2008/204/EC: Commission Decision of 10 October 2007 on the State aid implemented by France in connection with the reform of the arrangements for financing the retirement pensions of civil servants working for La Poste (notified under document number C(2007) 4545) (Text with EEA relevance)
Date: 2007-10-10
Institutions: European Commission
Subjects: France, State aid, control of State aid, exchange of information, financing method, pension scheme, postal and telecommunications services, public service

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Official Journal of the European Union

7.3.2008

COMMISSION

COMMISSION DECISION

of 10 October 2007

on the State aid implemented by France in connection with the reform of the arrangements for
financing the retirement pensions of civil servants working for La Poste

(notified under document number C(2007) 4545)

(Only the French version is authentic)

(Text with EEA relevance)

(2008/204/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(3)

Having regard to the Treaty
Community,
and
Article 88(2) thereof,

in particular

establishing the European
of

paragraph

first

the

On 23 June 2006 France notified the Commission of the
reform of the arrangements for financing the retirement
pensions of civil servants working for La Poste (here-
inafter the ‘reform’) in accordance with Article 88(3) of
the reform
the Treaty and stated that,
contain any
described in the notification did not
element
of
Article 87(1) of the Treaty.

the meaning

in its view,

aid within

State

of

Having regard to the Agreement on the European Economic
Area, and in particular Article 62(1)(a) thereof,

Having called on interested parties to submit their comments
pursuant to the provisions cited above (1) and having regard to
their comments,

Whereas:

(1)

(2)

1. PROCEDURE

On 21 December 2005 France presented to the
Commission the main features of the draft reform of
the arrangements for financing the retirement pensions
of civil servants working for La Poste.

On 2 March 2006 France sent by e-mail the draft noti-
fication of the reform. A pre-notification meeting was
held on 29 March at which the Commission stressed
the draft notification was quite incomplete and
that
information was missing. On 7 April
indicated what
France provided the Commission with some of
the
missing information.

(4)

(5)

On 20 July 2006 the Commission asked France for
further information on both the reform notified and
any compensatory measures
from which La Poste
might have benefited in the past. France replied on 17
August.

By letter of 12 October 2006, the Commission informed
France of its decision to initiate the procedure provided
for in Article 88(2) of
the
measures linked to the reform of the arrangements for
servants
retirement pensions of
financing the
working for La Poste.

the Treaty in respect of

civil

(6)

France submitted its comments on 14 December 2006.

(7)

The Commission Decision to initiate the procedure was
published in the Official Journal of the European Union (2).
The Commission called on interested parties to submit
their comments on the measures in question.

(1) OJ C 296, 6.12.2006, p. 6.

(2) See footnote 1.

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Official Journal of the European Union

L 63/17

(8)

The Commission received comments from […] (*) which
were forwarded to France. The corresponding obser-
vations made by France were received on 27 February
2007.

(b) weighing less than 50 g and with a price less than
two and a half times the public tariff from 1 January
2006 (an additional opening-up of the market to
competition estimated at some 7 %).

(9)

The Commission addressed additional questions
to
France on 12 March and 30 May 2007. France's replies
were received on 27 April and 8 June respectively.

(13)

In October 2006 the Commission formulated a
proposal (5)
in the
Community entirely by 2009, the target date indicated
in Directive 97/67/EC.

for opening up postal markets

(10)

(11)

2. DETAILED DESCRIPTION OF THE MEASURES

2.1. Context: liberalisation of the postal sector

(14)

The aim of Community policy in the postal sector is to
establish an internal market in postal services and to
ensure by way of an appropriate regulatory framework
that everyone in the Community has access throughout
the territory of the Community to effective, reliable and
good-quality services at affordable prices. Given the
importance of postal services both for economic pros-
perity and for the social cohesion and well-being of the
this is a priority field of action for the
Community,
Community.

items of correspondence,

In France the universal postal market is defined as an
entity bringing together the reserved sector (national
including
and international
direct mail, with the weight/price limits laid down in
Directive 97/67/EC), and at national and international
levels
and international
services for the delivery of parcels weighing 20 kg or
less, newspapers, periodicals and the like, and registered,
declared-value and forwarding services.

the provision of national

These Community objectives for postal services were
enshrined in Community legislation by a framework
postal directive, European Parliament
and Council
Directive 97/67/EC 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 (3), which set in place a comprehensive
regulatory framework for Community postal services.

(12) Directive

as

amended

97/67/EC,

by Directive
2002/39/EC (4), lays down the stages of the process for
opening up the market gradually and in a controlled
manner and further
that can be
reserved. According to Directive 97/67/EC, Member
States may exempt from the competition rules items of
correspondence:

the sectors

limits

(a) weighing less than 100 g and with a price less than
three times the public tariff from 1 January 2003 (an
opening-up of the market to competition estimated
at some 9 %);

(*) Confidential data.
(3) OJ L 15, 21.1.1998, p. 14. Directive as last amended by Regulation

(EC) No 1882/2003 (OJ L 284, 31.10.2003, p. 1).

(4) OJ L 176, 5.7.2002, p. 21.

(15) A feature of the French market is the extent of upstream
competition (such as worksharing). As for downstream
activities, competition is becoming stiffer, particularly as
a result of measures taken by operators in the newspaper
sector
in connection with both unaddressed and
addressed mail. As for bulk mailing, local operators are
active in large towns for mail weighing more than 50 g.
Lastly, express mail and parcels are liberalised markets on
which national and international operators compete (6).

2.2. Beneficiary of the measures

(16)

French Law No 90-568 of 2 July 1990 on the organi-
the public postal and telecommunications
sation of
service (the ‘1990 Law’) converted the former Telecom-
munications Directorate-General
into two legal persons
governed by public law: La Poste and France Télécom.

(17)

La Poste has been an independent public-law operator
since 1 January 1991. Under a planning contract with
the State, it is active in the fields of mail, express parcels,
financial services and general consumer services.

(5) Proposal for a European Parliament and Council Directive amending
Directive 97/67/EC concerning the full accomplishment of
the
internal market of Community postal services (COM(2006) 594 of
18 October 2006).

(6) Study entitled ‘The Impact on Universal Service of

the Full Market
Accomplishment of the Postal Internal Market in 2009 — Annexes —
May 2006’ and carried out on behalf of the Commission.

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7.3.2008

(18)

to the conditions

La Poste and its subsidiaries form a public group that,
laid down by the texts
subject
governing each of
activity, performs
services of general economic interest and engages in
competitive activities.

fields of

its

(19)

Pursuant to Directive 97/67/EC, La Poste was designated
by Law No 99-533 of 25 June 1999 laying down
guidelines for planning and sustainable development as

it

service, and in particular

service provider
levels,

in France. At
the universal postal
national and international
is responsible for
the public postal consignments service, which includes
the universal postal
the
public-service transport and delivery of press materials
covered by the specific scheme provided for by the
Postal and Electronic Communications Code. It is also
responsible for any other service involving the collection,
sorting,
items, of
transport and distribution of postal
mail in all its forms, of objects and of goods. It carries
out its financial activities in the manner laid down in
Article L. 518-25 of the Monetary and Financial Code.

(20)

The turnover of La Poste breaks down as follows (source: La Poste Group Activity Report, 2005):

(21)

La Poste's customers include businesses (90 % of its mail and parcels/express activities) and indi-
viduals (the remaining 10 %). The opposite is true of financial services, with individuals accounting
for 95 % of net banking income.

(22)

The staff at La Poste have two different statuses:

(i) civil servants, who form part of the state civil service: designation of La Poste as a legal person by
the 1990 Law was not accompanied by any change in the status of the postal administration staff
assigned to La Poste since the Government had undertaken to safeguard the status of civil servant
for those who went to work for La Poste;

(ii) employees governed by private law.

(23)

The workforce of La Poste breaks down as follows (source: financial report for the La Poste group,
2005):

In employee/year equivalent

31.12.2005

31.12.2004

Civil servants

Contract staff

180 558

122 847

303 405

Total

190 261

119 025

309 286

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(24)

Since 1990 La Poste has gradually cut back on recruiting civil servants and, for the most part, has
taken on private-law employees. It has embarked on a gradual process of changing the status of its
staff, subject to the limitations imposed by the need to respect the status of civil servants and subject
to the legal constraints, by replacing retiring civil servants with private-law employees. In the coming
years, when a large number of civil servants will take retirement, La Poste plans to continue replacing
them with private-law employees.

2.3. Measures in question

2.3.1. Description of the arrangements for financing the retirement pensions of civil servants working for La

Poste prior to the Law of December 2006

Pension scheme for civil servants

(25)

The pension scheme for civil servants is organised by the Civilian and Military Retirement Pensions
Code.

(26) According to the Court of Auditors (7), the scheme includes a wage-related payroll deduction (7,85 %)
and an employer's contribution payable by public establishments employing seconded staff (33 %).
However, legally speaking, there is no ‘employer's’ contribution for civil servants employed by the
State. But comparing spending on pensions by the State (after set-off of revenue from the wage-
related deductions) with the sum of the salaries paid to those in employment makes it possible to
calculate a rate of ‘employer's’ contribution that is often described as being implicit (8). For 2003,
according to estimates by the Economics, Finance and Industry Ministry, the implicit rate of contri-
bution payable by the State as the employer was 51,9 %, i.e. 44,7 % for civilian staff and 91,8 % for
military staff, i.e. a rate in the case of civil servants that is more than three times higher that that
resulting from the rules and collective agreements covering private-sector wages (9).

Basic retirement scheme for civil servants working for La Poste

(27)

Civil servants working for La Poste rank as state civil servants. In accordance with Article 20 of Law
No 83-634 of 13 July 1983 laying down the rights and obligations of civil servants, they are covered
by the civilian and military staff retirement scheme organised by the Civilian and Military Retirement
Pensions Code. Civil servants assigned to La Poste do not benefit from any specific retirement
advantage as compared with other civil servants. Moreover, La Poste does not participate in any
special business or branch scheme, unlike other public operators.

(28) Under Article 30 of the 1990 Law (10), the State remains in law the guarantor of the status of civil
servants assigned to La Poste and remains responsible for payment of their retirement pensions.
Retirement pensions paid to civil servants, including those assigned to La Poste (11), are voted on each
year in the Finance Law.

(29)

La Poste has no control over decisions on the pension arrangements for the civil servants working for
it. Nor can it influence the amount of the contributions levied or the level of the benefits paid out.

(30) Article 30 of the 1990 Law states that La Poste has to ensure the financial equilibrium of the social
security scheme covering the civil servants assigned to it and that it is therefore responsible for the
full funding of pensions paid by the State to its civil servants by reimbursing it for the amounts paid
out (less the contributions paid by the civil servants still working):

(7) Report by the Court of Auditors, ‘Les pensions des fonctionnaires civils de l'État’, April 2003.
(8) According to the Court of Auditors, this implicit rate would also be incomplete as it does not take account of the

scheme's management costs.

(9) The ‘employer's’ contribution payable in 2003 for private-sector employees was 15,46 % for non-executive staff and

15,60 % for executive staff.

(10) Article 30 of the 1990 Law reads as follows: ‘The payment and servicing of pensions granted under the Civilian and Military

Retirement Pensions Code to civil servants of La Poste […] shall be effected by the State.’

(11) ‘Civil servants assigned to La Poste’ means those civil servants who are either working for La Poste or who have

retired from La Poste or from the postal administration.

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‘In return, [La Poste (…) is required] to pay to the Public Treasury:

(a)

the amount of the deduction made from the salary of the civil servant, the level being fixed by Article L. 61
of the Civilian and Military Retirement Pensions Code;

(31)

(32)

(b) an additional contribution allowing full funding of the pensions that have been and are to be awarded to

their retired officials.’

