instance by failure access for in (b) Dominant position 2. 6. Since in most Member States the operator referred to in point 4. 2 is, by virtue of the exclusive rights granted to him, the only operator controlling a public postal network covering the whole territory of the Member State, such an operator has a dominant position within the meaning of Article 86 of the Treaty on the national market for the distribution of items of correspondence. Distribution is the service to the user which allows for important economies of scale, and the operator providing this service is in most cases also dominant on the markets for the clearance, sorting and transport of mail. In addition, the distribution, particularly if it also operates post office premises, has the important advantage of being regarded by the users as the principal postal enterprise, because it is the most conspicuous one, and is therefore the natural this dominant in most Member States, position also services such as registered mail or special delivery services, and/or some sectors of the parcels market. first choice. Moreover, enterprise which includes, provides (c) Duties of dominant postal operators 2. 7. According to point (b) of the second paragraph of Article 86 of the Treaty, an abuse may consist in limiting the performance of the relevant service to the prejudice of its consumers. Where a Member State grants exclusive rights to an operator referred to in point 4. 2 for services which it does not offer, or offers in conditions not satisfying the needs of customers in the same way as the services which competitive economic operators would have offered, the Member State induces those operators, by the simple exercise of the exclusive right which has been conferred on them, to limit the supply of the relevant service, as the effective exercise of those is, activities by private companies this case, the case where is particularly impossible. This the postal service to protect measures adopted restrict the provision of other distinct services on distinct or neighbouring markets such as the express mail market. The Commission has requested several Member States to abolish restrictions resulting from exclusive rights regarding the provision of express mail services by international couriersØ(˛Ò). in (˛Ñ) See Commission Notice on the definition of the relevant market for the purpose of the application of Community competition law (OJ C 372, 9. 12. 1997, p. 5). (˛Ò) See footnote 13. 6. 2. 98 EN Official Journal of the European Communities C 39/9 to failing inefficient service and Another type of possible abuse involves providing a seriously take advantage of technical developments. This harms customers who are prevented from choosing between alternative suppliers. For instance, a report prepared for the CommissionØ(˛Ó) in 1994 showed that, where they have not been subject to competition, the public postal operators in the Member States have not made any significant progress since 1990 in the stanÜ dardisation of dimensions and weights. The report also showed that some postal operators practised hidden and non reserved services (see points 3. 1 and 3. 4), which explained, according to that study, most of the price disparities 1994, between Member States especially penalising residential users who do not qualify for any discounts schemes, since they make use of reserved services that are priced at a higher level than necessary. cross subsidies reserved between in The examples given illustrate the possibility that, where they are granted special or exclusive rights, postal operators may let the quality of the service declineØ(˛Ô) and omit to take necessary steps to improve the Commission may be induced to act taking account of the conditions explained in point 8. 3. service quality. cases, such In As regards cross border postal services, the study referred to above showed that the quality of those services needed to be improved significantly in order to meet the needs of customers, and in particular of residential customers who cannot afford to use the services of courier companies or facsimile transÜ mission instead. Independent measurements carried out in 1995 and 1996 show an improvement of those quality of since 1994. However, service (˛Ó) UFC - Que Choisir, Postal services in the European Union, April 1994. (˛Ô) In many Member States users could, some decades ago, still rely on this service to receive in the afternoon, standard letters posted in the morning. Since then, a continuous decline in the quality of the service has been observed, and in particular of the number of daily rounds of the postmen, which were reduced from five to one (or two in some cities of the European Union). The exclusive rights of the postal organisations favoured a fall in quality, since they prevented other companies from entering the market. As a conseÜ quence the postal organisations failed to compensate for wage increases and reduction of the working hours by introducing modern technology, as was done by enterprises in industries open to competition. measurements only concerne first class mail, and the most recent measurements show that the quality has gone down slightly again. The majority of Community public postal operators have notified an agreement on terminal dues to the Commission for assessment under the competition rules of the Treaty. The parties to the agreement have explained that their aim is to establish fair compensation for the delivery of cross border mail reflecting more closely the real costs incurred and to improve the quality of cross border mail services. 2. 