61994CC0244_EN
Opinion of the Advocate-General
Opinion of the Advocate-General
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1. In this reference for a preliminary ruling, the French Conseil d'Etat asks the Court to ascertain whether a public body entrusted with the management of an optional supplementary old-age insurance scheme is subject to the competition provisions of the Treaty.
The facts of the case and their legislative context are straightforward and may be summarized as follows.
2. Until 1988 there existed in France a compulsory basic system of old-age insurance for farmers, managed by the Caisse nationale d'assurance vieillesse mutuelle agricole (`the CNAVMA').
In addition to that basic system, a number of private companies offered supplementary insurance services, which were of course optional.
3. Article 42 (II) of Law No 88-1202 of 30 December 1988, (1) which inserted Article 1122-7 into the Code Rural, established a supplementary and optional old-age insurance scheme for farmers, their spouses and families (`the scheme'). According to that provision, the organization and operation of the scheme are to be determined by decree.
Under Article 42 (III) of the Law, the contributions paid under the scheme are deductible from taxable earned income.
Decree No 90-1051 of 26 November 1990 (`the decree') (2) laid down the detailed rules for the operation of the scheme, entrusting its management to the CNAVMA in conjunction with the agricultural social insurance funds (Caisses de Mutualité Sociale Agricole) for individual departments or for areas covering more than one department.
4. A number of commercial insurance companies (`the applicants') (3) have challenged the decree before the Conseil d'Etat on the ground of abuse of powers, alleging, inter alia, infringement of the Treaty provisions on competition.
In particular, the applicants argue that the decree confers an effective monopoly upon the CNAVMA, contrary to Articles 86, 90 and 92 of the Treaty, capable of altering the structure of the existing market and causing the progressive elimination of all competing undertakings in the sector.
The determining factors are the tax deductibility of contributions which the CNAVMA can offer and the advantages it enjoys in its capacity as the body entrusted with the management, as a monopoly, of the compulsory basic insurance scheme for the same clientele.
5. The Conseil d'Etat considered that, before declaring the decree incompatible with those Treaty provisions, it first needed to ascertain whether the CNAVMA constituted an undertaking for the purposes of Community law.
It therefore suspended the proceedings and made this reference for a preliminary ruling.
The French court asks in particular whether a non-profit-making organization which manages an optional old-age insurance scheme, established by law to supplement a basic compulsory scheme, and operating according to the principle of capitalization in keeping with the rules laid down by the authorities in particular with regard to conditions for membership, contributions and benefits, is to be regarded as an undertaking for the purposes of Article 85 et seq. of the Treaty.
6. Before dealing with the substance of the matter, it will be useful to illustrate briefly the essential characteristics of the scheme in question, in the light of the provisions of the decree. (4)
The new scheme is for farmers aged under 65 who contribute, on a compulsory or a voluntary basis, to the basic old-age insurance scheme, and for their spouses and families.
7. Contributions are calculated on the basis of earned income, at the rate of either 4.5% or 7.0%, selected by the insured.
An exemption from, or reduction in, contributions may be granted by a special committee at the request of the person concerned in the event of illness of more than six months' duration.
A `social action fund', financed by a levy on contributions, (5) then compensates for the missing revenue.
Again at the request of the person concerned, the same committee may grant temporary suspension of the payment of contributions for reasons connected with the economic situation of the agricultural holding, in which case the insured is obliged to make good the arrears up to the maximum level within two years following the end of the period of suspension.
8. In keeping with the optional status of the scheme, its operation has been structured, as has already been mentioned, in accordance with the principle of capitalization.
In other words, the contributions paid by the persons insured are capitalized and invested by the CNAVMA in various financial products, so that the amount of the benefits finally enjoyed by each insured will depend on the results of the financial operations and the success of the investments.
The types of operation which the CNAVMA is authorized to undertake in the financial market are laid down by ministerial decision (6) and are subject to the supervision of the Cour des Comptes (Audit Court).
The French Government maintains that machinery has also been established to ensure that the insured receives benefits at least equivalent to the value of the contributions paid. It is not, however, apparent from the documents in this case what that machinery and its characteristics are. Instead, the agent for the French Government expressly admitted at the hearing that the insured bears the investment risk in any event.
