Opinion of the Economic and Social Committee on:

- the 'Proposal for a European Parliament and Council Directive on common rules for the development of Community postal services and the improvement of quality of service` and

- the 'Draft Notice from the Commission on the application of the competition rules to the postal sector and in particular on the assessment of certain state measures` ()

(96/C 174/14)

On 3 January 1996 the Council decided to consult the Economic and Social Committee, under Article 198 of the Treaty, on the above-mentioned proposal.

On 22 November 1995 the Commission decided to consult the Economic and Social Committee, under Article 198 of the Treaty, on the above-mentioned Draft Notice.

The Section for Transport and Communications, which was responsible for preparing the Committee's work on the subject, adopted its Opinion on 12 March 1996. The Rapporteur was Mr Farnleitner.

At its 334th Plenary Session (meeting of 28 March 1996), the Economic and Social Committee adopted the following Opinion by a large majority, with 6 votes against and 5 abstentions.

1. The Commission communication

1.1. The communication from the Commission on the set of measures proposed for the development of Community postal services emphasizes the importance of postal services as an essential means of communication and trade promoting many social and economic activities throughout the Community. In the Community, postal services generate about 1,3 % of GDP and employ about 1,8 million workers (of which around 1,5 million work for the postal services and some 300 000 for the appropriate authorities). Postal services in the Community comprise 80 billion items of mail per year, of which 3 billion constitute intra-Community cross-border mail. An efficient postal sector is of great importance to the further development of competitiveness and employment in the European Union.

1.2. It is of the utmost importance to guarantee within the whole Community the maintenance of a good quality universal service accessible for all users at affordable prices.

1.3. In the Commission's Green Paper of 11 June 1992 on the development of a single market for postal services (), the subsequent public consultations which led to the Commission's Communication of 2 June 1993 to the European Parliament and the Council on guidelines for the development of Community postal services () and in four European Parliament Resolutions of 22 January, 25 June and 29 October 1993 and 14 July 1995 (), the Commission was invited to submit proposals for the sector.

Proposal for a European Parliament and Council Directive on common rules for the development of Community postal services and the improvement of quality of service

2. Gist of the proposed Directive

2.1. The proposed Directive constitutes a comprehensive approach for establishing, for the first time at Community level, a high quality universal postal service at reasonable prices and partial liberalization and opening-up of the postal market to more competition. This will have to occur in two stages in order to give the providers of this service sufficient time to adapt to the new situation.

2.2. While the proposed Directive will provide for a harmonized regulatory framework at Community level for the postal sector, the Notice, in the Commission's view, should provide the actors in this sector with the necessary clarity as regards the application of the Treaty rules, especially those on competition, freedom of establishment and the freedom to provide services.

2.3. The proposed Directive is based on Article 100a of the EC Treaty and aims at the introduction of harmonized provisions for universal postal services, harmonized criteria for services that may be reserved for the universal service providers, the improvement of the quality of service and the promotion of standardization and related issues.

2.4. The proposed Directive provides for a minimum universal service of a certain quality to be available throughout the Community to all citizens, wherever they are located, at affordable prices. In particular, those Member States which at present do not have strict rules on universal service and quality of service will be obliged to introduce such rules for the universal service providers.

2.5. The universal services should provide as a minimum: the collection, transport and distribution of addressed letters, books, catalogues, newspapers and magazines up to 2 kg in weight and addressed postal packages up to 20 kg. The services for registered and insured letters would be included.

2.6. The proposed Directive defines harmonized criteria for the services which may be reserved for the universal service providers to the extent necessary for the maintenance of the universal service and for financial viability when running the universal service.

2.7. The reserved service will comprise the collection, transport, sorting and distribution of domestic mail which does not weigh more than 350 grams and whose tariff is below five times the basic tariff rate (i.e. the tariff for letters up to 20 grams).

2.8. Outgoing cross-border mail, express services and package services will be excluded from the reservable services, as they are already de facto liberalized in most Member States.

2.9. Incoming cross-border mail may continue to be reserved until 31 December 2000 if this is necessary for the financial viability of the universal service provider. The Commission assumes that the opening-up of this market segment to competition will have only a limited impact and will not endanger the financial viability of the universal service providers.

