Amended proposal for a EUROPEAN PARLIAMENT AND COUNCIL DIRECTIVE amending Directive 97/67/EC with regard to the further opening to competition of Community postal services

(presented by the Commission pursuant to Article 250 (2) of the EC Treaty)

EXPLANATORY MEMORANDUM

The Commission hereby presents a modified proposal for a European Parliament and Council Directive amending Directive 97/67/EC with regard to the further opening to competition of Community postal services. The modified proposal incorporates those amendments proposed by the European Parliament at First Reading which are acceptable to the Commission.

1. INTRODUCTION

a) Background

The Commission adopted its proposal on 30th May 2000, and it was formally transmitted to the European Parliament and Council on 14 July 2000.

The Economic and Social Committee gave its opinion on 29th November 2000. The Committee of Regions gave its opinion on 13th December 2000. The European Parliament adopted a Resolution at its First Reading on 14th December 2000, and proposed amendments to the Commission proposal.

b) Purpose of the Directive

The Directive aims to fulfil the mandate in Directive 97/67/EC to provide for a further gradual and controlled liberalisation of the postal market to take effect from 1 January 2003, to set out a timetable for further opening and to resolve various ancillary issues relating to the smooth functioning of the Internal Market in postal services.

2. EP AMENDMENTS ACCEPTED BY THE COMMISSION

Of the 47 amendments adopted by the European Parliament at First Reading, the Commission can accept 10 in full and 1 in part, making a total of 11.

Amendments accepted in full: 2, 6, 7, 24, 28, 29, 32, 39, 41 and 58

Amendments accepted in part:

The Commission has accepted those amendments which:

- give weight to the social tasks of the Community - namely a high level of employment and social protection;

- bring out the benefits of increased competitiveness;

- stress that each Member State sets its detailed universal service standards and quality;

- reinforce the role of national regulatory authorities;

- extend the complaints procedure requirements;

- improve the drafting or the positioning of existing amendments.

3. AMENDMENTS NOT ACCEPTED BY THE COMMISSION

The Commission has not accepted 36 of the 47 amendments proposed by the European Parliament. The reasons are given below, and where possible the amendments have been grouped into broad categories:

Advantages of competition and extent of reservable area

(Amendments 8, 16, 17, 18, 19, 20, 21, 22 and 38)

Amendment 8 seeks unjustly to limit the advantages of a universal postal network to some Member States only whereas a ubiquitous network is an advantage in all Member States. It would also seek to limit the applicability of the competition rules of the Treaty to universal service operators. Article 86 already takes account of the services of general interest.

Amendments 16, 17, 18 and 19, 20, 21, 22 and 38 insert an across-the-board reserved area weight limit of 150 grams and four times the first class tariff which would open only 6% of universal service providers' postal revenues (compared with 20% in the proposal). Direct mail and outgoing cross-border mail below 150 grams are also made reservable, resulting in key benefits being lost from market opening. These changes would not create real competition and therefore represent a wholly insufficient step. Moreover, Amendment 38 would also allow the extension of postal monopolies, contrary to the requirement that the Directive goes forward and not backwards in respect of opening the market.

Timetable for further step

(Amendments 1, 23, 26, 33, 38, 44)

Amendment 1 leaves out the timetable for further market opening, for the purposes of creating a single market in postal services, from the description of the existing Directive 97/67/EC. However, it is wrong to quote selectively from the Directive and leave a distorted picture of its intentions, which this would do.

Amendments 23, 26 and 38 would turn the timetable for decisions in the Commission's proposal into an open-ended review. Such a stand-alone review will create confusion and result in endless debate over the intentions of the legislators. Moreover, the aim of " gradual and controlled liberalisation" should not be abandoned, since it is a key principle of the current Directive. In addition, the Lisbon Summit conclusions, which call for a strategy for a fully operational internal market in postal services, should not be ignored. A further step, as in the Commission's proposal, represents a clear timetable, creating certainty for all market operators that the market opening process will continue in 2007 and beyond.

Amendments 33 and 44 seek to postpone the date for the lapsing of the Directive from the end of 2006 to the end of 2008. This would be too late to give legislators some sense of the need to move more quickly in this area, as highlighted in the Lisbon Summit conclusions. If the Directive were to lapse, regulation of the postal sector would be carried out solely on the basis of the competition rules of the Treaty.