These financing arrangements depart from the ordinary arrangements in that the ‘employer's’ contri-
bution paid by La Poste forms part of a defined-benefit scheme since it is intended to cover the
amount of pensions paid out each year by the State but is not correlated to the population of active
contributing civil servants at La Poste. Unlike an employer under ordinary law with a pay-as-you-go
scheme, La Poste does not make any contribution in full discharge of its liabilities but is required by
the 1990 Law to ensure the financial equilibrium of the retirement scheme for its civil servants.

The ‘objective and progress contract’ serving as the planning contract between the State and La Poste
for the period 1998-2001, which was extended to cover 2002 and 2003, and then the ‘performance
and convergence contract’ for the period 2003-2007 held this repayment steady in constant euros at
its 1997 level (the ‘1998 cap’). The share of pensions paid out by the State but covered neither by the
‘employer's’ contribution of La Poste nor by the pension deduction for civil servants remains the
responsibility of the State.

(33)

The table below gives (in EURm) the contributions paid to the State by La Poste since 1998 (in
constant euros) and the payments made by the State in respect of the pensions paid to civil servants
working for La Poste.

1998

1999

2000

2001

2002

2003

2004

2005

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

Present value as at
30 June 2006

[…]

[…]

[…]

Discount rate

Pensions paid out (1)

Contribution paid by La Poste
(‘employer’)

Pension deduction (civil
servants)

(1) Budget figures.

(34) According to France, the total amount of retirement pensions financed by the State between 1998

and 2005 was therefore around […] as at 30 June 2006.

(35)

In the absence of the reform, the obligation incumbent on La Poste to ensure the financial equi-
librium of the arrangements would result in a state liability being entered as an off-balance-sheet item
which would be shown as a provision in the accounts on the changeover to IFRS standards (Inter-
national Financial Reporting Standards), which is to take place in 2007 at the latest. Since La Poste
borrows on the market but is not quoted on the stock exchange, it was decided that it would change
over to the IFRS standards as of the publication of its 2007 half-yearly accounts.

(36)

The liabilities in respect of the rights acquired by civil servants as at 31 December 2005 and entered
as an off-balance-sheet item in La Poste's accounts amount to EUR 76 billion (of which EUR 34
billion relates to the rights acquired by civil servants still working). France estimates that EUR […]
billion relates to rights acquired before La Poste was set up, i.e. at a time when its main activities had
not yet been opened up to competition.

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(37)

The gradual cutback in the recruitment of civil servants since 1990 (12) and longer life expectancy
automatically mean that, since 1990, La Poste has had to pay an increasingly large amount of
pensions (13) relative to the salary of civil servants still working for La Poste.

Supplementary pension scheme for civil servants working for La Poste

(38) Article 76 of Law No 2003-775 of 21 August 2003 on the reform of retirement pensions set up a
compulsory supplementary public-service pension scheme (retraite additionnelle de la fonction publique
— RAFP) with effect from 1 January 2005. This is a funded points-based pay-as-you-go scheme for
acquiring pension rights that is managed by a public administration overseen by the State and known
as the ‘public-service supplementary retirement pension body’ (établissement de retraite additionnelle de la
fonction publique).

(39)

La Poste contributes to the RAFP for civil servants assigned to it and pays to the above body each
month the contributions for which it is responsible as the employer and the contributions from the
civil servants that it deducts direct from their salary. The ‘employer's’ contributions of La Poste to the
RAFP are in full discharge of its liabilities.

Early retirement scheme for civil servants assigned to La Poste

(40)

Like all other civil servants, those working for La Poste may be eligible for the early retirement
arrangements introduced for the public service: phased-in retirement and end-of-career leave.

(41)

The entire cost of these early retirement arrangements is borne by La Poste for all the civil servants
assigned to it. A provision has been entered in the accounts for the civil servants who have joined
one of the pre-retirement schemes.

2.3.2. The reform and the competitively fair rate

Legal bases of the reform

(42)

The legal bases in national law for the reform of the current arrangements for financing the pensions
of civil servants working for La Poste will be the amendments to Article 30 of the 1990 Law and to
the specifications for La Poste approved by Decree No 90-1214 of 29 December 1990. Article 46 of
the specifications sets out in particular the arrangements for reimbursement to the State by La Poste
of the pension liabilities for which it was made responsible by the 1990 Law.

(43)

Implementation of the reform requires, in addition to amendments to the two texts, clarification of
how to determine and pay the ‘employer's’ contribution in full discharge of La Poste's liabilities, in
place of reimbursement of the State for its pension funding.

(12) Recruitments by La Poste since 1990:

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

Civil
servants

Private-
law
employ-
ees

(13) Despite the stabilisation in constant euros since 1998.

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(44)

The legislative provisions, which had been notified to the Commission as a draft text annexed to
France's comments on the decision to initiate the procedure, were adopted unamended by Parliament
and now make up Article 150 of the Amending Finance Law 2006 (14).

(45) As things stand, the main effect of these provisions is that the ‘employer's’ contribution paid by La

Poste is treated as being in full discharge of its liabilities.

(46) Article 150 of the Amending Finance Law 2006 also lays down the principle of the competitively fair
rate (taux d'équité concurrentielle — ‘TEC’) and leaves to a decree the task of determining how to
calculate and pay the ‘employer's’ contribution. The decree was published on 2 January 2007 (15).
Article 150 above also modifies the financial flows involved, with the contribution now passing
through the national public body responsible for financing retirement pensions of La Poste (16) and
no longer being paid direct to the State.

Thinking behind the reform

(47) According to France, the thinking behind the notified reform is that,

in substance, the present
contribution paid by La Poste will be replaced by a contribution that will align the retirement
costs borne by La Poste on those of its competitors and be in full discharge of its liabilities.

(48) Under the reform, La Poste will, with effect from 2006, pay an ‘employer's’ contribution in full
discharge of its liabilities and based on a TEC. The contribution will be calculated in such a way as to
equalise the levels of wage-related social security contributions and tax payments between La Poste
and the other companies in the transport and banking sectors coming under the ordinary social
security arrangements. France initially planned to apply this calculation only to the risks that were
common to employees of private undertakings and to civil servants (17).

(49)

Since the assessment bases for, and the rates of, contributions differ as between civil servants and
private-law employees and since the contributions may vary slightly from one sector of the economy
to another, the equalisation method is based on a reconstruction process.

(50) As explained in the decision to initiate the procedure, the calculation starts with a reconstruction of
what the wage cost would be for a competitor with employees coming under the ordinary social
security arrangements (including retirement pensions) if they were guaranteed a net wage equal to
that of civil servants working for La Poste as well as an identical employment structure and range of
activities.

(14) Amending Finance Law No 2006-1771 of 30 December 2006.
(15) Decree No 2007-3 of 1 January 2007 on the arrangements for determining and paying the employer's contribution

— in full discharge of liabilities — in respect of civil servants working for La Poste.

(16) This public body was set up by Decree No 2006-1625 of 19 December 2006.
(17) For the French authorities, the common risks (including old age, family, sickness, maternity, accidents at work and
vocational
including under
training) were those covered by social security contributions and tax payments,
in the postal and banking sectors (the comparison includes the banking top-up, which is an
contractual rules,
additional contribution paid by banks of up to 4 % of the wage and salary bill). Excluded from it were current
contributions to provide employment risk cover and cover against the risk of non-payment of wages in the event of
insolvency or winding-up (Association pour la Gestion du régime de garantie des créances des Salariés — AGS). Conversely,
the exceptional solidarity contribution introduced by Law No 82-939 of 4 November 1982 on the exceptional
the
solidarity contribution for unemployed workers, which was paid only by civil servants, was left out of
comparison. In addition, La Poste itself pays the cash benefits for absence from work due to sickness, maternity,
paternity and adoption of the civil servants employed by it, whereas its competitors pay contributions for such
benefits. The cash benefits paid by La Poste account for over […] % of gross index-related salaries (traitement indiciaire
brut), corresponding to the difference between the contribution rates for private-law employees and those for civil
servants. They were not taken into account in the TEC notified initially whereas the contributions paid by compe-
titors were.

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(51)

(52)

(53)

The contribution in full discharge of liabilities that will be paid by La Poste to the State after the
reform is equal to the difference between the wage cost thus reconstructed and the real wage cost of
civil servants (excluding retirement pensions). The contribution calculated in this way will replace the
contribution from La Poste provided for in Article 30 of the 1990 Law. It will be paid by La Poste to
an administrative public body.

Calculated on the basis of the gross index-related salaries (18) of the civil servants working for La
Poste, this contribution determines the level of the contribution payable by La Poste (TEC). It will be
calculated each year in such a way as to take account of the real change in the compensation of civil
servants working for La Poste and of the changes that will take place in the levels of social security
contributions and tax payments under the ordinary social security arrangements.

The method of calculating the contribution of La Poste in full discharge of its liabilities is, therefore,
based on equalisation of the levels of wage-related security contributions and tax payments between
La Poste and other undertakings in the transport and banking sectors under the ordinary social
security arrangements. This method does not therefore ensure any equalisation of aggregate wage
costs (wages and social security contributions).

(54)

The new method of calculating the contribution of La Poste does not affect the individual situation of
civil servants assigned to it, whether as regards their pension rights, contributions or status.

Distinction under the reform between the sectors of activity of La Poste

(55) As La Poste operates in two sectors, the postal sector and the banking sector, in which ‘employer's’
in fact be

contributions under the ordinary social security arrangements differ, two TECs will,
calculated:

— one will apply to the category of civil servants working in the mail/parcels sector and will be
calculated by reference to the contributions paid by transport companies, a sector into which
postal activities fall; on the basis of the 2005 figures, the ‘postal sector’ TEC is initially estimated
at 36,5 % of the gross index-related wage and salary bill for this category,

— the other will apply to the category of civil servants seconded to La Banque Postale or working in
the resources department (19) and will be calculated by reference to the contributions paid by
banks; on the basis of the 2005 figures, the ‘banking sector’ TEC is initially estimated at 40,9 % of
the gross index-related wage and salary bill for this category.

(56) An aggregate TEC can be calculated each year as the weighted average of the two rates, the weighting
being based on the gross index-related wage and salary bill for each of the two categories. On the
basis of the 2005 figures, the aggregate TEC is initially estimated at 37,2 % of the gross index-related
age and salary bill of La Poste.

(18) The gross index-related salary is the main component of civil servants' compensation and depends on their index,
which is based on their seniority in the service. The components of civil servants' compensation are laid down by
Article 20 of Law No 83-634 of 13 July 1983 on the rights and obligations of civil servants.

(19) This category, which has no legal personality, manages all the human and material resources corresponding to the
services provided for in the agreements between La Poste and La Banque Postale (e.g. conditions under which la
Banque Postale has recourse to the staff of La Poste for its commercial activities).

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Transitional period

(57)

The TEC as defined above will be applied over a four-year transitional period. In 2006 the contri-
bution by La Poste in full discharge of liabilities will be set so that the level of the contribution in
euros will be equivalent to that calculated under the present arrangements (currently estimated at
some […] % of the gross index-related wage and salary bill). For the period 2007-2009 the contri-
bution will be raised by adding to the TEC a temporary surcharge set at […] % of the gross index-
related wage and salary bill for 2007, at […] % for 2008 and at […] % for 2009. This surcharge will
be abolished as of 2010.

(58)

The change in the aggregate initial TEC (20) applicable during the transitional period should therefore
be as follows (estimation based on the 2005 figures):

Level of the contribution

2006

[…]

2007

[…]

2008

[…]

2009

[…]

2010

[…]

Exceptional flat-rate contribution

(59) On 29 December 2006 La Poste paid an exceptional flat-rate contribution of EUR 2 billion (21) to the
national public agency for the financing of the retirement pensions paid out by La Poste. This was a
one-off contribution.