8. Unjustified refusal contrary to Article 86, is also an abuse to supply prohibited by Article 86 of the Treaty. Such behaviour would lead to a limitation of services within the meaning of Article 86, second paragraph, (b) and, if applied only to some users, result in discrimination second paragraph, (c), which requires that no dissimilar conditions be applied to equivalent transactions. In most of the Member States, the operators referred to in point 4. 2 provide access at various access points of their postal networks to intermediaries. Conditions of access, and in particular the tariffs applied, are however, often confidential and may facilitate the application of discriminatory conditions, Member States should ensure that their postal legislation does not encourage postal operators to differentiate injusÜ tifiably as regards the conditions applied or to exclude certain companies. be against directed 2. 9. While a dominant firm is entitled to defend its position by competing with rivals, it has a special responsibility not to further diminish the degree of competition remaining on the market. Exclusionary practices may existing competitors on the market or intended to impede market access by new entrants. Examples of such illegal behaviour include: refusal to deal as a means of eliminating a competitor by a firm which is the sole or dominant source of supply of a product or controls access to an essential technology or infraÜ structure; predatory pricing and selective price exclusionary dealing cutting agreements; discrimination as part of a wider pattern of monopolizing conduct designed to exclude competitors; and exclusionary rebate schemes. section 3); (see C 39/10 EN Official Journal of the European Communities 6. 2. 98 3. CROSSÜSUBSIDISATION (b) Consequences (a) Basic principles 3. 1. CrossÜsubsidisation means that an undertaking bears or allocates all or part of the costs of its activity in one geographical or product market to its activity in another geographical or product market. Under certain circumstances, cross subsidisation the postal sector, where nearly all operators provide reserved and non reserved services, can distort competition and lead to competitors being beaten by offers which are made possible not by efficiency (including economies of scope) and performance but cross subsidisation by leading to unfair competition is crucial for the develÜ opment of the postal sector. cross subsidies. Avoiding in 3. 2. CrossÜsubsidisation does not distort competition when the costs of reserved activities are subsidised by the revenue generated by other reserved services since there is no competition possible as to these services. This form of subsidisation may sometimes be necessary, to enable the operators referred to in point 4. 2 to perform their obligation to provide a service universally, and on the same conditions to everybodyØ(˛Õ). For instance, unprofitable mail delivery in rural areas is subsidised through revenues from profitable mail delivery in urban areas. The same could be said of subsidising the provision of reserved services through revenues generated by activities open to competition. Moreover, crossÜ subsidisation between non reserved activities is not in itself abusive. 3. 3. By open activities contrast, subsidising to competition by allocating their costs to reserved services is likely to distort competition in breach of Article 86. It could amount to an abuse by an underÜ taking holding a dominant position within the Community. Moreover, users of activities covered by a monopoly would have to bear costs which are those activities. the provision of to unrelated Nonetheless, too many dominant compete on price, or improve their cash flow and obtain only partial contribution fixed (overhead) costs, unless the prices are predatory or go against relevant national or Community reguÜ lations. companies their to 3. 4. A reference to cross subsidisation was made in point 2. 7; duties of dominant postal operators. The operators referred to in point 4. 2 should not use the income from the reserved area to cross subsidise activities in areas open to competition. Such a practice could prevent, restrict or distort competition in the non reserved area. However, in some justified cases, subject to the provisions of Article 90(2), cross subsidisation can be regarded as lawful, for example for cultural mailØ(˛Ö), as long as it is applied in a non discriminatory manner, or for particular services to the socially, medically and economically disadvantaged. When necessary, the Commission indicate what other exemptions the Treaty will would allow to be made. In all other cases, taking into account the indications given in point 3. 3, the price of competitive services offered by the operator in point 4. 2 should, because of the referred to difficulty of allocating common costs, in principle be at least equal to the average total costs of provision. This means covering the direct costs plus an approÜ priate proportion of the common and overhead costs of the operator. Objective criteria, such as volumes, time (labour) usage, or intensity of usage, should be used to determine the appropriate proportion. When using the turnover generated by the services involved as a criterion in a case of cross subsidisation, allowance should be made for the fact that in such a scenario the turnover of the relevant activity is being factors, kept artificially such as themselves revenues or profits, are influenced by predation. If services were offered selectively at a price below systematically and average total cost, the Commission would, on a case by case basis, the matter under investigate Article 86, or under Article 86 and Article 90(1) or under Article 92. low. DemandÜinfluenced 4. PUBLIC UNDERTAKINGS AND SPECIAL OR EXCLUSIVE RIGHTS 4. 