Universal service

(Amendments 10, 12, 15, 27 and 36)

Amendment 10, which stresses the dynamic and evolving nature of universal service, is not needed as this principle is already in Article 5 of the existing Directive.

Amendment 12 focuses on the need to re-examine universal service provision in Article 3; however, this is beyond the remit of the requirement in Article 7.

Amendment 15 points to the fact that account needs to be taken of the fact that universal service costs vary by Member State. However, account is already taken of this in the existing Directive through the different means available to national regulators to secure universal service.

Amendment 27 would require licensees in the universal service area to contribute to the costs of the REIMS II agreement on remunerating terminal dues for delivery of cross-border mail. However, it would be wrong to impose REIMS II costs on licensees since REIMS II is a commercial agreement between certain universal service providers (it expires in December 2001).

Amendment 36 would enable additional universal service standards to be set in Member States. However, it is not needed since Article 3 of the existing Directive already allows Member States to decide on the level of universal service above the minimum harmonised level.

Social and employment issues

(Amendments 13, 47 and 49)

Amendment 13 discusses reductions in employment in other utility markets partially compensated by higher employment by private operators. This is not relevant to the proposal since in the postal sector different actors and a different market environment is concerned.

Amendment 47 seeks to alter the objectives of the existing Directive by making the promotion of a high level of employment and social protection a new additional objective. This is not within the mandate of Article 7 and moreover would be of dubious legality.

Amendment 49 concerns further arrangements to safeguard state employment and similarly it is not relevant to the proposal.

The Lisbon Summit conclusions

(Amendments 4 and 46)

Amendment 4 seeks to alter the conclusions of the Lisbon Summit by inserting "gradual and controlled" before the liberalisation step called for and by eliminating the reference to creating a fully operational internal market in postal services. The conclusions and the way they are worded are correctly described in the proposal and the way they are worded should not be changed retrospectively in order to weaken them. Amendment 46 (2nd to 5th paragraphs) expands unnecessarily on the reference in the Lisbon Summit conclusions to the services of general interest.

Special services

(Amendments 11 and 35)

These amendments would delete all reference to special services from the proposal. However, a clear definition of special services is essential to modernising the regulatory framework and to provide consistency in the principles used to apply a reservable area and to ensure that new services, outside the universal service, can develop freely in line with the needs of customers.

Access

(Amendments 31 and 55)

Amendment 31 seeks to delete reference to non-discriminatory access in the recital while the relevant article is maintained. This is not logical: in any case, access to dominant monopolies is very important and cases reinforce the need for clearly stated principles in the Directive to ensure fairness to all operators.

Amendment 55 seeks to establish a reciprocity requirement for access to postal services in Member States. However, it is not possible for reciprocity to be the basis of a harmonisation directive.

Information exchange

(Amendments 30 and 42)

Amendment 30 calls for better information exchange between national and EU regulators while Amendment 42 seeks to establish a management committee to assist the Commission. However, Member States can already send their national regulatory authorities to the Committee established under Article 21 of the existing Directive and no need has been demonstrated for a further Committee. Therefore, these amendments are unnecessary.

Racial or ethnic discrimination

(Amendments 34 and 37)

These amendments relate to preventing racial or ethnic discrimination through lifting the universal service obligation if external markings on a letter indicate discriminatory content. Directive 2000/43/EC implementing the principle of equal treatment between persons irrespective of racial or ethnic origin already provides for this concept in a more appropriate way. There is no need to repeat its provisions in other Directives and, in any case, this issue is not relevant to market opening (the subject of the Directive proposal).

Other issues: Consultation, the Compensation Fund and the Regulator's tasks

(Amendments 5, 25 and 43)

Amendment 5 stresses the need for a thorough review in relation to the Article 23 report and appears to confuse the need to present a proposal on market opening (in Article 7) with the separate requirement (in Article 23) on the application of the whole Directive.

Amendment 25 expresses a preference for a reserved area over a compensation fund. However, the existing Directive is neutral on this point as it establishes a mix of means to assure universal service. It would not be right now to seek to influence Member States against a compensation fund or licensing, for example.

Amendment 43 seeks to change Article 22, which defines the tasks of the national regulatory authorities. This is not appropriate since the proposal concerns the changes called for in Article 7 and the regulator's tasks are already defined in the current Directive.