(60)

(61)

The principle and amount of this contribution were fixed in negotiations between the State and La
Poste. The amount was the result of a trade-off between the immediate budgetary needs of the State
and the contributive capacity of La Poste […].

The different entities belonging to the La Poste group contributed to the payment of the exceptional
flat-rate contribution in proportion to the wage and salary bill for the civil servants working directly
for them (see table below):

Parent company

Banque Postale

Sofipost

Geopost

Gross wage bill for civil servants
(in EURm)
base 2004

Exceptional flat-rate contribution

[…]

[…]

[…]

[…]

[…]

Total

[…]

[…] (1)

[…]

[…]

[…]

(1) The matter of the breakdown of the cost within the La Poste group, and in particular vis-à-vis La Banque Postale, is not

examined here by the Commission and will be dealt with in a later decision.

Affiliation of the retirement arrangements for civil servants working for La Poste to the ordinary
schemes

(62) According to France, one option for the State is to affiliate the retirement arrangements for civil
servants working for La Poste to the ordinary social security schemes. As things stand, no nego-
tiations have taken place with the ordinary retirement schemes even though France intends to begin
such negotiations as soon as possible.

(20) It should be noted that the rate applicable to the ‘banking’ sector will not be further reduced once it is equal to the

‘banking sector’ TEC (estimated at […] % on the basis of the 2005 figures).

(21) See Article 150 of the Amending Finance Law 2006.

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(63)

(64)

(65)

3. REASONS FOR INITIATING THE PROCEDURE

Following its preliminary analysis, the Commission first noted that the notified reform releases La
Poste from charges it would have had to incur under the 1990 Law. It wondered therefore whether
the charges of which La Poste was relieved corresponded in aggregate to an ‘abnormal’ charge within
the meaning of Community case law. In particular, in Combus (22) the Court of First Instance of the
European Communities seems to treat as ‘abnormal’ charges resulting from the exceptional status of
the employees of an undertaking which, following a reform, finds itself in a situation governed by
ordinary law, i.e. identical to that of its competitors, as regards personnel management (23). However,
in the present case, France has not adopted any legislative provision aimed at abolishing or adapting
the special employment arrangements for civil servants working for La Poste or the way in which
they acquire their pension rights.

France then claimed that the reform was designed gradually to align the charges borne by La Poste in
connection with the retirement pensions paid to civil servants working for it on those borne by its
competitors. The Commission expressed doubts as to whether there will actually be a level playing
field once the reform is implemented.

Lastly, according to France, La Poste had not benefited in the past from any other compensatory
measures aimed, at the time they were granted, at neutralising the effects of the additional costs
imposed by La Poste's ad hoc arrangements for financing the retirement pensions of civil servants.
And yet, since 1998, La Poste has not reimbursed the State for the total cost of the retirement
pensions paid to its civil servants, contrary to the obligation resulting from Article 30 of the 1990
Law.

(66)

In the light of the above, the Commission could not at that stage rule out the possibility that the
measure under scrutiny conferred an economic advantage on La Poste and contain elements of State
aid.

(67)

The Commission wondered whether, should the measures in question constitute State aid, they might
be declared compatible in the light of the derogations provided for in Article 87(3)(c) of the Treaty.

(68)

In the past, the Commission has authorised State aid measures relieving undertakings of pension
liabilities specific to a sector where they exceeded those resulting from the general retirement scheme
and were defined during a monopoly period (24). The measures under scrutiny in the present decision
are designed gradually to align the costs borne by La Poste in respect of retirement pensions paid to
civil servants assigned to it on the retirement pension costs of its competitors. The Commission was
unable, however, to conclude at that stage that La Poste was actually in a situation comparable to
that of its competitors, and this could have demonstrated that the aid was necessary in order to
garner fully the benefits of the liberalisation of the postal services market.

(69)

France has not invoked Article 86(2) of the Treaty during the procedure.

(22) Case T-157-01 Danske Busvognmænd v Commission [2004] ECR II-917.
(23) Combus, an undertaking charged by the State with the task of managing public bus transport operations in Denmark,
employed officials who maintained their employment relationship with the State while being at the disposal of
Combus under a secondment scheme. Since the officials were working for Combus, it had to compensate the State
for the remuneration and pensions it paid to them. In September 1998 the State concluded with Combus an
agreement governing the conditions for a change of status from civil servant to employee under contract for the
civil servants working for Combus. That agreement consisted essentially in giving civil servants the choice, as of
1 April 1999, between working on a contract basis for Combus or being assigned to another suitable post within the
Danish State Railways (DSB). In return for their waiving the rights deriving from their civil servant status upon
transfer to employment on a contract basis for Combus, the civil servants concerned demanded a single payment
totalling an estimated amount of DKK 100 million. The payment was made to the officials concerned in 1998.
(24) Commission Decision 2005/145/EC of 16 December 2003 on the State aid granted by France to EDF and to the

electricity and gas industries (OJ L 49, 22.2.2005, p. 9).

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4. COMMENTS BY INTERESTED PARTIES

(70)

Two interested parties have presented their joint comments under the procedure: […].

(71)

[…].

(72)

(73)

It is claimed that the measures referred to in the decision instituting the procedure raised the
fundamental question as to whether the employment of civil servants represents an ‘abnormal’
charge relief from which does not constitute State aid.

Firstly, […] claim that the Combus ruling does not apply in the present case. A number of factors
distinguish the case of La Poste from that of Combus. For example, the planned reform would not
prevent La Poste from employing civil servants; the absence of aid in Combus was due, above all, to
the fact that the charge would have been borne by the staff of Combus;
lastly, the competitive
environment would be totally different since La Poste enjoys exclusive rights.

(74)

Secondly, in order to assess the ‘abnormal’ nature of the charge resulting from the employment of
civil servants, all the advantages (25) and disadvantages associated with the employment of the said
civil servants would need to be worked out.

(75)

Thirdly, the measures under scrutiny would not be compatible with Article 87(3)(c) of the Treaty as
they do not promote competition.

(76)

(77)

In particular, the strict conditions attaching to the reform of the EDF/GDF retirement scheme as
described in Decision 2005/145/EC would not be met since the reform, on the one hand, would
restrict the ability of competitors to expand their business on the markets on which La Poste operates
instead of removing the barriers to entry and, on the other hand, would not be proportional in
nature as France has not demonstrated that the measures under scrutiny are the least harmful to
competition.

In addition, the reform would not be fair since it would not include unemployment in the list of
common risks, would not take stock of the competitive advantages conferred on an undertaking
enjoying exclusive rights, would introduce a subjective allocation formula favourable to La Poste and
would not take into account the compensatory measures from which La Poste might have benefited
in the past (26).

(78) No other comments were received by the deadline set in the decision initiating the procedure. The
in its view, no duly justified case within the
Commission has not extended the deadline since,
meaning of Article 6(1) of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down
detailed rules for the application of Article 93 of the EC Treaty (27) was made for extending the
deadline.

5. COMMENTS FROM FRANCE

(79)

France presented its comments on 14 December 2006. Additional
27 April and 8 June 2007 in response to questions put by the Commission.

information was provided on

(25) Among the advantages for La Poste, the comments mention the absence of unemployment-insurance contributions
for the civil servants, a lower gross remuneration for them compared with private-sector employees, the stability
enjoyed by civil servants during periods of growth, the possibilities of early retirement or re-assignment for them
during periods of recession, the more favourable retirement conditions for them and the exclusive rights enjoyed by
La Poste.

(26) According to the judgment in Deggendorf (Joined Cases T-244/93 and T-486/93 Textilwerke Deggendorf [1995] ECR
II-2265), this last point would mean that no new aid could be authorised until such time as La Poste had repaid the
unlawful aid received previously.

(27) OJ L 83, 27.3.1999, p. 1. Regulation as last amended by Regulation (EC) No 1791/2006 (OJ L 363, 20.12.2006,

p. 1).

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(80)

(81)

(82)

(83)

France claims to have demonstrated that the planned reform does not contain any State aid element
since the current method of financing the pensions of civil servants working for La Poste, which is
governed by the 1990 Law, would impose on La Poste an exorbitant financial cost exceeding that
under the ordinary arrangements that would place the undertaking at a very marked disadvantage.
The planned reform would simply remove the competitive disadvantage resulting from those
arrangements by aligning the conditions under which La Poste finances the retirement pension
costs of civil servants on those applicable to private companies in respect of their employees in
sectors where La Poste operates. Abolition of such an abnormal financial cost imposed by the State
on La Poste would not confer any advantage on La Poste vis-à-vis its competitors.

The retirement costs that La Poste has to pay under the 1990 Law would not be part of its normal
costs. The mere fact that a law imposed a particular scheme on an undertaking could not in itself
render that scheme normal. This is because assessment of the ‘normal’ nature of a cost within the
meaning of the Community State aid rules is totally separate from the nature of its legal basis.
Recalling the arguments set out in the notification, France takes the view that the exceptional
into the
obligations under the ordinary arrangements imposed by the 1990 Law do not
category of obligations that would form part of the ‘normal costs’ of an undertaking in accordance
with point 63 of the Community guidelines on State aid for rescuing and restructuring firms in
(‘the obligation a company itself bears under employment legislation or collective
difficulty (28)
agreements with trade unions to provide redundancy benefits and/or early retirement pensions’).

fall

France challenges the very restrictive interpretation placed by the Commission on the scope of the
Combus ruling. According to the settled case law of the Court of Justice of the European Communities
and of the Court of First Instance, the concept of State aid would apply only to state intervention
that, in various forms, reduces the costs normally borne by an undertaking's budget and is, therefore,
the interplay of competition by conferring an advantage on the undertaking
likely to distort
concerned. According to France,
is this principle that underlies the Commission's decision-
making practice and the Community case law according to which the removal of a structural
disadvantage imposed by the State does not constitute an advantage that could be classed as aid
since it is designed to relieve the undertaking of an abnormal charge, thereby restoring a level playing
field. This principle, it is claimed, stems directly from the concept of State aid as clarified by the
Court of Justice. It has been recognised and applied not only in Combus but also in a number of other
cases referred to in the notification, including Sabena/Swissair and Enirisorse (29).

it

The Commission's objections regarding the different circumstances of the Combus ruling should be
disregarded. For one thing, the fact that, with Combus, the measure in question took the form of
compensation paid by the State to the civil servants in return for a change in status would not mean
that the abolition of an abnormal charge borne by La Poste in financing their retirement pensions
must necessarily be accompanied by a change in their status or by the payment of an allowance to
them. In line with the approach taken by the Court of First Instance, it would be necessary to know
(i) if Combus suffered from a structural disadvantage vis-à-vis its competitors (resulting from the
‘privileged and costly status of civil servants’ and (ii) if the intervention by the State relieved Combus
of this competitive disadvantage (by way of a change in personnel status, together with payment by
the State of an allowance). France also takes the view that civil servants have, in fact, been gradually
replaced by private-law employees at La Poste since 1990, subject to the limitations imposed by the
1990 Law, with private-law employees being recruited to take over from retiring civil servants and
with the recruitment of civil servants being cut back gradually. This is, therefore, also the situation in
the case under scrutiny. Moreover, the 1990 Law was amended in May 2005 in order to remove the
restrictions on the recruitment of private-law employees. It now lays down a general principle that
private-law employees are to be recruited, stating that ‘La Poste may, under collective agreements,
recruit employees on a contract basis within the framework of the guidelines laid down by the
planning contract.’

(28) OJ C 244, 1.10.2004, p. 2.
(29) Case C-237/04 Enirisorse v Sotacarbo [2006] ECR I-2843, paragraphs 46-51.

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(84)

(85)

France points out that La Poste did not in the past, and in particular at the time it was set up in
1990-91, benefit from any compensatory measure which, when it was granted, would have been
aimed at offsetting the effects of the abnormal structural charge borne by it in connection with the
financing of the retirement pensions of the civil servants working for La Poste.