1. The treaty obliges the Member States, in respect of public undertakings and undertakings to which they grant special or exclusive rights, neither to enact nor in force any measures contrary to the maintain (˛Õ) See these Postal Directive, recitals 16 and 28, and (˛Ö) Referred to by UPU as "work of the mind’, comprising Chapter 5. books, newspapers, periodicals and journals. 6. 2. 98 EN Official Journal of the European Communities C 39/11 Treaty rules (Article 90(1)). The expression "underÜ taking’ includes every person or legal entity exerÜ cising an economic activity, irrespective of the legal status of the entity and the way in which it is financed. The clearance, sorting, transportation and distribution of postal items constitute economic activities, and these services are normally supplied for reward. the rules which govern The term "public undertaking’ includes every underÜ taking over which the public authorities may exercise directly or indirectly a dominant influence by virtue of ownership of it, their financial participation in it or itØ(ˇ˝). A dominant influence on the part of the public authorities may in particular be presumed when the public authorities indirectly, the majority of the hold, directly or subscribed capital of the undertaking, control the majority of the voting rights attached to shares issued by the undertaking or can appoint more than half of the members of the administrative, manaÜ gerial or supervisory body. Bodies which are part of the Member State’s administration and which provide in an organised manner postal services for third parties against remuneration are to be regarded as such undertakings. Undertakings to which special or exclusive rights are granted can, according to Article 90(1), be public as well as private. 4. 2. National regulations concerning postal operators to which the Member States have granted special or exclusive rights to provide certain postal services are "measures’ within the meaning of Article 90(1) of the Treaty and must be assessed under the Treaty provisions to which that Article refers. In addition to Member States’ obligations under Article 90(1), public undertakings and undertakings that have been granted special or exclusive rights are subject to Articles 85 and 86. 5. FREEDOM TO PROVIDE SERVICES (a) Basic principles 5. 1. The granting of special or exclusive rights to one or more operators referred to in point 4. 2 to carry out the clearance, including public collection, transport and distribution of certain categories of postal items inevitably restricts the provision of such services, in other Member both by companies established the States and by undertakings established Member State concerned. This restriction has a transborder character when the addresses or the senders of the postal items handled by those underÜ takings are established in other Member States. In the provision of postal practice, restrictions on services, within the meaning of Article 59 of the TreatyØ(ˇ˛), comprise prohibiting the conveyance of certain categories of postal items to other Member States including by intermediaries, as well as the prohibition on distributing gross border mail. The Postal Directive lays down the justified restrictions on the provision of postal services. in 5. 2. Article 66, read in conjunction with Artuicle 55 and 56 of the Treaty, sets out exceptions from Article 59. Since they are exceptions to a fundamental principle, they must be interpreted restrictively. As regards postal services, the exception under Article 55 only applies to the conveyance and distribution of a special kind of mail, that is mail generated in the curse of judicial or administrative procedures, connected, even occasionally, with the exercise of official authority, in pursuance of administrative procedures. The conveyance and distribution of such items on a Member State’s territory may therefore be subjected ot a licensing requirement (see point 5. 5) in order to protect the public interest. The conditions of the other derogations from the Treaty listed those provisions will not normally be fulfilled in relation to postal services. Such services cannot, in themselves, threaten public policy and cannot affect public health. in particular notifications judicial or any in 4. 3. In most Member States, special and exclusive rights apply to services such as the clearance, transporÜ tation and distribution of certain postal items, as well as the way in which those services are provided, such as the exclusive right to place letter boxes along the public highway or to issue stamps bearing the name of the country in question. 5. 3. The case law of the Court of Justice allows, in principle, the basis of further derogations on mandatory requirements, provided that they fulfil non economic essential requirements in the general interest, are applied without discrimination, and are appropriate and proportionate to the objective to (ˇ˝) Commission Directive 80/723/EEC on the transparency of financial relations between Member States and public undertakings, OJ L 195, 29. 7. 1980, p. 35. (ˇ˛) For a general explanation of the principles deriving from Article 59, see Commission interpretative communication concerning the free movement of services across frontiers (OJ C 334, 9. 12. 1993, p. 3). C 39/12 EN Official Journal of the European Communities 6. 2. 