The benefits may be calculated and paid out only if, at the same time or previously, the insured also requested the calculation of the pension to which he was entitled under the basic scheme.
9. The activities of the CNAVMA and of the other funds which contribute to the management of the scheme are subject to State control through the Ministry of Agriculture and the head of the regional inspectorate of labour, employment and social policy. (7)
In particular, the rules, balance sheets, accounts, board decisions and the employment and remuneration of staff by the various funds are subject to administrative approval.
Essentially, therefore, the scheme at issue here is supplementary and optional, established and regulated by statute, and managed by non-profit-making bodies which operate in accordance with the principles of capitalization and financial investment.
10. As we know, the Treaty does not contain any definition of an undertaking for the purpose of applying the competition rules.
The scope of Article 85 et seq. of the Treaty must therefore be determined by reference to the case-law of the Court.
Since its first rulings on the issue, the Court has emphasized that the defining criterion of an undertaking for the purposes of the Treaty is the pursuit of an economic activity. (8)
11. In its judgment in Case C-41/90 Hoefner and Elser, (9) the Court elaborated further by stating that the concept of an undertaking covers any entity engaged in an economic activity, regardless of its legal status and the way in which it is financed.
In that case, it accordingly held that a non-profit-making public employment agency was an undertaking since, in principle at least, that activity could be carried on by a private undertaking with a view to gain.
12. Ruling more recently on a situation similar to that now in issue, the Court concluded that two French organizations, one of which was entrusted with the management of a compulsory old-age insurance scheme for artisans and the other with the management of a compulsory sickness and maternity insurance scheme for self-employed persons in non-agricultural occupations, fell outside the scope of
the Community competition rules. (10)
The Court based that conclusion on the finding that the schemes in question pursued a social purpose, were based on the principle of solidarity and were subject to the control of the public authorities, which were responsible, inter alia, for setting the amount of contributions and benefits.
13. The question submitted by the French Conseil d'Etat must therefore be determined in the light of the criteria that can be elicited from the case-law as briefly summarized above.
To begin with, it is undisputed that the non-profit-making status of the CNAVMA and the other agricultural social insurance funds is irrelevant, since the activity with which they are entrusted is undeniably capable of being carried on by a private undertaking with a view to gain within the meaning of the Hoefner and Elser judgment, cited above. (11)
14. It therefore has to be determined whether or not, irrespective of their legal status, the agricultural social insurance funds pursue an activity that may be defined as economic in nature for the purposes of the case-law of the Court.
More particularly, it must first be determined whether the scheme in question has characteristics in common with those identified by the Court in relation to the schemes at issue in the Poucet and Pistre case, in order to ascertain whether the same reasons for excluding those schemes from the scope of the competition rules exist in this case.
15. In that regard, I should say at once that, whilst it is undeniable and undisputed that the scheme pursues a social purpose and is subject to the control of the public authorities, it seems to me that it is not, save to a minimal extent, based on the principle of solidarity.
In Poucet and Pistre, the Court found a strong element of solidarity in the operation of the French old-age insurance scheme for artisans and the sickness and maternity scheme for self-employed persons in non-agricultural occupations, by reason of their compulsory nature and of the mechanism for allocating burdens.
16. Solidarity was apparent in several respects: first, solidarity in time (a feature of all schemes based on allocation, in which there is no direct link between contributions and benefits), in that the contributions paid by active workers are directly used to finance benefits paid to pensioners; secondly, financial solidarity between the various compulsory schemes, based on balancing between schemes in surplus and those in deficit; and finally solidarity in relation to the least well-off, who are entitled to certain minimum benefits even in the absence of contributions paid by them, or at any rate without reference to their amount. (12)
17. The situation in the present case would appear to be quite different.
First of all, there does not appear to be any solidarity in time as defined by the Court.
Since the scheme in question is based on the principle of capitalization, there is on the one hand a direct link between the amount of contributions and the amount of benefits, whilst, on the other hand, the contributions and benefits may cease to be proportionate to each other by reason of the risk inherent in the investment policy of the managing organization.
In other words, the insured pays contributions to the institution, from which he later receives benefits which are related in any event to the financial results of the investments and are proportionate to the contributions paid, but he may also receive benefits that are proportionately lower, if the financial results are negative.
The rationale underlying the system is therefore quite different from that underlying a system in which the intention is that the inactive population should be financed by the active population.