The 1998 stabilisation mechanism would relieve La Poste of only some of the abnormal costs
incurred by it. It aims to stabilise the gross amounts paid by La Poste to the State on behalf of
civil servants but it has no impact on the reduction in the number of those still working and
contributing.

(86) Nor would the mechanism deal with the exorbitant nature of the charge borne by La Poste under the
1990 Law since its contribution is still part of a ‘defined-benefit’ scheme and is not in full discharge
of its liabilities. The mechanism has, therefore, not altered the principle of recording La Poste's
retirement pension liabilities as an off-balance-sheet item, the calculation method applied or the
obligation to create a provision for these liabilities on the changeover to the IFRS standards if the
mechanism is retained.

(87)

Lastly, France makes the point that, in addition to the universal postal service it provides, La Poste
incurs additional net costs associated with the services of general economic interest (SGEIs) that it
performs with regard to the transport and delivery of newspapers, periodicals and the like and with
regard to regional planning. The undercompensation for these two tasks amounted to some […] per
year during the period 2000-2005.

(88) When it comes to quantifying the additional costs imposed by the exceptional arrangements
applicable to it in the period 1998-2005, La Poste has carried out a more detailed retropolation
of the CFR over the period in question (30):

Employer's contribution rate, before
stabilisation

Employer's contribution rate, after
stabilisation

Simulated competitively fair rate —
TEC (by retropolation)

1998

1999

2000

2001

2002

2003

2004

2005

[…]

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(89)

Consequently, stabilisation in constant euros of the repayment to the State of the costs of civil
servants' retirement pensions would have offset only in part any structural disadvantage and has not
a fortiori conferred any advantage whatsoever on La Poste vis-à-vis its competitors. It would not
constitute aid.

(90) As regards the actual existence of a level playing field, France challenges the three misgivings raised in

the decision to initiate the procedure.

(91)

Firstly, the exclusion of the unemployment risk from the calculation of the TEC would be justified by
the fact that this is a risk that does not affect civil servants on account of their status. In addition, it
would be paradoxical to require La Poste to pay unemployment contributions when it does not enjoy

(30) These estimates present methodological limitations due to the nature of the exercise.

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In
the flexibility of personnel management normally available in return for such contributions.
response to a question put by the Commission, France notes more particularly that there is no
possibility for civil servants working for La Poste to ‘return’ as of right to the civil service. Such
transfers would require three conditions to be met: a request from the person concerned (principle of
voluntary transfer), the availability of posts within the host administration and the existence of posts
requiring equivalent qualifications. Accordingly, France takes the view that the potential effect of the
mobility scheme is not very significant in view of the rigidities linked to the employment of civil
servants.

France also stresses that the employment of civil servants imposes an extra cost on La Poste as
compared with the employment of private-law employees (31), irrespective of the level concerned and
after adjustment of the seniority steps. Despite exclusion of the unemployment risk and leaving aside
the significant additional costs inherent in the rigid status of civil servants, La Poste would continue
therefore, after the reform and despite the contribution of a level playing field, to incur higher
aggregate wage costs than those of its competitors for as long as civil servants worked for it.

Turning to the TEC, Franc considers that it has been careful in defining the term. It emphasises that
self-insurance by La Poste in respect of the cash benefits paid for absence from work as a result of
sickness, maternity, paternity and adoption is more costly than the contributions paid by companies
under the ordinary social security arrangements. But this additional cost was not taken into account
in calculating the TEC.

(92)

(93)

(94) However, in response to a request from the Commission, France calculated a TEC that took all the
risks into account,
including those that are not common and those covered by a separate self-
insurance scheme of La Poste (32). In 2006 the impact on the TEC of a hypothetical inclusion of
unemployment and AGS contributions, the exceptional solidarity contribution and the cash benefits
for absences from work as a result of sickness, maternity, paternity and adoption would be as
follows:
the 37,2 % notified. Taking the
different sectors, the adjusted TEC would be […] % in the postal sector (instead of 36,9 %) and
[…] % in the banking sector (instead of 39,9 %).

the adjusted overall TEC would be […] % instead of

Overall TEC La Poste

TEC postal activities

TEC banking activities

Hypothetical overall TEC for La Poste including
non-common risks, unemployment and cash
benefits for work absences as a result of sickness,
maternity, paternity or adoption

Hypothetical TEC for postal activities including
non-common risks, unemployment and cash
benefits for work absences as a result of sickness,
maternity, paternity or adoption

Hypothetical TEC for banking activities including
non-common risk, unemployment and cash
benefits for work absences as a result of sickness,
maternity, paternity or adoption

1998 1999 2000 2001 2002 2003 2004 2005 2006

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(31) Notably as a result of higher salaries.
(32) The figures for the period 1998-2004 have been calculated by retropolation on the basis of the 2005 figures. The
wage and salary bills for civil servants, including gross index-related salaries, are those recorded for the year for which
the TEC is calculated. The breakdown by activity as between executive and non-executive staff has been calculated in
proportion to the wage and salary bill for civil servants and the index-related salaries. The contributions are those
applicable on 1 January of the year for which the TEC is calculated. The Commission considers the methodology
applied to be both consistent and prudent.

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(95)

France has also calculated the net present values (NPVs) of La Poste's ‘employer's’ contributions in the
following scenarios:

(in EURbn)

1990 Law

Public establishments (1)

Notified TEC

Adjusted TEC (2)

NPV

[…]

[…]

[…]

[…]

(1) France has calculated the NPV that would result from the rates of contribution for public establishments under the pension

scheme applicable to state civil servants.

(2) Including unemployment and AGS contributions, the exceptional solidarity contribution and the cost of self-insured benefits.

(96) According to France, adjusting the TEC would result in
an increase of EUR 2 billion in the NPV payable by La
Poste. France notes that this amount corresponds to the
exceptional flat-rate contribution paid by La Poste on
29 December 2006.

(i) the nature of

the skills required to exercise the
function in question, depending on whether or not
the civil servants possess specific banking skills;

(97)

France concludes that
the notified reform does not
contain any State aid since La Poste will not benefit
from any advantage vis-à-vis its competitors.

(98)

in response to observations and questions by
Even so,
the Commission, France has stated its willingness to
commit
to the following as part of an overall
agreement on the current reform:

itself

(ii) the organising body within La Poste, depending on
whether the number, geographical location, training
and career development of
the civil servants are
defined by La Poste or by La Banque Postale.

(100) Despite some disagreement on the principles but always
with a view to an overall agreement on the present
reform, France has stated its willingness when calculating
the annual TEC to allocate general-purpose staff
re-
invoiced to La Banque Postale to the banking sector on
the basis of the figures taken from the analytical accounts
of La Poste.

(i) the TEC will comprise all the contributions including
the
the AGS and unemployment
exceptional solidarity contribution and the costs of
the benefits self-insured by La Poste;

contributions,

(101)

contribution

(ii) the actual payments by La Poste provided for by the
Law and its implementing decree will be as indicated
in the notified reform for as long as the capitalised
sum of the differences between the annual contri-
butions resulting from application of the TEC (with
account being taken of the non-common risks) and
the
and
surcharges 2006-2009) and effectively paid remains
below EUR 2 billion (amount of the exceptional flat-
rate contribution). If this capitalised sum exceeds EUR
2 billion in capitalised value terms, the contribution
by La Poste will be increased at
the appropriate
moment to the level of the contribution resulting
from application of the TEC that takes account of
the non-common risks.

notified

notified

(TEC

(99) As for demarcation of the total wage and salary bill for
civil servants as between the ‘financial services’ sector and
the ‘mail/parcels’ sector, France points out that it is based
on two objective criteria:

in its view,

In order to answer the Commission's questions, France
has also explored an ‘intrinsic’ approach centring on an
analysis of the cover provided by the undertaking for its
retirement pension liabilities.
It emphasises first of all
that,
this approach is particularly inap-
propriate in the case of La Poste, which (i) has been
remained
assigned civil
unchanged and is still determined by the State and
whose retirement scheme is that applicable to all the
civilian and military personnel of the State, and (ii) no
longer recruits civil servants.

servants whose

status has

(102) France then examined whether the contribution paid by
La Poste to the State in respect of the financing of the
retirement pensions of the civil servants assigned to it
corresponds to conditions that would be acceptable to a
private-sector operator.
remuneration
For
received by the State would have to be at least equal
to the net present value of the liabilities of La Poste
and would thus need to ensure full financing of these
liabilities on a funded basis. In applying these principles,
France has ascertained that,
in the past, the payments
made by La Poste have covered the normal actuarial
costs (33) and that the NPV of the future payments by

this,

the

(33) The normal annual actuarial cost corresponds to the rights acquired
in the year under consideration in return for the activity performed
during the financial year.

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La Poste to the State is equal to the NPV of the normal
annual actuarial costs. It concludes from this analysis that
the rate of the ‘employer's’ contribution would be […] %,
i.e. much lower than the TEC notified. If this rate were
applied, La Poste would have to pay […] more than the
liability imputable to it, i.e. the liability corresponding to
the years of activity completed by civil servants within
the undertaking since it was set up in 1990.

6. ASSESSMENT OF THE MEASURES

(106) The measures examined by the Commission for the
this decision are the 1998 cap and the
purposes of
notified reform of
the pension arrangements of civil
servants working for La Poste under Article 150 of the
Amending Finance Law 2006.

(103)

If the Commission were to come to the conclusion that
the reform did contain aid, France would subscribe in
principle to the reasoning set out by the Commission
in the decision to initiate the procedure in relation to
the compatibility of
the aid, especially as the precise
purpose of the notified reform is to place La Poste in a
situation comparable to that of its competitors. It stresses
that the decision to initiate the procedure recalls that aid
is compatible among other things when it relieves an
undertaking of a cost predating the liberalisation phase
that would significantly affect its competitiveness in an
environment that was undergoing liberalisation.

(104) As

regards

the planned affiliation of

the financing
arrangements for retirement pensions to the ordinary
that
security arrangements, France emphasises
social
this does not affect the analysis of the notified reform
as far as State aid is concerned. As for the relations
between La Poste and the State, the introduction of a
contribution in full discharge of liabilities payable by La
Poste on the basis of a TEC is indeed sufficient
to
guarantee the absence of any State aid without there
being any need to examine
for
financing civil servant pensions that will be applied
the planned
after
affiliation would in future involve only two parties, the
State and the Caisse nationale d’assurance vieillesse, since La
Poste would, following the notified reform, be relieved of
any responsibility in this respect. As the two parties
cannot be classed as undertakings within the meaning
of the Treaty, no State aid whatsoever can be involved.

the arrangements

connection,

In this

reform.

the

6.1. Classification as State aid

(107) According to Article 87(1) of
constitutes State aid if
decisions are met:

the Treaty, a measure
the following four cumulative

(i) the measure must confer an advantage on the bene-

ficiary;

(ii) the measure must distort or

threaten to distort

competition by favouring certain undertakings;

(iii) the measure must be taken by the State or must

involve state resources;

(iv) the measure must be capable of affecting trade

between Member States.

6.1.1. State resources

(108) Article 87(1) of the Treaty is concerned with aid granted
by a Member State or through state resources. In other
words,
the measures in question must appear as the
result of behaviour attributable to the State or must
involve state resources.

(109) On the one hand, the 1998 cap was introduced under a
contract between the French State and La Poste that is
described by France as being ‘special arrangements
for
the 1990 Law’. The 2006
applying the provisions of
reform has a law as its basis. The measures in question
can, therefore, be attributed to France.

(105) France presented its comments on the observations made
by interested parties on 27 February 2007. It takes the
view that the observations in question are not such as to
call into question the analysis showing that the planned
measures, as described in the notification and in the
numerous intervening exchanges with the Commission,
do not contain any State aid element. It is thus of the
opinion that the third parties have been unable to come
up with any pertinent arguments and have simply
restated the doubts which were
expressed in the
decision to initiate the procedure and which France
claims to have demonstrated were unfounded.