98 the subject services are data protection be achieved. As regards postal services, the essential requirements which the Commission would consider as justifying restrictions on the freedom to provide postal to in this field, the approximation measures taken confidentiality of correspondence, security of the transport of dangerous network as regards goods, as well as, where the justified under provisions of the Treaty, environmental protection and regional planning. Conversely, the Commission would not consider it justified to impose restrictions on the freedom to provide postal services for reasons of consumer protection since this general interest requirement can be met by the general legislation on fair trade practices and consumer protection. Benefits to consumers are enhanced by the freedom to provide postal services, provided that universal service obligations are well defined on the basis of the Postal Directive and can be fulfilled. 5. 4. The Commission therefore considers that the mainÜ tenance of any special or exclusive right which limits cross border provision of postal services needs to be justified in the light of Articles 90 and 59 of the Treaty. At present, the special or exclusive rights whose scope does not go beyond the reserved services as defined in the Postal Directive are prima facie justified under Article 90(2). Outward crossÜ border mail is de jure or de facto liberalised in some Member States, such as Denmark, the Netherlands, Finland, Sweden, and the United Kingdom. (b) Consequences 5. 5. The adoption of the measures contained to ensure in the Postal Directive requires Member States to regulate postal services. Where Member States restrict postal the achievement of universal services service and essential requirements, the content of such regulation must correspond to the objective pursued. Obligations should, as a general rule, be enforced within the framework of class licences and declaration procedures by which operators of postal services supply their name, legal form, title and address as well as a short description of the services they offer to the public. Individual licensing should only be applied for specific postal services, where it is demonstrated less restrictive procedures cannot ensure those objectives. Member States may be invited, on a case by case basis, to notify the that measures they adopt to the Commission to enable it to assess their proportionality. 6. MEASURES ADOPTED BY MEMBER STATES (a) Basic principles 6. 1. Member States have the freedom to define what are general interest services, to grant the special or exclusive rights that are necessary for providing them, to regulate their management and, where appropriate, to fund them. However, under Article 90(1) of the Treaty, Member States must, in the case of public undertakings and undertakings to which they have granted special or exclusive rights, neither enact nor maintain in force any measure contrary to the Treaty rules, and in particular its competition rules. (b) Consequences 6. 2. The operation of a universal clearance and distribution network confers significant advantages on the operator referred to in point 4. 2 in offering not only reserved or liberalised services falling within the definition of universal service, but also other services. The prohibition (non universal postal) under Articles 90(1), read in conjunction with Article 86(b), applies to the use, without objective justification, of a dominant position on one market to obtain market power on related or neighbouring markets which are distinct from the former, at the risk of eliminating competition on those markets. In countries where local delivery of items of correÜ liberalised, such as Spain, and the spondence transport and limited monopoly delivery, the use of a dominant position to extend the monopoly from the latter market to the former would therefore be incompatible with the Treaty provisions, in the absence of specific justification, if the functioning of services in the general economic interest was not previously endangered. The Commission considers that it would be appropriate for Member States to inform the Commission of any extension of special or exclusive rights and of the justification therefor. inter city is is to 6. 3. There is a potential effect on the trade between Member States from restrictions on the provision of postal services, since the postal services offered by operators other than the operators referred to in 6. 2. 98 EN Official Journal of the European Communities C 39/13 point 4. 2 can cover mailings to or from other Member States, and restrictions may impede crossÜ border ativities of operators in other Member States. exemption is, or may be, granted. Without prejudice to Article 90(2), Articles 92 and 93 are applicable to postal servicesØ(ˇ—). its competitors. The 6. 4. As explained in point 8(b)(vii), Member States must monitor access conditions and the exercise of special and exclusive rights. They need not necessarily set up new bodies to do this but they should not give to their operatorØ(ˇˇ) as referred to in point 4. 2, or to a body which is related (legally, administratively and structurally) to that operator, the power of superÜ vision of the exclusive rights granted and of the activities of postal operators generally. An enterprise in a dominant position must not be allowed to have such a power over indeÜ pendence, both in theory and in practice, of the supervisory enterprise supervised is essential. The system of undistorted competition required by the Treaty can only be ensured the different economic operators, including confidentiality of sensitive business information, are guaranteed. To allow an operator to check the declarations of its competitors or to assign to an undertaking the power to supervise the activities of its competitors or to be associated in the granting of licences means commercial that information about its competitors and thus has the opportunity those competitors. if equal opportunities for the activity of undertaking authority influence given from such the all to is 7. POSTAL OPERATORS AND STATE AID (a) Principles in postal operations, the majority appear While a few operators referred to in point 4. 