DG COMPETITION Unit F3 01 April 2014
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1 State aid to the Postal Sector DG COMPETITION Unit F3 01 April 2014
2 AGENDA 1. Introduction 2. Legal framework 3. Postal Directives 4. Notion of aid: State aid or no State aid? 5. Compatibility assessment
3 1. INTRODUCTION
4 1. INTRODUCTION EU Postal Sector: In 2011: 91 billion turnover, 0.72% EU GDP and 0.75% of EU employment Postal services handle about 135 billion items per year: 2/3 mail & 1/3 parcels Two key trends: e-substitution (left graph) and e-commerce (right graph) Decrease of letter segment: Increase of the parcel segment:
5 1. INTRODUCTION EU postal policy: The postal services sector is of vital importance for commercial users and consumers: parts of this sector can therefore be considered as a service of general economic interest (SGEI). Accomplish the Single Market for postal services and ensure a high quality universal postal service as part of the Lisbon Agenda. Opening up the sector to competition in a gradual and controlled way on the basis of the regulatory framework: 1 st Postal Directive (97/67/EC) 2 nd Postal Directive (2002/39/EC) 3 rd Postal Directive (2008/06/EC) The improvement of quality of service, in particular in terms of delivery performance and convenient access are key aspects of the EU postal policy.
6 I. Sectoral legislation: 2. LEGAL FRAMEWORK Postal Directives (primarily DG MARKT) II. State aid control: (by DG COMPETITION) Case law: Four Altmark criteria (ECJ judgment of 24/07/2003) to determine whether a measure entails an economic advantage (or not) and hence whether there can be State aid (or not). Commission's 2012 SGEI Package: (applicable since 31/01/2012) Public financing of SGEIs via State aid in the form of public service compensation can be compatible if compliant with: The 2012 SGEI Framework: Rules under which State aid to finance SGEIs is compatible with Article 106(2) of the Treaty The 2012 SGEI Decision: compatible with Article 106 (2) and also exempt from notification (for specific sectors / smaller amounts)
7 3. POSTAL DIRECTIVES Provision of a universal postal service (USO) A precise set of universal service obligations is set out in article 3 of the Postal Directive to give effect to the principles of universality, equality and continuity. Establishment of a national regulatory authority which is independent of the postal operator. Operators providing the universal service have to establish separate accounts in order to avoid undue cross-subsidies: for services open to competition; for non-reserved services (no longer applicable).
8 3. THIRD POSTAL DIRECTIVE (2008/06/EC) Full market opening Currently completed in all Member States. USO financing: Compensation from public funds: Net Avoided Cost methodology (NAC) - Annex I 3rd Postal Directive When USO represents an unfair financial burden on USO provider. Or, establish a sharing mechanism of the net costs of the universal service obligation between providers (a so-called compensation fund).
9 4. NOTION OF AID: STATE AID OR NO STATE AID? Case law: Altmark criteria In its Altmark judgement, the Court of Justice has defined four cumulative criteria which, if fulfilled, allows the Commission to exclude the presence of an economic advantage No State aid. The criteria: (1) defining the SGEI; (2) ex ante clear & objective criteria for compensation, (3) no overcompensation, (4) tender or efficiency. The efficiency test is difficult to apply in the postal sector. Consequence: State compensation State aid Practically all compensations for SGEI in the postal sector constitute State aid within the meaning of article 107(1) EC. Member States must therefore respect the obligations of: prior notification; and standstill provision pursuant to article 108(3) EC Treaty.
10 5. COMPATIBILITY ASSESSMENT Member States are (to a great extent) free to define which SGEI missions should be delivered by the postal operator, how and if it should be compensated by the State (or not). Compatibility of State compensation for USO: Should comply with 3rd Postal Directive and 2012 SGEI Framework 3rd Postal Directive: Unfair burden Additional requirement that is not contained in State aid rules 2012 SGEI Framework: next slide
11 5. COMPATIBILITY ASSESSMENT Compatibility of State compensation for other Postal SGEIs: Should only comply with 2012 SGEI Framework (need to notify!): EU Public procurement rules have to be fulfilled Close cooperation with DG MARKT Limited entrustment period Net Avoided Cost methodology (NAC) Net costs determined on comparison to counterfactual Avoidance of undue distortion of competition E.g. non-discriminatory network access
12 5. COMPATIBILITY ASSESSMENT Compatibility of State compensation for other Postal SGEIs: Other conditions of the 2012 SGEI Framework: Public consultation of the users of postal services to identify their needs Clear agreement (entrustment act) that sets out the requirements Separate accounts to be able to identify costs & revenues of the SGEI Clear compensation criteria, no overcompensation and efficiency incentives in the compensation mechanism Ensuring transparency through publication of certain information
13 5. COMPATIBILITY ASSESSMENT Compatibility of State compensation for other Postal SGEIs: No need to notify: if the State compensation is < 15 million per year and if all conditions of the 2012 SGEI Decision are met: Entrustment act that contains all info required by 2012 SGEI Decision Normally no more than 10 years (unless duly justified by investments) Separate accounts to be able to identify costs & revenues of the SGEI Clear compensation criteria and no overcompensation (+ checks)! Sectoral regulation (Postal directives) remains applicable, including the NAC for the USO (even if USO compensation < 15 million)!
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