18. Secondly, there is no `horizontal' solidarity, as there is no machinery for the reciprocal balancing of surpluses and losses between the various optional insurance schemes.
19. Finally, it is also hard, in my view, to perceive any real solidarity in relation to the least well-off. Although, as already mentioned, the decree provides for a few cases of exemption from or reduction of contributions, they are linked to the state of health of the person concerned rather than to his economic situation.
Moreover, although the missing revenue is compensated for by the `social action fund', which is financed by levies on contributions, this is done only within the limit (laid down by legislation) of 0.5% of total gross contributions.
As for the suspension of payment of contributions which may be granted to insured persons for reasons connected with the economic situation of the agricultural holding, this is, as has already been mentioned, only temporary and the arrears must in any event be reimbursed within the periods set.
20. Therefore, contrary to the normal situation with regard to compulsory insurance schemes, this scheme follows the principle of solidarity to only a minimal extent, namely in so far as it provides for a limited balancing mechanism between persons insured under the same scheme, operating by means of the `social action fund'.
Moreover, it seems obvious to me that whilst, as the Court rightly pointed out in the Poucet and Pistre judgment, solidarity is an inherent feature of compulsory schemes, an optional scheme may well be structured in such a way as to leave the requirements of solidarity out of account altogether or to satisfy them only to a minimal extent.
21. But there is more to it than that.
Even if, as already mentioned, the operation of the system is subject to the control of the public authorities, such control is not absolute, at least as regards the method of calculating contributions.
The amount of the contributions, and thus of the benefits, also depends on the choice (albeit limited to two options) of the insured.
That possibility does not seem to me to correspond exactly to the rigid legislative framework which the Court had identified in the insurance schemes at issue in Poucet and Pistre.
22. The criteria relied upon by the Court in holding that the organizations at issue in Poucet and Pistre do not fall within the scope of the competition rules therefore suggest that the opposite solution should be adopted in this case.
I therefore consider that the CNAVMA (and the other social insurance funds) must, at least in so far as their management of this scheme is concerned, be classified as an undertaking within the meaning of Article 85 et seq. of the Treaty.
There is no reason why that undertaking should enjoy treatment any different from that reserved for competing undertakings which are in a position to provide the same service on similar conditions.
23. I propose in the light of the foregoing considerations that the Court give the following answer to the question submitted by the French Conseil d'Etat:
`A non-profit-making organization entrusted with the management of a supplementary and optional old-age insurance scheme, established by law and operating according to the principle of capitalization under the control of the public authorities, is an undertaking within the meaning of Article 85 et seq. of the EC Treaty.'
(1) - Loi relative à l'adaptation de l'exploitation agricole à son environnement économique et social (JORF p. 16745).
(2) - Décret relatif au régime complémentaire facultatif d'assurance vieillesse des personnes non salariées des professions agricoles (JORF, p. 14581).
(3) - Namely the Fédération Française des Sociétés d'Assurance, the Société Paternelle-Vie, the Union des Assurances de Paris-Vie and the Caisse d'Assurance et de Prévoyance Mutuelle des Agriculteurs.
(4) - The decree was supplemented by the Regulation of the Council of Administration of the CNAVMA, adopted on 28 December 1990 (JORF, p. 1572).
(5) - At a maximum of 0.5% of total gross contributions.
(6) - Arrêté du 27 février 1987 modifiant l'arrêté du 13 mars 1973 relatif aux placements, prêts et emprunts des caisses de mutualité sociale agricole (JORF, p. 4332).
(7) - Chef du service régional de l'inspection du travail, de l'emploi et de la politique sociale.
(8) - See in particular the judgments in Joined Cases 17 and 20/61 Kloeckner v High Authority [1962] ECR 325 and in Case 19/61 Mannesmann AG v High Authority [1962] ECR 357, delivered in the context of the ECSC Treaty.
See also the judgment in Case 155/73 Sacchi [1974] ECR 409.
(9) - [1991] ECR I-1979.
(10) - Judgment in Joined Cases C-159/91 and C-160/91 Poucet and Pistre [1993] ECR I-637.
(11) - On the same point, see, more recently, the judgment in Case C-364/92 SAT Fluggesellschaft v Eurocontrol [1994] ECR I-43.
(12) - See paragraphs 9 to 13.