2 are to be highly profitable, operating either in financial deficit or at close to break even although information on underlying financial performance is limited, as relatively few operators publish relevant information of an auditable standard on a regular basis. However, direct financial support in the form of tax support exemptions is being given to fund some postal services, even if the actual amounts are often not transparent. subsidies or such as indirect The Treaty makes the Commission responsible for enforcing Article 92, which declares State aid that affects the Community to be incompatible with the common market except in certain circumstances where an trade between Member States of Pursuant to Article 93(3), Member States are required to notify to the Commission for approval all plans to grant aid or to alter existing aid arrangements. Moreover, is required to monitor aid which it has previously authÜ orised or which dates from before the entry into force of the Treaty or before the accession of the Member State concerned. the Commission as last All universal service providers currently fall within the scope of Commission Directive 80/723/EEC of 25 June 1980 on the transparency of financial relations between Member States and public underÜ takingsØ(ˇÑ), by Directive 93/84/EECØ(ˇÒ). In addition to the general transÜ parency requirement for the accounts of operators referred to in point 4. 2 as discussed in point 8(b)(vi), Member States must therefore ensure that financial relations between them and those operators are transparent as required by the Directive, so that the following are clearly shown: amended (a) public funds made available directly, including tax exemptions or reductions; (b) public funds made available through other public undertakings or financial institutions; (c) the use to which those public funds are actually put. The Commission following as making available public funds: regards, in particular, the (a) the setting off of operating losses; (b) the provision of capital; (ˇˇ) See in particular, Case CÜ18/88 RTT v ØGBÜInnoÜBM [1991ü ECR IÜ5981, paragraphs 25 to 28. (ˇ—) Case CÜ387/92 Banco de Credito Industrial v. Ayuntamiento Valencia [1994ü ECR IÜ877. (ˇÑ) OJ L 195, 29. 7. 1980, p. 35. (ˇÒ) OJ L 254, 12. 10. 1993, p. 16. C 39/14 EN Official Journal of the European Communities 6. 2. 98 (c) non refundable grants or loans on privileged terms; which benefit the prohibition set out in Article 92(1) on the basis of Article 90(2)Ø(ˇÔ). exemption from an from (d) the granting of financial advantages by forgoing profits or the recovery of sums due; 8. SERVICE OF GENERAL ECONOMIC INTEREST (e) the forgoing of a normal return on public funds used; (a) Basic principles (f) compensation for financial burdens imposed by the public authorities. (b) Application of Articles 90 and 92 that privileged to check whether The Commission has been called upon to examine a number of tax advantages granted to a postal operator on the basis of Article 92 in connection with Article 90 of the Treaty. The Commission sought tax treatment could be used to cross subsidize that operator’s operations in sectors open to competition. At that time, the postal operator did not have an analytical cost accounting system serving to enable the Commission to distinguish between the reserved activities and the competitive ones. Accordingly, the Commission, on the basis of the findings of studies carried out in that area, assessed the additional costs due to universal service obligations borne by that postal operator and compared those costs with the tax advantages. The Commission concluded that the therefore costs exceeded decided that the tax system under examination could not lead to cross subsidization of that operator’s operations in the competitive areasØ(ˇÓ). those advantages and in its decision is worth noting It the that Commission invited the Member State concerned to make sure that the postal operator adopted an analytical cost accounting system and requested an annual report which would allow the monitoring of compliance with Community law. the Treaty rules where 8. 1. Article 90(2) of the Treaty allows an exception from the application of the application of those rules obstructs, in law or in fact, the performance of the particular task assigned to the operators referred to in point 4. 2 for the provision of a service of general economic interest. Without prejudice to the rights of the Member States to define particular requirements of services of general interest, that task consists primarily in the provision and the maintenance of a universal public postal service, guaranteeing at affordable, costÜ effective and transparent tariffs nationwide access to the public postal network within a reasonable distance and during adequate opening hours, from including accessible points throughout the territory and the timely delivery of such indicated, as well as associated services entrusted by measures of a reguÜ latory nature for universal delivery at a specified quality. The universal service is to evolve in response to the social, economical and technical environment and to the demands of users. the clearance of postal boxes postal items to the address those operators collection items or to The general interest involved requires the availability in the Community of a genuinely integrated public postal network, allowing efficient circulation of information and thereby fostering, on the one hand, the competitivenes of European industry and the development of trade and greater cohesion between the regions and Member States, and on the other, the improvement of social contacts between the citizens of the Union. The definition of the reserved area has to take into account the financial resources necessary for the provision of the service of general economic interest. The Court of First Instance ha endorsed the Commission’s decision and has stated that the tax advantages to that postal operator are State aid 8. 