(110) On the other hand, the measures examined are liable to
result in a waiver of financial resources by the State since
La Poste no longer guarantees the financial equilibrium of
the arrangements for the civil servants working for it. It
is settled case law that the waiver by the public autho-
rities of certain tax or other revenues constitutes a state
resource (34). Accordingly,
in question
involve state resources.

the measures

(34) Case T-67/94 Ladbroke v Commission [1998] ECR II-1, paragraph

109.

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6.1.2. Effect on trade

the Treaty (35)

(111) The Commission takes the view that the markets on
which the La Poste group operates have been largely
opened up to intra-Community trade as a result,
among other things, of Council Directive 88/361/EEC
of 24 June 1988 for the implementation of Article 67
of
(free movement of capital), Second
Council Directive 89/646/EEC of 15 December 1989
on the coordination of laws, regulations and administra-
tive provisions relating to the taking up and pursuit of
the business of credit institutions and amending Directive
77/780/EEC (36) (freedom of establishment) and Directive
97/67/EC (Postal Directive). The La Poste Group Financial
Report 2005 states that:

(i) 64,5 % of
markets;

turnover was generated on competitive

(ii) 15,2 % of turnover was generated on international
markets (outside France), compared with 14,1 % in
2004.

(112) The financial report referred to also underscores the
group's capacity to expand on markets that have been
opened up in France and Europe.

(113) Similarly, in his reply to the Court of Auditors' report on
La Poste in 2003 (37), the Chairman of La Poste explained
that ‘the group will press ahead with its internationali-
sation in order to take account of the opening up of
markets
largest
customers. This
in the mail,
parcels and express mail sectors are resorting increasingly
to European calls for tenders. The group must be in a
position to respond.’

is because companies

internationalisation of

and the

its

(114)

In this context, it is sufficient to point out that markets
on which La Poste operates have a cross-frontier
dimension and that La Poste
competing with
companies established in other Member States and with
French companies active on these markets at interna-
tional level.

is

(35) OJ L 178, 8.7.1988, p. 5.
(36) OJ L 386, 30.12.1989, p. 1. Directive repealed by European
Parliament
and Council Directive 2000/12/EC (OJ L 126,
26.5.2000, p. 1). Directive 2000/12/EC has itself been replaced
by European Parliament and Council Directive 2006/48/EC of
14 June 2006 relating to the taking up and pursuit of
the
business of credit institutions (recast) (OJ L 177, 30.6.2006, p. 1).
(37) Les comptes et la gestion de La Poste (1991-2002), October 2003.

(115) The measures in question make life more difficult for
Community operators wishing to expand in France.

(116) Since the measures in question strengthen the position of
La Poste vis-à-vis other competing operators in the
Community, the Commission takes the view that they
affect trade between Member States and are liable to
distort competition between operators.

(117) The fact that certain activities of La Poste are covered by
a statutory monopoly does not alter this conclusion.
liberalisation under way since 1998
Given the gradual
and on the eve of full
liberalisation of postal services,
the risk of trade being affected is foreseeable (38), even for
activities currently covered by a monopoly, especially as
such activities, together with competitive activities (e.g.
express mail), use common industrial processes in the
production system at La Poste. Moreover, the monopo-
listic activities may also compete — indirectly — with
competitive non-postal
electronic
messaging (‘e-substitution’) (39) or fax.

such as

activities

6.1.3. Existence of a selective advantage for La Poste

(118)

to ascertain whether

the measures under
In order
it needs to be
scrutiny contain elements of state aid,
determined whether they confer an economic advantage
on La Poste in that they allow it to avoid costs that
would normally have had to be borne by its own
financial
resources and have thus prevented market
forces from producing their normal effect (40).

(119) Aid consists

in the mitigation of charges normally
included in the budget of an undertaking,
taking
account of the nature or general scheme of the system
of charges in question. Conversely, it could be possible to
define a concept of ‘special charge’ which would consist
in an additional charge over and above those normal
charges (41). The withdrawal of such a special charge by
way of a legislative provision would not grant any
advantage to the beneficiary and would not, therefore,
constitute State aid.

(38) The La Poste Group Financial Report 2005 thus refers to ‘the
prospect of a total opening up to competition in 2009’ as one
element in the development plan for each sector.

(39) ‘The EU postal sector is curently undergoing significant changes
including gradual market opening, the rapid growth and falling
electronic media …’
costs of
(Commission staff
working document, Accompanying document to the proposal for
a Directive of the European Parliament and the Council amending
Directive 97/67/EC concerning the full accomplishment of
the
services — Executive
internal market of Community postal
Summary of
(SEC(2006) 1292 of
Impact Assessment
the
18 October 2006).

substitutive

(40) Case C-301/87
paragraph 41.

France

v

Commission

[1990]

ECR I-307,

(41) Case 390/98 H.J. Banks & Co. Ltd v The Coal Authority and Secretary

of State for Trade and Industry [2001] ECR I-6117.

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(120) Like the Court's case law regarding selectivity analysis (42),
which involves a comparison with a reference framework
in order to determine whether differential treatment of
certain undertakings and products is in conformity with
the ‘nature or general scheme of the system’, the decision
to be taken in what is, from a structural viewpoint, a
normal market situation as to whether a charge is
‘normal’ or ‘special’ has to be based on a reference
framework or comparator with a view to identifying
undertakings which would be in a legal and factual
situation that
the
light of
comparable
objective pursued by the measures in question (43).

in the

is

(121) As a preliminary observation, it should be pointed out
that the reform does not envisage any equalisation of the
retirement rights of the civil servants concerned with
those of the employees of La Poste's main competitors.
Similarly,
the staff concerned are, by definition, civil
servants, who retain their special status, whereas the
employees of La Poste's main competitors are covered
by private-law contracts. And so the objective pursued
by the measures under
strictly
speaking, concern the system of charges set up by the
they concern
different
retirement
the
private-law employees or civil
objective is wider-ranging, namely to create a level
playing field between La Poste and its competitors,
taking into account among other things the fact that
some of La Poste's employees are civil servants that
have been assigned to it.

scrutiny does not,

schemes, whether

servants.

Instead,

(122)

In theory, there could be several reference frameworks:
the situation of La Poste's competitors, the situation of
other public undertakings, the pension scheme applicable
to state civil servants, or France Télécom (see Section
this kind is
6.1.3.1).
appropriate, the reference framework for the existence
the advantage would then be the situation of La
of
Poste itself prior
the measures
to the granting of
(Section 6.1.3.2).

If no exogenous comparator of

(123) Lastly,

in response to the doubts expressed in the
decision to initiate this procedure, the Commission will
also examine whether or not charges incurred by La
Poste that have been mitigated correspond overall
to
an ‘abnormal’ charge or to a ‘structural disadvantage’
within the meaning of the case law of the Court of
First Instance (Section 6.1.3.3).

(42) Case C-143/99 Adria-Wien Pipeline GmbH and Wietersdorfer &

Peggauer Zementwerke [2001] ECR I-8365, paragraph 41.

(43) This is also a response to an observation by […] to the effect that,
if the charge relating to the employment of civil servants is to be
assessed as an ‘abnormal’ charge, all the advantages and disad-
vantages associated with the employment of those civil servants
need to be taken into account. The Commission would also
in practice, this would be impossible.
make the point here that,

6.1.3.1. A b s e n c e o f a n e x o g e n o u s

c o m p a r a t o r

(124)

It would be very difficult for the Commission to identify
operators who would be in a legal and factual situation
comparable to that of La Poste in respect of the estab-
lishment of a level playing field, notably as regards the
retirement scheme.

and

public

commercial

(125) Turning first to La Poste's competitors, these are private-
law companies operating on competitive markets,
whereas La Poste has a status similar to that of an
industrial
establishment
(EPIC) (44) with a statutory monopoly (45). The fact too
that La Poste's
employees under
competitors have
private-law contracts while the comparison deals speci-
fically with civil servants working for La Poste means that
they cannot be regarded in the context of an analysis of
the existence or otherwise of an advantage within the
meaning of Article 87(1) of the Treaty as being in a
comparable legal and factual situation with regard to
the objective of the measures. It should be pointed out
that, as indicated in paragraphs 25 et seq., the retirement
arrangements for the civil servants flow from a scheme
that is legally distinct and quite separate from the scheme
for the private-law employees. In any event, this means
that, with regard to the wider objective of creating a level
playing field between them, La Poste and its competitors
must clearly be regarded as being in different factual and
legal situations.

(126) Accordingly, La Poste's competitors could not be used as
a comparator in the analysis which the Commission
would have to carry out in order to determine whether
or not an advantage within the meaning of Article 87(1)
of the Treaty existed.

(127) That said, the Commission would point out that such a
comparator will clearly be appropriate for examining the
compatibility of any aid measures under review in the
light of Article 87(3)(c) of the Treaty when the distortion
of competition on the relevant markets is assessed in
greater detail.

tasks of

(44) In France a distinction in principle is made within public estab-
(EPAs),
lishments between administrative public establishments
which perform the traditional
the administration, and
industrial and commercial public establishments (EPICs), which
engage in activities of an economic nature. A number of public
establishments have not been classified by the law as either EPAs or
EPICs. Such is the case with La Poste. However,
the Court of
Cassation,
ruling of 18 January 2001 (second civil
chamber), accepted the principle whereby La Poste is treated as
an EPIC. See Commission recommendation of 4 October 2006
proposing the adoption of appropriate measures regarding the
State's unlimited guarantee in favour of La Post (Case E 15/2005).
(45) The tariffs applicable are fixed according to principles laid down by
Directive 97/67/EC.
the Directive
stipulates that prices must be geared to costs and that Member
States may decide that a uniform tariff
should be applied
throughout their national territory.

In particular, Article 12 of

in its

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7.3.2008

(128) The Commission has

attempted to identify other

comparators.

(129) One theoretical comparator would have been the pension
scheme for civil servants set up under the Code for
Civilian and Military Retirement Pensions. However, this
scheme could not as such apply to factual circumstances
similar to those encountered by La Poste. For example,
state civil servants do not, as a rule, work in market
sectors such as those where La Poste operates.

(130) Among the EPICs, to which La Poste is similar by virtue
of its status, the Commission has been unable to identify
economic operators forming a homogeneous group that
could act as comparator. Only a very few EPICs,
including the Office National des Forêts and the Monnaie
de Paris, have features
in common with La Poste.
However, these disparate features would not suffice to
constitute a coherent comparator.

the view that
(131) Consequently,
neither
pension
arrangements for state civil servants would constitute
relevant comparators in this case.

the Commission takes
nor

establishments

public

the

(132)

under

only
also civil

In addition, the Commission has looked into the possi-
bility of comparing La Poste and France Télécom. The
1990 Law converted the former Direction Générale des
Télécommunications into two legal persons governed by
public law: La Poste and France Télécom. Although it
private-law
individuals
not
employs
contracts but
France Télécom
became a limited listed company in 1996. It would no
longer be in a comparable legal and factual situation in
the light of the objective of the measures under review.
What
the rules
applicable to France Télécom with regard to social
security contributions and tax payments is the subject
of a complaint to the Commission, and the Commission
cannot, in the present decision, prejudge its ruling in that
case.

the compatibility of

is more,

servants,

[…]

(133) To sum up, the Commission is of the opinion that no
exogenous comparator exists that would make it possible
to define a ‘normal’ contribution for undertakings in a
legal and factual situation comparable to that of La Poste
in the light of the objective pursued by the measures
under review.

for

(air

that

a measure

ruling states

the Enirisorse

(135) Neither the Commission Decision in Sabena/Swissair (46)
nor
ruling, both of which have been
referred to by France, affects the Commission's findings
as to the existence of an advantage for La Poste. The
a
Sabena/Swissair
particular sector
transport) and not a particular
undertaking is a general economic policy measure. The
sectoral and not individual (i.e. limited to a single under-
taking) nature of
represents a major
the measure
difference with the case of La Poste in that, among
other things, it allowed the Commission to identify an
exogenous comparator, namely the scheme for social
security contributions applied to the other sectors of
Belgian industry. Similarly, in Enirisorse, the Court bases
its conclusion on a comparison of the measure at issue
with a ‘normal situation’ (47), which the Commission was
able to define but which does not exist in similar form in
the present case.