4. CONCLUSION

The Commission has accepted 11 of the 47 amendments proposed by the European Parliament at First Reading, either in whole or in part.

In accordance with Article 250 paragraph 2 of the EC Treaty, the Commission amends its initial proposal, incorporating these amendments.

2000/0139 (COD)

Amended proposal for a EUROPEAN PARLIAMENT AND COUNCIL DIRECTIVE amending Directive 97/67/EC with regard to the further opening to competition of Community postal services

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Articles 47(2), 55 and 95 thereof,

Having regard to the proposal from the Commission [1],

[1] OJ C

Having regard to the opinion of the Economic and Social Committee [2],

[2] OJ C

Having regard to the opinion of the Committee of the Regions [3],

[3] OJ C

Acting in accordance with the procedure laid down in Article 251 of the Treaty [4],

[4] OJ C

Whereas:

(1) The Council in its resolution of 7 February 1994 on the development of Community postal services [5], identified as one of the main objectives of Community postal policy the reconciling of the furtherance of the gradual, controlled opening to competition of the postal market and a durable guarantee of the provision of the universal service.

[5] OJ C 48, 16.2.1994, p. 3.

(2) Directive 97/67/EC of the European Parliament and of the Council of 15 December 1997 on common rules for the development of the internal market of Community postal services and the improvement of quality of service [6] established a regulatory framework for the postal sector at Community level, including measures to guarantee a universal service, the setting of maximum limits for the postal services which Member States may reserve to their universal service provider(s) with a view to the maintenance of the universal service, and a timetable for decision-making on the further opening of the market to competition, for the purposes of creating a single market in postal services.

[6] OJ L 15, 21.1.1998, p. 14.

(3) Article 16 of the Treaty highlights the place occupied by services of general interest in the shared values of the Union as well as their role in promoting social and territorial cohesion; the same Article further states that care should be taken that such services operate on the basis of principles and conditions which enable them to fulfil their missions.

(4) The European Parliament's Resolutions of 14 January 1999 on European postal services [7] and its further Resolution of 18 February 2000, also on European postal services [8], highlight the social and economic importance of postal services and the need to maintain a high quality of universal service.

[7] OJ C 104, 14.4.1999, p. 134.

[8] Resolution B5-0116/2000; not yet published in the Official Journal.

(4bis) The measures described must be fashioned in such a way that the social tasks of the Community pursuant to Article 2 of the Treaty - namely, a high level of employment and of social protection - are also achieved as objectives.

(4ter) The rural postal network in mountain and island regions plays an essential role in integrating businesses into the national/global economy and in maintaining cohesion in social and employment terms in rural mountain and island regions. Furthermore, rural post offices in mountain and island regions can provide an essential infrastructure network affording universal access to new telecommunications technologies.

(5) The European Council, meeting in Lisbon, on 23 and 24 March 2000, set out in its Presidency conclusions two decisions applying to postal services, whereby action was requested of the Commission, the Council and the Member States in accordance with their respective powers. The requested actions are: first, to set out by the end of 2000 a strategy for the removal of barriers to services, namely postal services, and secondly, to speed up liberalisation in areas such as postal services, the stated aim being to achieve a fully operational market in postal services.

(5bis) The Lisbon European Council of Heads of State and Government in March 2000 also considered it essential that, in the framework of the internal market and of a knowledge-based economy, full account is taken of the Treaty provisions relating to services of general economic interest, and to the undertakings entrusted with operating such services.

(6) The Commission has undertaken a thorough review of the Community postal sector, including the commissioning of studies on the economic, social and technological developments in the sector, and has consulted extensively with interested parties.

(7) The Community postal sector requires a modern regulatory framework which aims in particular at enhancing the internal market for postal services. Increased competitiveness should enable the postal sector to be integrated with alternative methods of communication and allow the quality of the service provided to ever-more demanding users to be improved.

(8) The basic aim of safeguarding the durable provision of a universal service matching the standard of quality defined by the Member States in accordance with Article 3 of Directive 97/67/EC on a consistent basis throughout the Community can be secured if, in this area, the possibility of reserving services is maintained and, at the same time, conditions of high efficiency ensured by a sufficient degree of freedom to provide services .

(9) The competitive advantages provided by a universal postal network which is efficient and responsive to customer demand can help to offset any additional costs incurred by reason of the obligation to provide a universal service which cannot be self-financing.