2. The financial resources for the maintenance and improvement of that public network still derive mainly from the activities referred to in point 2. 3. (ˇÓ) Case NNØ135/92, OJ C 262, 7. 10. 1995, p. 11. (ˇÔ) Case TÜ106/95 FFSA v. Commission [1997ü ECR IIÜ229. 6. 2. 98 EN Official Journal of the European Communities C 39/15 Currently, and in the absence of harmonisation at Community level, most Member States have fixed the limits of the monopoly by reference to the weight of the item. Some Member States apply a limit whereas one combined weight and price Member State applies a price limit only. Information collected by the revenues the Commission on obtained from mail flows in the Member States seems to indicate that the maintencance of special or exclusive rights with regard to this market could, in the absence of circumstances, be exceptional sufficient to guarantee the improvement an mainÜ tenance of the public postal network. The service for which Member States can reserve exclusive or special rights, to the extent necessary to ensure the maintenance of the universal service, is harmonised in the Postal Directive. To the extent to which Member States grant special or exclusive rights for this service, the service is to be considered a separate product market in the assessment of indiÜ vidual cases in particular with regard to direct mail, the distribution of cross border mail, inward outward cross border mail, as well as with regard to the collection, sorting and transport of mail. The Commission will take account of the fact that those markets are wholly or partly liberalised in a number of Member States. the postal sector, 8. 3. When applying the competition rules and other relevant Treaty rules the to Commission, acting upon a complaint or upon its own initiative, will take account of the harmonized definition set out in the Postal Directive in assessing whether the scope of the reserved area can be justified under Article 90(2). The point of departure will be a presumption that, to the extent that they fall within the limits of the reserved area as defined in the Postal Directive, the special or exclusive rithts will be prima facie justified under Article 90(2). That presumption can, however, be rebutted if the facts in a case show that a restriction does not fulfil the conditions of Article 90(2)Ø(ˇÕ). issues in relation which makes it difficult for the Commission, at this stage, to specify in a general way the obligations of the Member States regarding that service. The two principal to direct mail are potential abuse by customers of its tariffication and of its liberalisation (reserved items being delivered by an alternative operators as if they were non reserved direct mail items) so as to circumvent the reserved services referred to in point 8. 2. Evidence from the Member States which do not restrict direct mail services, such as Spain, Italy, the Netherlands, Austria, Sweden and Finland, is still inconclusive and does not yet allow a definitive general assessment. In view of that uncertainty, it is considered appropriate to proceed temporarily on a case by case basis. If particular circumstances make it necessary, and without prejudice to point 8. 3, Member States may maintain certain existing restrictions on direct mail services or introduce licensing in order to avoid artificial traffic distortions and substantial destabilÜ ization of revenues. 8. 5. As regards the distribution of inward corss border mail, the system of terminal dues received by the postal operator of the Member State of delivery of cross border mail from the operator of the Member State of origin is currently under revision to adapt terminal dues, which are in many cases too low, to actual costs of delivery. certain existing restrictions on Without prejudice to point 8. 3, Member States may maintain the distribution of inward cross border mailØ(ˇÖ), so as to avoid artificial diversion of traffic, which would inflate the share of cross border mail in Community traffic. Such restrictions may only concern items falling under the reservable area of services. In assessing the situation in the framework of indiÜ vidual cases, the Commission will take into account the relevant, specific circumstances in the Member States. 8. 4. The direct mail market is still developing at a different pace from one Member State to the other, (ˇÕ) In relation to the limits on the application of the exception set out in Article 90(2), see the position taken by the Court of Justice in the following cases: Case CÜ179/90 Merci convenzionali porto di Genova v. Siderurgica Gabrielli [1991ü ECR IÜ1979; Case CÜ41/90 Klaus H‰fner and Fritz Elser v. Macroton [1991ü ECR IÜ5889. 8. 6. The clearance, sorting and transport of postal items has been or is currently increasingly being opened up to third parties by postal operators in a number (ˇÖ) This may in particular concern mail from one State which has been conveyed by commercial companies to another State to be introduced in the public postal network via a postal operator of that other State. C 39/16 EN Official Journal of the European Communities 6. 