(136)

In ascertaining the existence of an advantage within the
meaning of Article 87(1) of the Treaty, the Commission
should, therefore, examine the situation of La Poste and
compare social security contributions and tax payments
prior to and following the measures under review.

6.1.3.2. S i t u a t i o n o f L a P o s t e p r i o r t o a n d
f o l l o w i n g t h e m e a s u r e s u n d e r
r e v i e w

(137) The social security contributions and tax payments made
prior to the measures under review are those stipulated
In the absence of an exogenous
in the 1990 Law.
comparator,
reference
framework for determining the existence or otherwise
of an advantage.

they would

constitute

the

(138) With the 1998 cap,

the ‘employer's’
contribution in respect of the pensions of civil servants
working for La Poste was reduced by an amount that
France itself put at […] over the period 1998-2006.

the amount of

(139) One of the effects of the 2006 Law has been to replace
La Poste's contribution by a contribution in full discharge
of any liabilities that aligns the retirement costs borne by
La Poste on those of its competitors. Without this Law,
the level of the ‘employer's’ contribution would, in the
years ahead, continue to rise significantly, notably as a
result of the deterioration in the ratio of those in work
(contributors) to those not in work (benefit recipients)
following the decision by La Poste to halt recruitment
of civil servants in spite of the positive effects of the cap.

(134) Had the Commission been able to fund a relevant
exogenous comparator for identifying the existence of
‘abnormal’ costs,
the measures under scrutiny might
not have constituted State aid if certain conditions
relating in particular to calculation of
the TEC had
been met.

(140) The Commission thus notes that

the measures under
review relieve La Poste of charges which it would have
had to bear under the 1990 Law.

(46) Letter SG(95) D/9783 of 25 July 1995.
(47) See paragraph 48 of the ruling.

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Official Journal of the European Union

L 63/35

(141)

the normal or abnormal nature of
In an analysis of
retirement costs for La Poste itself,
the Commission
takes the view that the liabilities a company itself bears
under employment legislation or collective agreements
redundancy benefits
to provide
with trade unions
and/or early retirement pensions are part of the normal
costs of a business which a firm has to meet from its
own resources (48).

(145)

(142) By extension,

that

the Commission concludes

the
retirement costs borne by La Poste under the 1990
Law are normal costs (49). And so, since the measures
under
that
review would relieve La Poste of costs
would normally have had to be financed from its own
confer on the
financial
operator
of
Article 87(1) of the Treaty.

resources,
an

advantage within

these measures

the meaning

(143) The advantage in question is selective since it concerns
only La Poste. In the absence of any exogenous reference
framework, this restriction is not justified by the nature
and general scheme of the system under review.

6.1.3.3. E x i s t e n c e o f a n a b n o r m a l c h a r g e /

i n i t i a t i o n o f

t h e p r o c e d u r e

its

itself

finds

competitors

in the wake of a reform,

(144) The decision to initiate the procedure discusses in detail
the Combus ruling, in which the Court of First Instance
seems to regard as ‘abnormal’ charges resulting from the
exceptional status of the personnel of an undertaking
which,
in a
situation governed by ordinary law and thus identical
regards personnel
to that of
as
Instance states ‘The
management. The Court of First
measure in question had been introduced to replace the
privileged and costly status of the officials employed by
Combus with the status of employees on a contract basis
comparable to that of employees of other bus transport
undertakings competing with Combus. The intention was
thus to free Combus from a structural disadvantage it
competitors.
had in relation to its private-sector
Article 87(1) EC is
at prohibiting
advantages for certain undertakings and the concept of
aid covers only measures which lighten the burdens
normally assumed in an undertaking's budget and
which are to be regarded as an economic advantage
recipient undertaking would not have
which the
[…].
under
obtained
instead of paying the DKK 100 million
Moreover,
directly to the officials employed by Combus,
the
Danish Government could have obtained the same

normal market

aimed merely

conditions.

result by reassigning those officials, without paying any
particular bonus, which would have enabled Combus to
employ immediately employees on a contract basis
falling under private law.’ (50).

In general, it must first be recalled that the Combus ruling
has not been confirmed by the Court of Justice. Certain
points in its case law contradict the assumption that
compensation for a structural disadvantage would rule
out any classification as aid. For instance, it has consis-
tently ruled that the existence of aid was to be assessed
in relation to the effects and not the causes or objectives
of state intervention (51). It has also maintained that the
concept of aid covers advantages granted by the public
authorities that,
in various forms, mitigate the charges
normally included in the budget of an undertaking (52).
the costs linked to
It has also clearly indicated that
employee pay naturally place a burden on the budgets
those
of undertakings,
costs
collective
agreements (53).
it has ruled that
state measures aimed at compensating for additional
costs cannot exclude them from being categorised as
aid (54).

irrespective of whether or not
obligations

In this connection,

stem from legal

or

(146) However, France emphatically calls for application of the
principle laid down by the Court of First Instance in
Combus, stating that the notified reform simply relieves
La Poste of an ‘abnormal’charge. The Commission must
point out that material factors distinguish the Combus
case from the present case, including the following:

(i) The compensation is paid direct to the civil servants
employed by Combus whereas the measures under
scrutiny in this decision concern the ‘employer's’
contributions made by La Poste.

(ii) The Commission takes the view that,

to re-integrate

in practice,
France would not be able
the
180 000 civil servants working for La Poste into
the
civil
France
servants working at La Poste have no fundamental
or automatic right to ‘return’ to the administration.
They belong to the category defined by their special

administration.

comments

that

(50) See Combus, referred to above, paragraph 57.
(51) Case 173/73, Italy v Commission [1974] ECR 709, paragraph 13;
Case C-310/85 Deufil v Commission [1987] ECR 901, paragraph 8;
Case C-241/94 France
ECR I-4551,
v Commission
paragraph 20.

[1996]

(52) Case C-387/92 Banco Exterior [1994] ECR I-877, paragraph 13;

(48) See paragraph 63 of the Community guidelines on State aid for

Case C-241/94, referred to above, paragraph 34.

rescuing and restructuring firms in difficulty.

(49) Such a conclusion would not perhaps have been drawn if an
exogenous comparator could have been identified. However, this
has not been possible in connection with the examination of any
selective advantage within the meaning of Article 87(1) of the
Treaty.

(53) Case C-5/01 Belgique v Commission [2002] ECR I-1191, point 39.
(54) Case 30/59 Gezamenlijke Steenkolenmijnen in Limburg v Haute Autorité
[1961] ECR 3, points 29 and 30; Case C-173/73, referred to above,
points 12 and 13; Case C-241/94, referred to above, points 29 and
35; Case C-251/97 France v Commission [1999] ECR I-6639, points
40, 46 and 47.

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7.3.2008

of

professional

status. They are not, therefore, eligible a priori to
work outside La Poste and, at the same time, there
is no way of compelling them to do so. What is
more, re-integrating 180 000 civil servants poses
qualifications. One
problems
obstacle to any re-integration that is emphasised by
France has to do with the existence of available posts
requiring equivalent qualifications. This is a problem
specific to La Poste. The qualification structure of
civil servants working for La Poste differs signifi-
cantly from that of civil servants in public adminis-
tration. The majority of civil servants working for La
Poste
posts,
whereas the needs of state, regional and local admin-
istrations correspond primarily to executive posts
requiring higher-level qualifications.

non-executive

low-skilled

occupy

(iii) The relevant state measure in the Combus case was
designed to replace the privileged and costly status of
civil servants working for Combus by contract agent
status comparable to that of employees of other bus
transport companies competing with Combus. By
contrast,
servants
the status and rights of civil
working for La Poste remain unchanged as a result
of the measures under review (55). That status and
the
those
employees
for
companies competing with La Poste.

from those of
law working

are different
private

under

rights

of

La

Poste's

competitors,

Incidentally, as regards the allegedly ‘privileged and
costly’ status of civil servants working for La Poste
compared with the employment conditions of the
employees
the
Commission has carried out a comparison based
on the balance-sheet
figures published by two
banks (56) between those banks' aggregate wage
costs and the aggregate wage costs of civil servants
working for La Poste. The findings show that average
aggregate wage costs at the banks in question are
most likely higher than (or at least equal to) the
servants
average
working for La Poste. Questioned on this point,
France acknowledges that it does not have access
to reliable and relevant information on the average
costs of an employee working on a contract basis for
La Poste's competitors (57).
then carries out an

aggregate wage

costs of

civil

It

(55) This is an essential difference from the Commission Decision of
28 March 2003 in Case N 483/2000 — Netherlands, Sale Ingenieur-
bureau Zuid-Holland (OJ C 5, 8.1.2002, p. 2), referred to in the
decision to initiate the procedure and in which the financial
compensation paid by the Dutch authorities was paid to the
employees who lost their status as provincial civil servants and
their entitlement to the associated employment conditions.
(56) The two banks concerned are Crédit agricole and BNP-Paribas.
(57) France also puts forward general arguments regarding the different
nature of the activities of La Banque Postale as compared with the
large all-purpose banks
investment and
financing acitivities and have a greater presence at the upper end
of the retail banking sector). However, these factors are not quan-
tified by France and, as a result, no unequivocal conclusion can be
drawn from the arguments put forward.

(which also conduct

La

this

Poste

law for

seniority,

approximation in an attempt to demonstrate that,
given equal
the average cost of civil
servants working for La Poste exceeds the average
cost of ‘similar’ employees working on the basis of
contracts of indeterminate duration (CDIs), whether
in the ‘mail/parcels’ sector or in the banking sector.
The approximation is based on the assumption made
the average cost of an employee
by France that
working under private
is
comparable to that of an employee of a competitor
in the same sector. The Commission takes the view
since
that
it
assumption is unacceptable
disregards fundamental elements of
the definition
of wages, and in particular the effects associated
with the employer's image. With a positive image,
and for example, with the ability to offer long-term
career prospects, La Poste would thus be able to pay
lower wages than competitors that did not have the
same image. This is why, without ruling the possi-
bility out, the Commission considers that France has
not convincingly demonstrated that
the status of
servants working for La Poste was both
civil
‘privileged
the
employment conditions of employees of La Poste's
competitors.

compared with

costly’

and

its

(iv) The competitive background in which Combus was
operating differed from that for La Poste. Combus
had to conduct
transport business on a
commercial basis and operate on a market under
conditions of competition comparable to those for
private bus companies. After a tendering procedure,
public transport companies divest their bus transport
operations to private and public undertakings. Under
the tendering rules, the contracts are awarded to the
‘economically most advantageous bid’, irrespective of
the private or public nature of the tenderer. La Poste
has a wide-ranging monopoly where economic
constraints operate differently.

(147) The Commission considers that the factual differences
issue are

between the Combus case and the case at
sufficient to justify a different reasoning in each case.

(148) Lastly, the ‘intrinsic’ approach proposed by France is not
deemed appropriate by the Commission,
in particular
because of the characteristics of the (closed) population
of civil servants concerned and the recent establishment
of the undertaking. This view is, in any case, shared by
France. Moreover,
the calculations made by France
compare the real costs incurred by La Poste (including
therefore the 1998 cap) with those it would have
it had
incurred if, when set up on 1 January 1991,
brought in a new retirement scheme that provided the
same benefits but was
funded. According to the
Commission, this comparison is far too hypothetical to
permit any relevant conclusions to be drawn as to the
nature of the aid measures under review.