2.10. Direct mail may continue to be reserved until 31 December 2000 if this is necessary for the financial viability of the universal service provider. This sector represents on average in the Community 17 % of volume and 12 % of revenues for the public postal operators, and has a high growth rate. It is already liberalized, to varying degrees, in seven Member States (Austria, Finland, Germany, Italy, the Netherlands, Spain and Sweden).

2.11. The Commission will decide by 30 June 1998 at the latest whether it is possible for direct mail and incoming cross-border mail to be kept in the reserved sector after 31 December 2000. There will be a general review of the scope of the reserved sector during the first half of the year 2000.

2.12. The proposed Directive is based on the principles of affordability and cost-orientation for tariffs for the universal service. It will be left to the Member States to decide whether a uniform tariff should be applied on their territory for every service that forms part of the universal service. Operators providing the universal service are to be subject to an obligation to establish transparent cost accounting systems as well as separate accounts for reserved and non-reserved services.

2.13. The Member States will be responsible for establishing quality standards for their domestic services while the Commission, assisted by an advisory committee composed of representatives of the 15 Member States, will lay down the quality standards for intra-Community cross-border services.

2.14. Harmonized standards will be prepared and adopted on the basis of mandates entrusted to the European Committee for Standardization.

2.15. The proposed Directive requires the establishment of a national regulatory authority in all Member States which is independent of the postal operators, in accordance with the principle of separation of regulatory and operational functions.

2.16. The Commission Communication specifically refers to the decisions of the European Court of Justice whereby the provisions of the EC Treaty, especially those concerning competition, apply to the postal sector.

3. Draft Commission Notice on the application of the competition rules to the postal sector and in particular the assessment of certain state measures relating to postal services (SEC(95) 830 final)

3.1. The Commission's Draft Notice on the application of the competition rules, which was referred to the ESC for an Opinion on 22 November 1995 and is complementary to the proposed legislative measures, sets out and explains the guiding principles according to which the Commission intends to apply the competition rules of the EC Treaty to the postal sector in order to further the gradual, controlled liberalization of the postal market while maintaining the necessary safeguards for the provision of a universal service. The Notice aims at establishing a clear and reliable framework for the future application of the competition rules in order to provide the required degree of legal certainty.

3.2. In particular, the Notice sets out the approach the Commission intends to take when addressing the compatibility of state measures restricting the freedom to provide services and/or to compete in the postal markets with the EC Treaty's competition rules.

3.3. The Notice confirms the Member States' right to maintain, at this stage, a defined area of reserved services, as far as this is necessary.

3.4. In addition, it addresses the issue of non-discriminatory access to the postal network and the regulatory safeguards required to ensure fair competition in the sector.

3.5. The Commission specifically recognizes that the postal sector is critical for the future development of the European economy. A balance has to be developed at Community level between the requirements of a public service and the application of competition rules, in which both aspects are complementary and mutually reinforcing. The Commission aims at the phased development of a comprehensive Community policy for the postal sector in which it will ensure compliance with the competition rules in particular, respecting the duties assigned to it by the Treaty.

3.6. The above measures should be considered as the first important step of a progressive and future-oriented policy, the aim of which is the completion of the single market and the development of Community postal services.

4. Comments on the proposed Directive and the Draft Notice

4.1. The ESC is pleased that the Commission has first drafted the Notice and submitted it for an Opinion. The Directive forms the foundation of the ESC's assessment of the Notice. The ESC thinks it particularly necessary that the content and terminology of the Directive and the Notice should match.

4.1.1. As regards the statement in the Notice that the Court of Justice of the European Communities has recognized that the EC Treaty, and in particular its competition rules, also applies to the postal sector, the ESC recalls other statements in the Corbeau Decision (Case C-320/91): The Court confirmed that the maintenance of an exclusive authorization for the collection, sorting and distribution of mail is only incompatible with Article 90 and Article 96 of the EC Treaty when (i) the exclusive authorization also applies to services which specifically correspond to special needs of economic operators that are separate from services of a general interest and require the provision of certain additional services that the original postal service did not provide, and (ii) it is impossible to exclude these additional services from the area of monopoly without jeopardising the economic equilibrium of the service in the general economic interest which is provided by the relevant postal organization.

4.2. Universal service

4.2.1. The establishment of a mandatory universal service, which lays down compulsory minimum standards, is in the EU public interest and is welcomed by the ESC. A good quality, wideranging universal service is just as essential for large sections of the population as for small and medium-sized businesses, and is also a necessary contribution towards bringing together living standards in all EU regions.