2. 98 certain existing restrictions on if particular circumstances make of Member States. Given that the revenue effects of such opening up may vary according to the situation in the different Member States, certain Member States may, it to point 8. 3, necessary, and without prejudice maintain the clearance, sorting and transport of postal items by intermediariesØ(—˝), so as to allow for the necessary restructuring of the operator referred to in point 4. 2 However, such restrictions should in principle be applied only to postal items covered by the existing should not monopolies, is already limit what the Member State concerned, and accepted in the principle of compatible with should be non discriminatory access to the postal network as set out in point 8(b)(vii). (b) Conditions for the application of Article 90(2) to the postal sector The following conditions should apply with regard to the exception under Article 90(2): (i) Liberalisation of other postal services Except for those services for which reservation is necessary, and which the Postal Directive allows to be reserved, Member States should withdraw all special or exclusive rights for the supply of postal services to the extent that the performance of the particular task assigned to the operators referred to in point 4. 2 for the provision of a service of a general economic interest is not obstructed in law or in fact, with the exception of mail connected to the exercise of official authority, and they should take all necessary measures to guarantee the right of all economic operators to supply postal services. This does not prevent Member States from making, where necessary, the supply of such services subject to declaration procedures or class licences and, when necessary, to individual licensing procedures aimed at the enforcement of essential requirements and at safeguarding the universal service. Member States should, in that event, ensure that the conditions set out in those procedures are transparent, objective, and without discriminatory effect, and that there is an efficient procedure of appealing to the courts against any refusal. (ii) Absence of less restrictive means to ensure the services in the general economic interest Exclusive rights may be granted or maintained only where they are indispensable for ensuring the funcÜ tioning of the tasks of general economic interest. In many areas the entry of new companies into the market could, on the basis of their specific skills and expertise, contribute to the realisation of the services of general economic interest. If the operator referred to in point 4. 2 fails to provide satisfactorily all of the elements of the universal service required by the Postal Directive (such as the possibility of every citizen in the Member State concerned, and in particular those living in remote areas, to have access to newspapers, magazines and books), even with the benefit of a universal postal network and of special or exclusive rights, take actionØ(—˛). Instead of extending the rights already granted, Member States should create the possibility that services are provided by competitors and for this purpose may those competitors in addition to essential requirements. All of objective, should non discriminatory and transparent. the Member State concerned must obligations obligations impose those on be (iii) Proportionality Member States should moreover ensure that the scope of any special and exclusive rights granted is in proportion to the general economic interest which is pursued through those rights. Prohibiting selfÜ delivery, that is the provision of postal services by the natural or legal person (including a sister or subsidiary organisation) who is the originator of the mail, or collection and transport of such items by a third party acting solely on its behalf, would for (—˝) Even the in a monopoly situation, senders will have freedom to make use of particular services provided by an intermediary, such as (preÜ)sorting before deposit with the postal operator. (—˛) According to Article 3 of the Postal Directive, Member States are to ensure that users enjoy the right to a universal service. 6. 2. 98 EN Official Journal of the European Communities C 39/17 for example not be proportionate to the objective of guaranteeing adequate resources the public postal network. Member States must also adjust the scope of those special or exclusive rights, according to changes in the needs and the conditions under which postal services are provided and taking account of any State aid granted to the operator referred to in point 4. 2. (iv) Monitoring by an independent regulatory body The monitoring of the performance of the publicÜ service tasks of the operators referred to in point 4. 2 and of open access to the public postal network and, where applicable, the grant of licences or the control of declarations as well as the observance by economic operators of the special or exclusive rights of operators referred to in point 4. 