(10) Experience has shown that referring only to the price limit as a means of determining the added value of express services is no longer a practical proposition due to the development of added value express services below the price limit.

(11) It is therefore appropriate to define a category comprising "special services" fulfilling special customer needs, this category should include all services with the required added features. Such services should not be reserved, regardless of the weight or the price of such items. Sending mail electronically for distant printing only will not be sufficient to take it outside the reserved area.

(12) The increase in demand within the postal sector as a whole, predicted for the medium term, will help to offset the loss of market share that the universal service providers may incur as a result of further market-opening and will thereby further safeguard the universal service.

(13) Amongst the factors which bring about change affecting employment in the postal sector, technological development and market pressure for efficiency gains are the most important; of the remaining factors for change, market-opening will play a less prominent part. Market-opening will help to expand the overall size of the postal markets, and any reductions in staff levels among the universal service providers due to such measures (or their anticipation) are likely to be offset by the resulting growth in employment among private operators and new market entrants.

(14) It is appropriate to provide at Community level a timetable for a gradual and controlled opening of the letters market to competition which allows all universal service providers sufficient time to put in place the further measures of modernisation and restructuring required to ensure their long-term viability under the new market conditions. An appropriate period of time is also needed to enable Member States to adapt their regulatory systems to a more open environment. It is therefore appropriate to provide for a step-by-step approach to further market-opening, consisting of an intermediate step representing a significant but controlled opening of the market, followed by a review and proposal for a further step.

(15) It is appropriate to ensure that the next phase of market-opening is both substantial in nature and achievable in practice for the Member States.

(16) A general reduction to 50 grams in the weight limit of the services which may be reserved to the universal service providers, combined with opening outgoing cross-border mail and express mail fully to competition, represents a relatively simple and controlled further phase which is nevertheless significant.

(17) In the Community, items of ordinary correspondence weighing between 50 grams and 350 grams represent on average approximately 16% of the total postal revenues of the universal service providers, whilst items of outward cross-border correspondence and express services below the price limit represent a further 4% or so, on average, of the total postal revenues of the universal service providers.

(18) A price limit for the services capable of being reserved, of two and a half times the public tariff for an item of correspondence in the first weight step of the fastest standard category, is appropriate in combination with a 50-gram weight limit where applicable.

(19) A 50-gram weight limit for items of ordinary domestic correspondence is practical, since it does not present a risk of its circumvention by way of an artificial increase in the weight of individual items of correspondence, most items of correspondence being below 20 grams in weight.

(20) Direct mail already represents in most Member States a dynamic and growing market with substantial growth prospects while in the remaining Member States there is considerable potential for growth. Direct mail is already largely open to competition in six Member States. The improvements in service flexibility and pricing resultant from competition would improve the position of direct mail versus alternative communications media, which, in turn, would be likely to lead to new postal items as an additional spin-off and strengthen the position of the postal industry as a whole. Nevertheless, to the extent necessary to ensure the provision of universal service, it should be provided that direct mail may continue to be reserved within the above weight and price limits of 50 grams and two and a half times the basic public tariff.

(21) Outgoing cross-border mail is already de facto open to competition in most Member States; its reservation is not needed to ensure universal service representing on average 3% of total postal revenues. Opening this part of the market de jure would allow different postal operators to collect, sort and transport all outgoing cross-border mail and to deliver it in Member States, but only where the domestic regulation in a particular Member State permits this.

(22) Opening incoming cross-border mail to competition would allow circumvention of the 50-gram limit through relocation of the posting of a proportion of bulk domestic mail, thereby making its effects unpredictable. Identifying the origins of items of correspondence could present additional enforcement difficulties. A 50-gram weight limit for items of ordinary incoming cross-border correspondence and direct mail, as for ordinary domestic correspondence, is practical as it does not present a risk of circumvention either in this way or through an artificial increase in the weight of individual items of correspondence.

(23) Setting a timetable now, aimed at a further step towards the completion of the internal market in postal services, is important for both the long-term viability of the universal service and the continued development of modern and efficient posts.

(24) It is appropriate to continue to provide forthe possibility for Member States to reserve certain postal services to their universal service provider(s). These arrangements will enable the universal service providers to complete the process of adapting their operations and human resources to conditions of greater competition without upsetting their financial equilibrium and thus without jeopardising the safeguarding of universal service.