4.2.1.1. The constant provision of such a service requires a special form of financing for the exclusive rights of those who have to provide the universal service. The reserved area should be so defined that the survival of the firms entrusted with providing the universal service in the Member States is ensured in the long term.

4.2.1.2. The functioning of the universal service has priority.

4.2.1.3. The weight and tariff limits in Article 8 of the proposed Directive cannot be transposed into national law in every case because of differences in existing national rules. The transporting of an item of 350 grams at a price of less than 5 times the tariff for a standard item of 20 grams is not possible everywhere and in addition this scale of weights is not provided for in many Member States. The ESC sees no statistical evidence for the weight limits set by the Commission.

4.2.1.4. The relatively high weight limit of 20 kg for packages is consistent with the UPU Agreement, and particularly the needs of small and medium-sized firms.

4.2.2. The ESC supports the timetable proposed by the Commission in the Directive for reviewing the situation in the postal services sector, whereby the proposed deadlines should only run from the time when the Directive comes into force, and the final decision should only be taken four years after the Directive enters into force.

4.2.3. The principle of 'standard rates within the territory` for letters remains an important political instrument for aligning living standards in all parts of the EU and, moreover, is necessary to social policy. This rate principle should continue unrestricted for services which come under the reserved area. But for those letter services of the universal postal service which are not reserved, there should be some differentiation to prevent 'cherry picking`, which would harm firms entrusted with the universal service. For mail services of the universal service which are brought into competition, there should be a possibility of rate differentials, particularly in conurbations.

4.2.3.1. In the initial round of ESC discussions, the machinery for final settlement between postal operators, which at that time was inadequate, emerged as an economic problem for the postal operators. The ESC is pleased to note that the agreement on compensation for the compulsory delivery of cross-border consignments (REIMS agreement) is ready, and expressly calls upon the Commission to do what it can to get the public operators of postal services/postal authorities of the Member States to sign and implement the treaty. The ESC suggests that the Commission consider whether it itself should not enter into talks on final settlements in order to introduce a binding scheme of final settlements, based on costs, in the interests of the postal operators. Until a final settlement scheme is created which rules out unfair competitive practices, the possibility must remain for economically challenged postal administrations or firms to protect themselves with the help of the measures set out in Article 25 of the UPU Agreement.

4.3. Separate accounts

4.3.1. The ESC has already advocated separate accounts (). However, cross-subsidization within the universal service should be allowed.

4.3.1.1. But the need to have separate accounts does not justify a structural separation of business units.

4.3.2. The ESC would refer here to the hiving-off of other branches of the postal service, especially bus services, which in some Member States are still operated by the postal companies. In certain Member States the postal companies perform other services such as money transfers, the management of savings accounts and the delivery of official papers; these should be clearly separated through mathematical calculation from the universal service.

4.3.2.1. Separate and transparent accounting for the reserved service represents the basis of decisions on the continuation of the reserved service.

4.4. Quality standards

4.4.1. Lack of quality could perhaps be due to financial neglect (e.g. the Member States not providing the postal service operators with sufficient capital), political motivated instructions (e.g. repeated cuts in the interest of the national budget) or operational shortcomings in the postal operators. The ESC therefore thinks the Member States should define the reserved service in such a way as to enable the operator to operate efficiently and in a quality-oriented manner.

4.4.2. One problem is posed in some Member States by the delivery of postal items to addressees as called for in the proposed Directive. The ESC supports the basic rule of 'delivery to the person's house`, but the Member States should be able to waive this rule in exceptional cases, so as to take the best possible account of regional circumstances. In some countries letters are delivered to 'collection boxes` and even packages have to be collected as a general principle in some Member States.

4.4.3. As a general principle the ESC would stress the importance of high quality standards and clear quality criteria which include appropriate and positive rules for compensating customers in the event of the loss or delay of shipments. Minimum quality objectives should be set for services within the EU, with the Member States having the right to introduce higher quality standards.

4.4.4. As a general principle the level of service should be aligned upwards by means of suitable measures. Evidence of compliance with quality standards should be provided through constant monitoring.