2 should be ensured by a body or bodies independent of the latterØ(—ˇ). separately That body should in particular ensure: that contracts for the provision of reserved services are made fully transparent, are invoiced and distinÜ guished from non reserved services, such as printing, labelling and enveloping; that terms and conditions for services which are in part reserved and in part liberalised are the reserved element is open to all postal users, irrespective of is whether or not purchased. the non reserved component separate; and that is law to ensure Price and service discrimination between or within classes of customers can easily be practised by operators running a universal postal network, given the significant overheads which cannot be fully and precisely assigned to any one service in particular. It is therefore extremely difficult to determine crossÜ subsidies within them, both between the different stages of the handling of postal items in the public postal network and between the reserved services and the services provided under conditions of competition. Moreover, a number of operators offer preferential tariffs for cultural items which clearly do not cover the average total costs. Member States are that obliged by Article 5 and 90 Community fully complied with. The Commission considers that the most appropriate way of fulfilling that obligation would be for Member States to require operators referred to in point 4. 2 to identifying sepaÜ keep separate financial records, rately, inter alia, costs and revenues associated with the provision of the services supplied under their exclusive under competitive conditions, and making it possible to assess fully the conditions applied at the various access points of the public postal network. Services made up of elements falling within the reserved and competitive services should also distinguish between the costs of each element. Internal accounting systems should operate on the basis of consistently applied and objectively justified cost accounting principles. The financial accounts should be drawn up, audited by an independent auditor, which may be appointed by the National Regulatory Authority, and be publsihed in accordance with the relelvant Community and national to commercial organisations. legislation applying provided rights those and (v) Effective monitoring of reserved services (vii) NonÜdiscriminatory access to the postal network The tasks excluded from the scope of competition should be effectively monitored by the Member State according and performance levels and there should be regular and public reporting on their fulfilment. published targets service to Operators should provide the universal postal service by affording non discriminatory access to customers or intermediaries at appropriate public points of access, in accordance with the needs of those users. Access conditions including contracts (when offered) should be transparent, published in an appropriate manner and offered on a non discriminatory basis. (vi) Transparency of accounting Each operator referred to in point 4. 2 uses a single postal network to compete in a variety of markets. (—ˇ) See in particular Articles 9 and 22 of the Postal Directive. Preferential tariffs appear to be offered by some operators to particular groups of customers in a non transparent should monitor the access conditions to the network with a is no discrimination view to ensuring that there fashion. Member States C 39/18 EN Official Journal of the European Communities 6. 2. 98 either in the conditions of use or in the charges payable. It should in particular be ensured that interÜ mediaries, including operators from other Member States, can choose from amongst available access points to the public postal network and obtain access within a reasonable period at price conditions based on costs, that take into account the actual services required. The obligation to provide non discriminatory access to the public postal network does not mean that Member States ar required to ensure access for items of correspondence from its territory, which were conveyed by commercial companies to another State, in breach of a postal monopoly, to be introduced in the public postal network via a postal operator of that other State, for the sole purpose of taking advantage of lower postal tariffs. Other economic reasons, such as production costs and facilities, added values or the level of service offered in other Member States are not regarded as improper. Fraud can be made subject to penalties by the independent regulatory body. for postal At present cross border access to postal networks is occasionally rejected, or only allowed subject to items whose production conditions, transmission process before those postal items were given physical form. Those cases are usually called non physical remail. In the present circumstances there may indeed be an that economic problem for includes cross border data the postal operator delivers the mail, due to the level of terminal dues applied between postal operators. The operators seek to resolve this problem by the introduction of an appropriate terminal dues system. to inform The Commission may request Member States, in accordance with the first paragraph of Article 5 of the Treaty, the conditions of access applied and of the reasons for them. The Commission is not to disclose information acquired as a result of such requests to the extent that it is covered by the obligation of professional secrecy. the Commission of 9. REVIEW level is adopted at Community to This notice facilitate the assessment of certain behaviour of undertakings and certain State measures relating to postal services. It is appropriate that after a certain period of development, possibly by the year 2000, the Commission should carry out an evaluation of the postal sector with regard to the Treaty rules, to establish whether modifications of the views set out in this notice are required on the basis of social, economic or technological considerations and on the basis of experience with cases in the postal sector. In due time the Commission will carry out a global evaluation of the situation in the postal sector in the light of the aims of this notice