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6.1.4. Distorting the conditions of competition

(149) The measures under review confer a selective economic
advantage since only one undertaking, La Poste (58),
is
involved. In principle, such measures threaten to distort
the conditions of competition (59).

6.1.5. Conclusion

(150)

In the light of the relevant case law, including Combus, it
follows that the measures in question constitute State aid
within the meaning of Article 87(1) of the Treaty.

6.2. Unlawful nature of the aid

(151) The 1998 cap was

the
Commission prior notification. It is therefore unlawful.

imposed without

giving

(152) The Commission would point out here that

the cap
produced effects both on liberalised markets and on
activities covered by a statutory monopoly. La Poste
did not,
therefore, engage exclusively in monopolistic
activities (60). The cap cannot, therefore, be regarded as
existing aid.

(153) The 2006 reform was notified to the Commission. Its
implementation has been suspended insofar as La Poste is
still paying the ‘employer's’ contribution resulting from
the 1998 cap. The 2006 reform has not, therefore, been
carried out.

6.3. Compatibility of
common market

the aid measures with the

General framework for examining the compatibility of
the aid measures under review

(154) The derogations provided for in Article 82(2) of

the
Treaty in respect of aid having a social character that is
granted to individual consumers, aid to make good the
damage caused by natural disasters or exceptional occur-
rences and aid granted to the economy of certain areas of
the Federal Republic of Germany are clearly irrelevant in
the case under consideration.

(155) As regards the derogations provided for in Article 87(3)
of
the aid
the Commission notes
measures in question are not designed to promote the
economic development of areas where the standard of

the Treaty,

that

(58) Two undertakings, La Poste and France Télécom, applied the
retirement arrangements
laid down by the 1990 Law. The
arrangements applicable to France Télécom were amended in
1996-1997. As a result, only La Poste applied the arrangements
set out in the 1990 Law.

(59) Case C-126/01 GEMO S.A. [2003] ECR I-13769, paragraph 33.
(60) See
Joined Cases T-298/97, T-312/97, T-313/97, T-315/97,
T-600/97 to 607/97, T-1/98, T-3/98 to T-6/98 and T-23/98
Alzetta Mauro v Commission [2000] ECR II-2319, paragraph 147.

living is abnormally law or where there is serious under-
employment, that they do not constitute a project of
they are not aimed at
European interest and that
remedying
French
a
economy. Nor are they designed to promote culture or
heritage conservation.

disturbance

serious

the

in

(156)

It should be examined whether the measures can be
to
declared compatible by the Commission pursuant
Article 87(3)(c) of the Treaty, which states that aid to
facilitate the development of certain economic activities
or of certain economic areas may be declared compatible
with the common market where such aid does not
adversely affect trading conditions to an extent contrary
to the common interest.

(157) The Commission would also point out that France has
not invoked Article 86(2) of the Treaty as justification for
the compatibility of the aid granted to La Poste.

Analysis of the effects of the aid measures — intensity
of the distortion of competition

(158)

(159)

the Commission
the compatibility of

In view of the nature and effects of the reform, which
aligns the contributions made by La Poste on those of its
the
competitors,
assessment of
the aid measures
must be carried out with regard to the establishment of
a level playing field for social security contributions and
tax payments between La Poste and its competitors in the
mail/parcels and financial services sectors, which make
up the bulk of La Poste's activities (61).

considers

that

of

of

the

distortion

competition,

In order to analyse the effects of the aid and to assess the
the
intensity
Commission must first examine the level of contributions
paid by La Poste as compared with its competitors,
taking into account the commitments given by France.
then see what would have
The Commission will
happened if La Poste had not
received the aid in
question. The positive effects of the aid will then be
examined,
It will
then be possible to take overall stock of the situation.

together with their negative effects.

Level of contributions paid by La Poste

(160) The Commission has

looked very

closely

at

the

mechanism for calculating the TEC.

(61) Since La Poste has no discretion in the matter and given the overall
comparable nature of the benefits paid under the general scheme
and those under the arrangements for civil servants (in particular,
Law No 2003-775 of 21 August 2003 on the reform of retirement
pensions provides for the period of insurance required in the civil
service in order to receive a full retirement pension to be aligned on
the general scheme), the Commission considers that comparison of
the benefits offered by the scheme in question is
irrelevant.
Moreover, such a comparison is not possible since it would take
into account indirect and uncertain factors such as comparison of
the advantages and disadvantages of employing civil servants as
opposed to employees under private law. Be that as it may, the
real
issue in terms of competition is to analyse what affects the
accounts of La Poste relative to its competitors, viz. the contri-
butions payable.

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(161) As a preliminary remark, it must first be pointed out that
the ordinary-law arrangements for La Poste's contri-
butions has two differentiating features:

(i) the discharging or non-discharging effect of

the

contributions;

(ii) the amount of the contributions.

social

regards

in principle, exposed. However, the very logic of the
reform planned by France is to establish a level
playing field between La Poste and its competitors
as
security contributions and tax
payments, irrespective of the differing status of civil
servants and employees under private law. Moreover,
even if
(see
paragraph 146),
individual measures, with civil
servants working for La Poste moving to a public
administration, are not impossible, leaving La Poste
with some flexibility in managing the civil servants
assigned to it (64), as is the case with France Télécom.

large-scale mobility seems ruled out

(162) On the first point,

in a pay-as-you-go scheme an
employer governed by ordinary law pays contributions
in full discharge of its liabilities. La Poste does not pay
any such contributions but is required by the 1990 Law
to ensure the equilibrium of its retirement scheme for
cap imposed in 1998 on the
civil
servants. The
contribution
maximum amount of
regardless of
in a
more fundamental way, the 2006 Law have the effect
of putting in place a contribution in full discharge of
liabilities.

the rate of contribution and then,

‘employer's’

the

(163) The aid measures in question thus resolve the first
and the

scheme

difference between the La Poste
ordinary arrangements.

(164) On the second point, the Commission has verified that
the NPV of the future financial flows under the 1990
Law is higher than the NPV for future financial flows
the adjusted TEC (62).
resulting from application of
Without the aid, La Poste would therefore have had to
pay higher
the ordinary
arrangements.

contributions

than under

(165) The Commission would also note that the establishment
of a genuinely level playing field with La Poste's compe-
titors required two adjustments to the TEC:

(i) Extension of
security risks

the basis of calculation to all social

In the notification (63) calculation of
the TEC is
restricted to the common risks,
thereby excluding
in particular the unemployment risk and the risk of
non-payment of wages in the event of a company
becoming insolvent or being wound up, these being
risks to which, with their status, civil servants are not,

(62) What is more, since 1998 La Poste has paid aggregate contributions
higher than those that would have resulted from the adjusted TEC.
(63) See in this connection Annex 2 (‘Comparison of the wage contributions
servants and for ordinary-law employees’) and Annex 3
contributions La Poste/private-law

for
(‘Comparison of
employer's
employer’) in the decision to inititate the procedure.

civil

the

The Commission takes the view that these arguments
justify inclusion of all the social security risks in the
TEC. The commitments entered into by France (see
paragraph 98) are a satisfactory response to the
Commission's observations.

(ii) Most accurate calculation possible for alleviating the
and the

costs between the mail/parcels
financial services sector

sector

view that, unlike

The notified TEC did not include the share of general-
purpose staff
that was re-invoiced to La Banque
Postale in the financial services sector since France
servants
took the
assigned to the resources department, these general-
purpose employees do not have specific banking
training or skills and since their number, geogra-
phical location, training and career development are
defined by La Poste.

civil

the

However, as far as the Commission is concerned, the
fact
that general-purpose employees also perform
financial activities (e.g. at the counter) means that
the breakdown of costs between the mail/parcels
sector and the financial services sector must be
based on the most accurate figures available. The
commitment
(see
paragraph 100) to include in the annual calculation
of the TEC the share of general-purpose employees
re-invoiced to La Banque Postale in the banking
sector on the basis of the figures from La Poste's
analytical accounts (65) is therefore satisfactory.

authorities

French

the

by

(64) Even though the implementing decrees have not yet been adopted,
Law No 2007-148 of 2 February 2007 on the modernisation of the
civil service is designed to remove certain regulatory obstacles
resulting from the statutory assignment rules and to lay down for
La Poste arrangements
to those applicable to France
Télécom. France is of the opinion that the conditions laid down
by the Law should ensure that any movements of civil servants
working for La Poste to a public administration are ‘limited in
number’.

similar

(65) The Commission Decision of 21 December 2005 on the measures
involved in setting up and operating La Banque Postale (letter
C(2005) 5412) endorsed the system for assigning La Poste's costs
to La Banque Postale in the analytical accounts.

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The share of the financial services sector in the TEC is
thus increased from […] % to […] % of the wage and
salary bill.

(166) Following the adjustments made by France to the calcu-
lation of the TEC, the mechanism in question is able to
equalise the levels of wage-based social security contri-
butions and tax payments between La Poste and the
other undertakings in the ‘mail/parcels’ sector and in
the banking sector covered by the ordinary social
security arrangements. However, the transitional period
2006-2010 announced by France in the notification
must not enable La Poste to pay a level of contribution
lower than the adjusted TEC.

Scenario without the granting of aid

(167)

In the absence of the reform, La Poste would have had to
create provisions in its accounts after the financial year
2006 for the retirement liabilities of the civil servants
working for it. This provisioning would have resulted
directly the fact that the ‘employer's’ contributions for
the retirement pensions of civil servants working for La
Poste were not in full discharge of its liabilities.

(168)

In the absence of the aid, La Poste's contributions would
not be aligned on those paid by its competitors. Conse-
quently, La Poste would be handicapped and would be
unable to compete on its merits on the liberalised
markets (e.g. in financial services or express mail).

(169)

In the absence of the reform, La Poste would have had to
ensure that its contributions were financed in an appro-
priate manner each year, and this would involve an addi-
tional annual cost of several hundreds of millions of
euros as compared with the reform arrangements (66).
Nevertheless, the Commission takes the view that these
additional costs (not borne by competitors) are not such
that they would have obliged La Poste to cut back its
activities in the sectors open to competition both within
and outside the scope of SGEIs.

(170) A substantial proportion of

the costs in question is
linked to SGEIs, and this should, in principle, enable La
Poste to be compensated for the corresponding addi-
tional costs (67). Moreover, the contributions for activities

(66) In 2005, for example, the difference between the amount payable
under the 1990 Law and the adjusted TEC as reconstituted is […].
For 2010 Standard & Poor's estimates the saving for La Poste at
EUR 700 million.

(67) The State aid rules governing public service compensation prohibits
over-compensation. It is also pointed out that the maintenance of
reserved services appears justified on the grounds of ensuring the
operation of
financially balanced
conditions (see recital 16 to Directive 97/67/EC).

service under

the universal

not falling within the scope of SGEIs would not have any
material
impact on the activities planned by La Poste.
The contributions in question are fixed costs, and this
means that they are not such as to affect La Poste's
future
commercial decisions,
investment decisions. The fixed costs are borne by La
Poste, irrespective of the investment project in question.

and in particular

its

(171) The circumstances under which the level of contributions
could significantly affect La Poste's activities are either the
exceptionally high amount of the contributions, which
could oblige La Poste to move out of the market, or a
major increase in the cost of capital.

(172) Given its situation,

there does not seem to be any

material risk of La Poste going into receivership (68).

(173)

In theory, the possibility of the additional contributions
payable each year by La Poste seriously affecting its
balance sheet, something which could have affected the
operator's terms of financing on account of a higher cost
of capital, cannot be ruled out absolutely. However, this
seems highly unlikely in view of the arguments set out
above and the changes,
in market conditions
if any,
would a priori not be significant.