4.5. Tariffs

4.5.1. Postal tariffs should reflect costs and must be a proper reflection of the quality and level of the service provided. In choosing to do without the model of a settlement fund, steps should be taken to avoid distortions of competition being caused by individual Member States operating a policy of low tariffs offset by guaranteed settlement of losses. Steps should be taken above all to ensure that companies are provided with a sound economic basis for operating a universal service founded on the reserved service. Within the reserved sector the companies' primacy in cost accounting should remain. Finally, the ESC would stress once more that it is for a good, affordable universal service which is accessible for all and whose continued existence must be ensured in the long term.

4.5.2. It would stress the importance of geographical tariff settlement as the cornerstone of the universal service.

5. Final remarks

5.1. The ESC welcomes the creation of a universal service at affordable prices for all European citizens. As a consequence of the creation of a universal service, it expects higher quality standards which will benefit all users, consumers and firms. It sees in the creation of stable framework conditions for postal companies a positive foundation for avoiding negative social consequences and easing the transformation of the internal market.

5.2. The ESC feels that the Commission should also pay constant attention to the social effects. These particularly include the effects of extensive liberalization of the postal services on income and working conditions in the sector.

5.2.1. Before any further moves towards liberalization there should therefore be a thorough investigation into the effects on wages and working conditions. This investigation should include a look at the danger of social dumping or a massive upsurge in the number of 'bad jobs`, and also point out possibilities of protecting or improving minimum social standards for employed persons at European level.

5.2.2. The ESC asks the Commission to begin or carry out the necessary steps here in close consultation with the Economic and Social Committee and the Joint Committee for the Postal Services.

5.3. Cross-border mail is a market segment whose importance for postal operators varies tremendously from one country to another, depending on the geographic and structural situation. The ESC feels that, when the limits of the reserved sector are re-examined, it must be borne in mind that, for countries where the amount of incoming cross-border mail is noticeably higher than the Community average, the retention of such mail in the reserved sector is essential to the financial equilibrium of the universal service provider.

5.4. Should adoption of the Directive be delayed, the ESC advocates a four-year time limit for the trial period and a timely interim review, before further decisions are taken. The Commission decision provided for in Article 8(2) of the Directive should be prepared using a procedure under Article 21. The ESC trusts that it will also be consulted before the decision is taken, under Articles 100a and 189b.

5.5. The ESC welcomes the scheduled separation of operational and official tasks in the postal services sector. The supervision of competition by independent authorities is particularly important.

5.6. The ESC clearly sees a danger of the Directive's aims being hampered by the increased use of 'remailing`, particularly from third countries. It therefore welcomes the Commission's declaration in the Notice that the Member States may deem it necessary 'to maintain in particular circumstances certain existing restrictions on the distribution of inward cross-border mail, so as to avoid artificial traffic diversion, which would inflate the share of cross-border mail in the Community traffic. Such restrictions may only concern items falling under the reservable area of services`.

5.7. The ESC is pleased to note that the Commission has decided, after referring the two documents to it for an Opinion, that the Notice on the competition rules will only be brought into force jointly and in full co-ordination with the Directive. The ESC supports this procedure.

5.8. The market for direct mailing (including the use of electronic services) represents a fast-growing sector which is currently still largely reserved for the postal companies. However, technical developments and liberalization could lead to a more extensive by-passing of the postal services. Even if the market shares of the postal companies have hitherto remained largely unchanged, rapidly rising losses of market shares in this key area may affect the provision of the universal service. The ESC therefore thinks it necessary to keep a constant eye on technological developments and their consequences for the universal service.

Done at Brussels, 28 March 1996.

The President

of the Economic and Social Committee

Carlos FERRER

() OJ No C 322, 2. 12. 1995, p. 22.

() OJ No C 129, 10. 5. 1993, p. 48.

() COM(93) 247 final.

() OJ No C 42, 15. 2. 1993, p. 240; OJ No C 194, 19. 7. 1993, p. 397; OJ No C 315, 22. 11. 1993, p. 643; OJ No C 249, 25. 9. 1995, p. 212.

() ESC Opinion - OJ No C 129, 10. 5. 1993, p. 48.

APPENDIX to the Opinion of the Economic and Social Committee

The following proposal for an amendment was supported by at least a quarter of the members present, although it was rejected during the discussion.

Point 5.2.1

Add the following sentence:

'In addition, it should have a favourable impact on employment creation through the liberalization of postal and related services in EU and non-member countries.`

Voting

For: 48, against: 67, abstentions: 19.