CELEX: 62006CC0162
Language: en
Date: 2007-05-08
Title: Opinion of Mr Advocate General Poiares Maduro delivered on 8 May 2007. # International Mail Spain SL v Administración del Estado and Correos. # Reference for a preliminary ruling: Tribunal Supremo - Spain. # Directive 97/67/EC- Common rules for the development of the internal market in postal services - Liberalisation of postal services - Possibility to reserve cross-border post to the universal postal service provider’ to the extent necessary to ensure the maintenance of universal service’. # Case C-162/06.

OPINION OF ADVOCATE GENERAL
      M. POIARES MADURO
      delivered on 8 May 2007 (1)
      
      Case C‑162/06
      International Mail Spain SL
      v
      Administración del Estado
      and
      Correos
      (Reference for a preliminary ruling from the Tribunal Supremo (Spain))
      (Postal services – Cross-border mail – Assessment criteria – Financial balance of the universal service provider)1.     The Third Chamber in plenary session of the Chamber for Contentious Administrative Proceedings of the Tribunal Supremo (Supreme
         Court, Spain) has referred a question to the Court concerning the interpretation of Article 7(2) of Directive 97/67/EC of
         the European Parliament and of the Council of 15 December 1997 on common rules for the development of the internal market
         of Community postal services and the improvement of quality of service, (2) in the version before its amendment by Directive 2002/39/EC of the European Parliament and of the Council of 10 June 2002.
         (3)
      
      I –  The legal background, the facts of the dispute and the question referred for a preliminary ruling 
      2.     Article 7(2) of Directive 97/67 authorises the maintenance of a reserved service in the following terms:
      ‘…
      2.      To the extent necessary to ensure the maintenance of universal service, cross-border mail and direct mail may continue to
         be reserved within the price and weight limits laid down in paragraph 1.
      
      ...’.
      3.     Article 18(1)(C) of Law 24/1998 of 13 July 1998 on the universal postal service and the liberalisation of postal services,
         (4) which transposed Directive 97/67, states in the version in force at the material time: 
      
      ‘1.      Under Article 128(2) of the Constitution and under the conditions laid down in the next chapter, the following services, which
         are included in the universal postal service, are reserved exclusively to the universal postal service provider: 
      
      … 
      (C)      the incoming and outgoing cross-border postal service for letters and postcards, with the weight and price limits established
         in paragraph (B). For the purposes of this Law, cross-border postal service means the service beginning or ending in other
         States’.
      
      4.     Under Article 41(2)(b) of Law 24/1998, ‘supplying postal services reserved to the universal postal service provider, without
         its authorisation, undermining the latter’s supply of the service’ constitutes a very serious infringement. Article 41(3)(a)
         states that ‘the following are considered as serious infringements: (a) the infringements covered by points (a) to (i) of
         paragraph 2 above where they are not committed in circumstances which would enable them to be categorised as very serious’.
      
      5.     Since 1988, International Mail Spain SL (formerly TNT Express Worldwide Spain SL) provided outgoing cross-border postal services
         for postcards collected in the main Spanish tourist locations. For this purpose, letterboxes had been placed in hotels, camping
         sites, apartment blocks, supermarkets and so forth to collect postcards being sent abroad which were stamped with adhesive
         labels which could be purchased at the same points of sale as the postcards.
      
      6.     The Secretaría General de Comunicaciones (Ministerio de Fomento) (Secretariat-General of Communications, Ministry of Development)
         took the view that the provision of those services constituted a serious infringement of administrative law pursuant to Article
         41 of Law 24/1998. By decision of 16 June 1999, it imposed a fine of ESP 10 million (approximately EUR 60 100) on International
         Mail Spain SL and ordered it to cease offering and supplying such services.
      