(25) It is appropriate both to define the new weight and price limits and the services to which they may apply and to provide for a further review and decision on further market-opening.

(26) Measures adopted by a Member State, including the establishment of a compensation fund or any change in its operation or any implementation of or payment from it, may involve aid granted by a Member State or through State resources in any form whatsoever within the meaning of Article 87(1) of the Treaty necessitating prior notification to the Commission pursuant to Article 88(3) thereof.

(27) The concept of licensing competitors in the universal service area can be combined with requirements obliging such licensees to contribute to the provision of universal service.

(27a) Directive 97/67/EC established that Member States shall designate one or more national regulatory authorities for the Postal sector that are legally separate from and operationally independent of the Postal operators. In view of the dynamics of the European Postal markets, the important role national regulatory authorities play should be acknowledged and furthered. Article 9 of the above mentioned Directive allows Member States to go beyond the objectives of the present Directive.

(28) It is appropriate for national regulatory authorities to link the introduction of all licenses to requirements that consumers of the licensees' services are to have transparent, simple and inexpensive procedures available to them for dealing with their complaints, regardless of whether they relate to the services of the universal service provider(s) or to those of operators holding authorisations, including individual license-holders. It is further appropriate for these procedures to be available to users of all postal services, whether or not they are universal services. Such procedures should include procedures for determining responsibility in case of loss or damage to mail items.

(29) The universal service providers normally provide services, for example to business customers, consolidators of mail for different customers and bulk mailers, enabling them to enter the mail stream at different points and under different conditions by comparison with the standard letters service. In doing this, the universal service providers should comply with the principles of transparency and non-discrimination, both as between different third parties and as between third parties and universal service providers supplying equivalent services. It is also necessary for such services to be available to residential customers who post in similar conditions, given the need for non-discrimination in the provision of services.

(30) It is appropriate in the light of the complaints which have been raised against certain incumbent operators in recent years to provide for Member States to adopt rules to ensure that universal service providers do not cross-subsidise services outside the reserved area by means of revenues from services in the reserved area, except where it is shown to be strictly necessary to fulfil specific universal service obligations, as defined by Member States in accordance with Article 3 of Directive 97/67/EC, as amended by this Directive. It is therefore appropriate for national regulatory authorities to adopt rules to this effect and for them to communicate these rules to the Commission.

(31) In view of the amendments, it is appropriate to postpone until 31 December 2006 the date for the expiry of Directive 97/67/EC.

(32) Directive 97/67/EC should therefore be amended accordingly.

(33) This Directive is without prejudice to the application of the Treaty rules on competition and on the freedom to provide services, as explained in particular in the 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 [9],

[9] OJ C 39, 6.2.1998, p. 2.

HAVE ADOPTED THIS DIRECTIVE:

Article 1

Directive 97/67/EC is hereby amended as follows:

(1) In Article 2, the following point is added:

"20. Special services: services clearly distinct from the universal service, which meet particular customer requirements and which offer additional service features with added-value not offered by the standard postal service. Additional added-value service features are, for example, delivery on appointment, the option to effect a change of destination or of addressee in course of transit or if delivery to the primary destination fails, tracking and tracing, guaranteed time of delivery, more than one attempt at delivery, delivery according to the priority or sequence specified by the customer.

Home collection without any such features is not a special service.

Electronic transmission to and/or electronic receipt by the operator for sorting, printing and/or preparation of mail shall not be regarded as an additional service feature within the meaning of the first subparagraph.

Express mail is a special service, which, in addition to faster and more reliable collection, transportation and delivery, is characterised by the provision of some or all of the following additional service features: collection from the sender's address, delivery to the addressee in person or to his authorised representative, guarantee of delivery by a given date, possibility of a change of destination and addressee in transit, confirmation to the sender of delivery, tracking and tracing, personalised treatment for customers and the offer of a range of services according to requirements."

(2) Article 7 is replaced by the following:

"Article 7

1. To the extent necessary to ensure the provision of universal service, Member States may continue to reserve certain standard mail services to the universal service provider(s). Those services shall be limited to the clearance, sorting, transport and delivery of ordinary items of domestic correspondence and incoming cross border correspondence within both of the following weight and price limits. The weight limit shall be 50 grams. This weight limit does not apply if the price is equal or more than two and a half times the public tariff for an item of correspondence in the first weight step of the fastest category.