Positive effects of the aid measures

(174) The liberalisation of the postal sector has been under way
since 1998 (69). The imposition of
the cap and the
reform of the retirement arrangements applicable to La
Poste are important stages in adapting the undertaking to
progressive liberalisation and with a view to the full
liberalisation of the French postal market (70). It is also
acknowledged that the liberalisation of postal markets at
Community level has an important role to play in the
Lisbon Strategy for Growth and Employment (71). From a
more political viewpoint but still
in relation to the
Community interest, the Commission considers that the
liberalisation of the postal sector could be made more
difficult if plans to reform retirement schemes, such as
the one being examined here, were not approved.

(68) See, for example, the rating given by Standard & Poor's in April

2007 to La Poste.

(69) In 1998 liberalisation in the mail sector was limited to letters
weighing more than 350 g and costing less than five times the
public tariff applicable to an item of correspondence in the first
weight step of the fastest standard category (where such category
exists). In 2003 the weight limit was reduced to 100 g and the
price to less than three times the public tariff and then in 2006 to
50 g and the price to less than two and a half times the public
tariff.

(70) Similarly, in the Commission Decision in Case N 405/2005, Greece
— Financial contribution to voluntary early retirement scheme of OTE
(OJ C 151, 29.6.2006, p. 2), the Commission took the view that
the implementation of the scheme (VRS) was a necessary stage in
the continuing privatisation of the undertaking.

(71) See, for example, recitals 5 and 6 to the proposal for a European
Parliament and Council Directivve amending Directive 97/67/EC
concerning the full accomplishment of
the internal market of
Community postal services (COM(2006) 594, 18.10.2006).

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(175) The point should be made here that

the retirement
arrangements applicable to La Poste under the 1990
Law have specific characteristics (including the non-
discharging effect of the ‘employer's’ contribution of La
Poste and the level of the contribution, which is higher
than that paid by competitors) which, taken individually,
distort competition to the detriment of La Poste. The
main effect of
the aid measures under review is to
align La Poste's contributions on those incurred by its
competitors, thereby eliminating the distortion of compe-
tition specific to La Poste.

(176) The Commission also takes the view that the measures in
question are tailored to the Community interest
in
question. No other instrument could have been more
effective.
In the sectors with an SGEI, public-service
compensation could indeed have been granted but such
an approach would not be sustainable over the long term
because of the structural nature of the problem.

(177)

In addition, the cap and then the reform helped La Poste
to act more and more as a private investor operating
under normal commercial constraints. A number of
measures already adopted, such as the recruitment of
employees under private law (instead of civil servants),
have now been implemented with this objective in mind.

(181) On the basis of a static analysis,

the Commission

considers that:

(i) the distortions of competition are, by nature, very
limited in the reserved sectors, where there are no
direct competitors: Given the past history of La Poste
and its
large
is
a
proportion (72)
off-balance-sheet
liabilities relate to activities in the reserved sector;

activities,
of

evident
2006

it
the

that

services market,

from which La

(ii) on the postal markets that have already been liber-
the
alised and on the financial
financial
Poste has
resources
benefited as a result of the measures under review
in theory, deter competitors from entering
could,
those markets (exclusion):
In the financial services
sector, La Banque Postale has 10,7 % of the retail
banking market
its activities are far
from diversified. The Commission takes the view
that the measures would have only a limited effect
here, particularly if the special distribution right for
livret A were to be abolished (73). The shares of La
Poste on the already liberalised postal markets (such
as express mail) may be significant to the extent that
the measures in question may have had an impact on
competitors. Nevertheless, since pension charges are a
fixed cost, the real impact should be limited.

(2005) but

(178) As to the proportionality of the measures, the aid granted
is limited to the strict minimum since all the relevant
contributions are included in the calculation of
the
adjusted TEC.

(182) On the basis of a dynamic analysis, in particular for the
markets that are now in the reserved sector but will
normally be opened up to competition in the years
ahead, the Commission takes the view that:

(179) Lastly, the measures under review, even though they do
not concern special arrangements for the benefits paid to
retirees, provide sustainability for a financing mechanism
that past developments had rendered obsolete. The
Commission considers that the measures are, therefore,
to be seen in the more general framework of the reform
of retirement schemes in Member States, which has the
support both of the Council and of the Commission.

Negative effects of the aid measures

(180) The relevant products and markets can be classified

according to whether they belong to:

(i) the reserved postal sectors covered by a statutory
monopoly (such as letters weighing less than 50 g);

(ii) the non-reserved postal sectors (such as express

mail);

(iii) the non-postal sectors,

including financial services,

which have long since been liberalised.

(i) the measures in question could, in theory, enable La
Poste to retain a dominant position. However, the
Commission regards this as a low risk since the
measures simply align the contributions paid by La
Poste on those paid by its competitors and no
abnormal financial advantage has been gained by La
Poste from its monopoly (74);

(72) France is unable to provide an accurate figure because, for example,
staff who acquire pension rights have careers which see them move
from the reserved sector to a liberalised sector and analystical
accounting is not designed to follow the activity of staff on the
basis of a civil servants/employees breakdown but to keep separate
accounts for reserved and non-reserved sectors.

(73) Commission Decision of 10 May 2007 on the special rights to
distribute livret A or livret bleu (C(2007) 2110) gives France nine
months in which to discontinue this distribution system.

(74) Even if the 2006 results show an improvement, La Poste's financial
situation is not
flourishing. During the period 1991-2005 the
profit-turnover ratio averaged only 0,5 %. In the reserved sector it
was 6,8 % in the period 2000-2004 although the Commission has
accepted as a normal level of profitability a much higher ratio in
the Post Office Limited case, where distribution activities overlap in
part with the activities of La Poste. Moreover, no private investor
would have built a network similar to the postal network, which is
not financially viable and is maintained only because of the SGEI
assigned to La Poste and the public-service compensation paid by
the State (Standard & Poor's points out here that the network
losses of EUR 350 million
operated by La Poste makes annual
despite compensation of EUR 130 million in the form of
tax
exemptions).

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(ii) even if the exceptional flat-rate contribution referred
to by France does, in fact, constitute an advance on
the payment of
linked to the
the contributions
adjusted TEC,
the payment of EUR 2 billion in
2006, which was possible only because of a loan,
is detrimental
structure.
According to Standard & Poor's, La Poste promised
the State that it would restore by 2010 the financial
structure that obtained in 2005,
in particular by
the revenue accruing
assigning to debt repayment
from the pension reform. This affects the financial
situation of La Poste at a crucial time, on the eve
of the full liberalisation of the postal sector.

to the group's

financial

Conclusions

(183)

It
the
follows from the foregoing observations that
negative effects of the aid granted to La Poste will be
modest.

(184) Since, given the commitments entered into by France, the
measures are limited to what
is strictly necessary to
establish a level playing field for social security contri-
butions and tax payments and put an end to a distortion
of competition that was a handicap for La Poste, they do
not affect trading conditions to an extent contrary to the
common interest. Consequently, the Commission is of
the opinion that
in question are
the aid measures
compatible with the common market and that no addi-
tional compensatory measures are needed.

6.4. Additional comment: the ‘EDF’ precedent

(185) By Decision 2005/145/EC in the EDF

case,

resulting

from the

the
Commission authorised State aid that relieved the under-
takings in a particular sector of specific pension liabilities
which exceeded those
general
retirement arrangements and which had been defined
during the monopoly period. It also took the view that
the partial mitigation of
the costs arising from the
mechanism for
financing the specific pension rights
acquired before the date of the reform constituted State
aid within the meaning of Article 87(1) of the Treaty that
could be declared compatible with the common market.
In its
the Commission
the situation of EDF was not very
concluded that
‘stranded costs’
different
in
in fact, designed to
the energy sector. The aid was,
facilitate the transition to a competitive energy sector.
The Commission deemed it appropriate to treat the aid
for EDF as
and
announced that
it would take this approach in its
analysis of similar cases.

intrinsically from that of

compensation for

stranded costs

analysis of

accounts,

the

(186)

In the EDF decision, the aid concerned only activities
traditionally carried out in a monopoly situation. This
is not so in the present case, which concerns both the
reserved sector and the liberalised sector. EDF and La
Poste are not, therefore, entirely similar cases. However,
in an analysis along the lines of the stranded costs meth-
odology, the decision to initiate the procedure explains:
‘The Commission is unable, however, to conclude that
the measures are necessary to garner fully the benefits of
the postal services market. Such
the liberalisation of
reasoning can be deployed if
the Commission is
assured that La Poste is actually in a situation comparable
to that of its competitors.’

(187) The Commission has now established that:

(i) La Poste no longer recruits civil servants;

(ii) the adjusted TEC places La Poste in a situation of
competitors as
tax
and

fairness vis-à-vis
security

its
contributions

social

competitive
regards
payments;

(iii) the obligations resulting from the 1990 Law prior to
the liberalisation of the postal sector would have
affected La Poste's competitiveness in an environ-
ment undergoing liberalisation.

(188) Accordingly, the Commission takes the view that the aid
measures in question relieve La Poste of specific pension
liabilities which exceeded those
resulting from the
ordinary pension arrangements and which had been
defined during the monopoly period.

6.5. No provisioning for retirement liabilities from

2007

(189) The Commission notes that La Poste entered the pension
liabilities for civil servants as an off-balance-sheet item in
the annual accouts up to 2006. If the contribution had
not been recognised as being in full discharge of
its
liabilities, La Poste would have had to make provision
for the corresponding liabilities in the balance sheet as of
2007. This is a normal unexceptional application of
international
accounting standards provided for by
European Parliament and Council Regulation (EC) No
1606/2002 of 19 July 2002 on the application of inter-
national accounting standards (75). The lack of provi-
sioning does not,
therefore, constitute State aid. Nor
does it involve in itself state resources over and above
those provided by the measures in question.

(75) OJ L 243, 11.9.2002, p. 1.

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7. CONCLUSIONS

Article 2

(190) The cap imposed in 1998 and the reform of the pension
arrangements for civil servants working for La Poste
under Article 150 of the Amending Finance Law 2006
constitute State aid that is compatible with the common
market, provided that:

(i) the TEC calculated each year includes in the ‘financial
services’ category the proportion of general-purpose
staff re-invoiced to La Banque Postale on the basis of
the detailed figures taken from the analytical accounts
of La Poste;

(ii) the TEC takes in all social security contributions and
tax payments, including the AGS and unemployment
contributions, the exceptional solidarity contribution
and the cost of benefits self-insured by La Poste,

The competitively fair rate (‘TEC’) calculated each year in
1.
order to determine the amount of the ‘employer's’ contribution
in full discharge of liabilities, which is referred to in Article 150
include in the
of
‘financial services’ category the proportion of general-purpose
staff re-invoiced to La Banque Postale on the basis of
the
detailed figures taken from La Poste's analytical accounts.

the Amending Finance Law 2006, must

The TEC must include all the social security contributions
2.
and tax payments,
including the AGS (Wage Guarantee
Insurance Association), the unemployment contributions, the
exceptional solidarity contribution and the cost of benefits
self-insured by La Poste.

Article 3

France shall
inform the Commission, within two months of
notification of this Decision, of the measures taken to comply
with it.

HAS ADOPTED THIS DECISION:

Article 1

The cap imposed in 1998 on the repayment by La Poste of
retirement pensions paid by the State to civil servants working
the pension
and the notified reform of
for La Poste
arrangements for the said civil servants under Article 150 of
the Amending Finance Law 2006 constitute State aid that is
compatible with the
the
conditions set out in Article 2 are met.

common market provided that

Article 4

This Decision is addressed to the French Republic.

Done at Brussels, 10 October 2007.

For the Commission

Neelie KROES
Member of the Commission