In the case of the free postal service for blind and partially sighted persons, exceptions to the weight and price restrictions may be permitted.

To the extent necessary to ensure the provision of universal service, direct mail may continue to be reserved within the weight and price limits referred to in the first subparagraph.

2. Items of outgoing cross-border correspondence, document exchange and special services (including express mail) may not be reserved.

For special services, the sending of mail electronically for distant printing only shall not be sufficient to avoid the monopoly on incoming cross-border mail.

3. As a further step towards the completion of the internal market in postal services, the European Parliament and the Council shall decide, not later than 31 December 2005, on a further opening of the postal market with effect from 1 January 2007.

To that end, the Commission shall present a proposal by 31 December 2004, following a review of the sector which shall focus on the need to ensure the provision of universal service in an appropriate manner in a competitive market environment.

Upon request by the Commission, Member States shall provide all the information necessary for completion of this review."

(3) In Article 12, a fifth indent is added:

"- Whenever universal service providers apply special tariffs, for example for services for businesses, bulk mailers or consolidators of mail from different customers, they shall apply the principles of transparency and non-discrimination with regard both to the tariffs and to the associated conditions. The tariffs shall take account of the avoided costs, as compared to the standard service covering the complete range of features offered for the clearance, transport, sorting and delivery of individual postal items and, together with the associated conditions, shall apply equally both as between different third parties and as between third parties and universal service providers supplying equivalent services.

Any such tariffs shall also be available to residential customers who post under similar conditions."

(4) In Article 12, a sixth indent is added:

"- cross-subsidisation of universal services outside the reserved area out of revenues from services in the reserved area shall be prohibited except to the extent to which it is shown to be strictly necessary to fulfil specific universal service obligations imposed in the competitive area; rules shall be adopted to this effect by the national regulatory authorities who shall inform the Commission of such measures."

(4a) Article 19, paragraph 1 is replaced by the following:

"Member States shall ensure that transparent, simple and inexpensive procedures are drawn up for dealing with users' complaints, particularly in cases involving loss, theft, damage or non-compliance with service quality standards (including procedures for determining where responsibility lies in cases where more than one operator is involved)."

(5) In Article 19, the following sentence is added to the first paragraph:

"Member States shall ensure that this principle is also applied to beneficiaries of postal services which do not fall within the universal service."

(6) In Article 27, the date "31 December 2004" is replaced by the date "31 December 2006".

Article 2

1. Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive no later than 31 December 2002. They shall forthwith inform the Commission thereof.

When Member States adopt those provisions, they shall contain a reference to this Directive or be accompanied by such a reference on the occasion of their official publication. Member States shall determine how such reference is to be made.

2. Member States shall communicate to the Commission the texts of the main provisions of national law which they adopt in the field covered by this Directive.

Article 3

This Directive shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Communities.

Article 4

This Directive is addressed to the Member States.

Done at Brussels,

For the European Parliament For the Council

The President The President

FINANCIAL STATEMENT

1. TITLE OF OPERATION

Proposal for a European Parliament and Council Directive on amending Directive 97/67/EC with regard to the further opening to competition of Community postal services.

2. BUDGET HEADINGS INVOLVED

None, administrative expenditures only.

3. LEGAL BASIS

Articles 47(2), 55 and 95 of the Treaty establishing the European Community as amended by the Treaty of Amsterdam.

4. DESCRIPTION OF THE OPERATION

4.1 General objective

The Postal Directive 97/67/EC, adopted by the Council, Parliament and Commission on 15 December 1997 established in Article 7 a timetable for the further gradual and controlled opening to competition of postal services particularly with a view to the opening of cross-border and direct mail as well as on a further review of the price and weight limits, to take effect from 1 January 2003.

The European Council of the Heads of Government and the French President in Lisbon in March of this year set out two objectives applying to postal services where action was requested by the Commission, the Council and the Member States in accordance with their respective powers. These objectives were first "to set out by the end of 2000 a strategy for the removal of barriers to services" (including postal services) and second, "to speed up liberalisation in areas such as...postal services...". The aim is to achieve a fully operational internal market in these areas..."

Market developments in recent months and years have made more apparent the pressing need for decisions on further market-opening due to the further extension of the universal service providers' activities into competitive markets through acquisitions and alliances which have raised serious concerns in the market-place due to continuing monopoly power. The universal service providers are also undergoing a process of modernisation which needs to be supported by pro-competitive actions.

Significant market-opening is needed to move further towards the goal of moving towards a completion of the internal market in postal services, in line with the Lisbon Summit conclusions referred to above. This will improve the service levels, quality and prices available to posting customers across the Union and in a way that ensures universal service through not jeopardising the financial equilibrium of universal service providers.

The draft proposal comprises a two step approach. The first step, to be implemented by 1 January 2003, comprises a maximum reservable area of 50 grams or two-and-a-half times the basic first class letter tariff for all ordinary items of correspondence except a) outgoing cross-border mail and b) express services which are to be opened fully to competition. This opens up on average 20% of the postal revenues of the universal service providers and leaves 50% of such revenues in the reservable area (compared with 70% at present).

The second step in the proposal is that the Parliament and Council shall decide in 2005 on what the subsequent step should be on a proposal from the Commission in 2004. This proposal shall follow a review of the sector which will focus on maintaining universal service in a competitive environment.

In addition, the proposal includes several accompanying measures to respond to market and competitive developments since the last Directive. Such measures are considered to be a precondition for effective and fairly implemented market-opening in 2003. These concern the definition of special services which are distinct from standard customer services and which serve specific customer needs (for example express services) which are always outside the reserved area; the monitoring of any compensation fund arrangements reflecting requirements under the state aid rules to ensure that such funds are not disproportionate to the costs of ensuring universal service; the application of special tariffs in a non-discriminatory manner, including to any services of the universal service providers, and the maintenance of strict rules on cross-subsidisation.

The proposal would allow for the whole Postal Directive (as amended) to continue beyond 31 December 2004 (when it would expire in the absence of a decision under Article 7(3) until 31 December 2006 if a further proposal has not been agreed by that date.

The above proposal will lead to a more open and adapted postal sector which will better serve the needs of all users and strengthen the Union economically while ensuring that essential social aims are safeguarded, most importantly the provision of universal service.

4.2 Period covered and arrangements for renewal

1 January 2001 to 31 December 2006

5. CLASSIFICATION OF EXPENDITURE

6. TYPE OF EXPENDITURE

7. FINANCIAL IMPACT (on Part B)

None

8. FRAUD PREVENTION MEASURES9. ELEMENTS OF COST-EFFECTIVENESS ANALYSIS

9.1 Specific and quantifiable objectives; target population

The aim of the proposed Directive is to facilitate the functioning of the internal market in postal services in the Community. The impact of market-opening is likely to be increased postal volumes and revenues and further improvements in quality of service together with innovation and provision of increasingly tailored services. Such a development will strengthen the postal sector against the challenge from new technologies and enable the main actors to take advantage of the opportunities presented by the development of electronic commerce and pan-European economic activity, particularly involving large senders of mail such as financial institutions, utilities and mail order companies.

9.2 Grounds for the operation

The Directive takes account of the fact that postal services have a very important social, regional and employment dimension. Therefore the directive continues with the "gradual and controlled" approach to market-opening and focuses on parts of the market that are growing strongly or open already to some extent so that loss of market share by the universal service providers can be offset by overall growth in the market. It establishes a path for further progress on completing the internal market while not establishing any preconditions as to the nature of the subsequent step. This pragmatic approach will enable the experience of the step in 2003 to be assessed when new proposals are framed in 2004. The proposed Directive further provides for the continuation of a Committee to assist the Commission whose consultations will be compulsory (Article 21).

9.3 Monitoring and evaluation of the operation

Article 7 of the proposed Directive with regard to the further opening to competition of Community postal services provides for the Commission shall table a further proposal before the end of 2004, following a review of the sector which will focus on the need to provide universal service in a competitive market environment. The Commission will report to the Parliament and Council before the end of 2004.

10. ADMINISTRATIVE EXPENDITURE (PART A OF SECTION III OF THE GENERAL BUDGET)

Actual mobilisation of the necessary administrative resources will depend on the Commission's annual decision on the allocation of resources, taking into account the number of staff and additional amounts authorised by the budget authority.

10.1 Impact on the number of posts

>TABLE POSITION>

* END = experts nationaux détachés/detached national experts

10.2 Overall impact of human resources

3.5 x EUR 108 000 (unit cost) x 6 years ; titles A1, A2, A4, A5 and A7.

10.3 Increase in other administrative expenditure arising from the operation.

(In EUR thousand)

>TABLE POSITION>

The expenditure set out in the above table under Heading A-7 will be covered by credits within the DG MARKT global envelope.

(In EUR thousand)

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IMPACT ASSESSMENT FORM

The Impact of the Proposal on Business with special reference to small and medium-sized enterprises

Title of Proposal:

Commission proposal for a European Parliament and Council Directive amending Directive 97/67/EC with regard to the further opening to competition of Community postal services

Reference number (Répertoire) : 99004

The proposal

1. Necessity for the proposed Community legislation

The proposal amends Directive 97/67/EC of the European Parliament and of the Council of 15 December 1997 on common rules for the development of the internal market of Community postal services and the improvement of quality of service (the "Postal Directive"), as required by Article 7 of that Directive, so as to establish a timetable and minimum requirements for the further gradual and controlled opening of Community postal markets, involving a specified intermediate step in 2003 and a timetable for a subsequent step in 2007.

Coordination of market-opening process at Community level is necessary in order to move towards completion of the internal market for Community postal services, to give enterprises, whose postal activities often represent an important element of their business, access to good quality postal services under equivalent conditions throughout the Community (particularly when offering their goods and services across its internal borders), to ensure equality of opportunity to postal operators in the Community and to contribute to social and economic cohesion by guaranteeing all citizens a universal postal service under similar conditions wherever they live.

The impact on business

2. Who will be affected by the proposal-

All postal users, particularly business users, will be affected by the market-opening measures contained in the proposal, in as much as they will have access to more competitive services and a wider range of postal service providers.

Both existing and new postal operators, including small and medium-sized enterprises, will also have increased opportunities to develop their services or to enter new areas of the market as a result of the opening proposed. In particular, small and medium-sized enterprises may be able to provide services on a local or regional basis.

The universal service providers, which currently benefit from the reservation of services which are to be opened to competition pursuant to this proposal, will need to prepare their organisational and business strategies for operating in a competitive market, but in reality, they have already been preparing for several years.

3. What will business have to do to comply with the proposal-

Postal operators will need to adapt to the more competitive conditions in the postal sector that will exist as a result of the market-opening measures proposed. The Postal Directive already provides that Member States may establish authorisation procedures for postal operators and these procedures are likely also to cover operations in the market segments newly liberalised as a result of this proposal. These may include, under certain conditions, contributions to a compensation fund established for the purposes of guaranteeing the provision of a universal service if the reserved area is considered insufficient for this purpose.

4. What economic effects is the proposal likely to have-

The market-opening measures proposed will enhance both the offer and demand for postal services, will reinforce the freedom of enterprises to enter postal markets, will provide an incentive to plan future investment and, by virtue of the anticipated market growth arising from market-opening, will help to guarantee the lasting provision of the universal service and to sustain employment in the sector, by strengthening traditional postal services as they face the challenges of adapting to new technologies.

Postal users, including small and medium-sized enterprises, will benefit from increased quality of service, lower tariffs and more customer-oriented postal services.

5. Does the proposal contain measures to take account of the specific situation of small and medium-sized firms (reduced or different requirements etc.)-

Since the measures contained in the proposal will benefit small and medium-sized enterprises by offering them the opportunity for further involvement in the postal markets, no specific measures are necessary. Small and medium -sized enterprises will also benefit from the increased focus by new entrants on their "market niche" needs.

Consultation

6. The origin of this proposal is the mandate contained in the Postal Directive, which was the result of wide consultations. The preparatory work for this action has mainly consisted of a series of studies reviewing the situation in the postal sector and the potential impact of the market-opening measures proposed. Interested parties have been consulted extensively.

Monitoring and Review

7. The measures for market-opening effected by this proposal will become part of the regulatory framework for the postal sector established by the Postal Directive. This framework will be subject to ongoing review by the Commission and any additional measures which may be required as a result of the adoption and implementation of this proposal may be the subject of further proposals by the Commission.

Contact Point

8. For enquiries, comments and to receive further information, please contact Mr Fernando Toledano, DG MARKT, Unit D 3, Tel: (+32-2) 296.81.77.