      7.     International Mail Spain SL brought an action before the Chamber for Contentious Administrative Proceedings of the Tribunal
         Superior de Justicia de Madrid (High Court of Justice, Madrid). The Tribunal Superior de Justicia de Madrid dismissed the
         action on 6 June 2002, holding, inter alia, that Law 24/1998 complies with Directive 97/67. International Mail Spain SL brought
         an appeal before the Tribunal Supremo which, on 7 March 2006, referred the following question for a preliminary ruling:
      
      ‘Does Article 7(2) of Directive 97/67 … , which authorises Member States to include cross-border mail in the reserved postal
         services, allow them to establish that reservation only in so far as they are able to prove that, without it, the economic
         equilibrium of the universal service provider is at risk, or, instead, does it also allow them to retain it for other reasons,
         among them reasons of expediency, relating to the overall situation in the postal sector, including the degree of liberalisation
         in that sector at the time the reservation is decided?’
      
      8.     The Tribunal Supremo considered that, if Article 18(1)(C) of Law 24/1998 infringed the conditions laid down in Article 7(2)
         of Directive 97/67, the fact that private operators did not comply with the provision of Spanish legislation could not give
         rise to the administrative penalty imposed.
      
      9.     In order to have a complete picture of the context within which the question referred by the Tribunal Supremo has arisen,
         it may be useful to bear in mind that the content of Article 7(2) of Directive 97/67 has been reworded (and placed in Article
         7(1)) by Directive 2002/39 as follows:
      
      ‘...
      To the extent necessary to ensure the provision of universal service, for example when certain sectors of postal activity
         have already been liberalised or because of the specific characteristics particular to the postal services in a Member State,
         outgoing cross-border mail may continue to be reserved within the same weight and price limits.
      
      ...’ .
      II –  Analysis
      A –    Admissibility
      10.   The Kingdom of Spain expressly pleaded the inadmissibility of the referral made by the Tribunal Supremo. It is possible to
         distinguish two grounds of inadmissibility raised by the Kingdom of Spain: (i) the request for a preliminary ruling is framed
         incorrectly, appearing to concern the assessment of the validity of a national legislative act; and (ii) the question referred
         serves no purpose and is hypothetically constructed.
      
      11.   The Spanish Government claims in its observations that, in the present case, by referring the question or questions at issue
         to the Court for a preliminary ruling, the Tribunal Supremo is asking the Court to assess whether Article 18(1)(C) of Law
         24/1998 on postal services complies with Directive 97/67, or whether it goes beyond the limits laid down by that directive.
      
      12.   To my mind, that plea does not seem convincing. Let us simply recall that, ‘whilst the Court does not have jurisdiction under
         Article 234 EC to apply the rules of Community law to a particular case or to judge the compatibility of provisions of national
         law with those rules, it may provide a national court with all the elements relating to the interpretation of Community law
         which may be useful to it in assessing the effects of the provisions of that law’. (5) The Court is called upon to provide an interpretation of Community law and to provide the national courts with all the elements
         necessary for determining whether the provision of national legislation is compatible with Community law.
      
      13.   The Kingdom of Spain also claims that the question – or, if preferred, the two questions – referred for a preliminary ruling
         are inadmissible because they serve no useful purpose in deciding the dispute before the referring court and, moreover, they
         are hypothetically constructed. That argument cannot be upheld, either. 
      
      14.   The Court has pointed out on a number of occasions that an approach consistent with the division of jurisdiction as between
         the Court and the national courts presupposes that, ‘in the context of the cooperation between the Court of Justice and the
         national courts provided for by Article 177 of the Treaty, it is solely for the national court before which the dispute has
         been brought, and which must assume responsibility for the subsequent judicial decision, to determine in the light of the
         particular circumstances of the case both the need for a preliminary ruling in order to enable it to deliver judgment and
         the relevance of the questions which it submits to the Court’. (6) Accordingly, as the questions referred by the Tribunal Supremo concern the interpretation of a provision of Community law,
         the Court is, in principle, required to give a ruling. (7)
      
      15.   In fact, the line of reasoning proposed by Spain, according to which the question is inadmissible because the reply of the
         Court of Justice is not capable in itself of deciding the dispute before the referring court, could prompt the question: in what situations would a reference for a
         preliminary ruling be admissible? The outcome of the dispute in the main proceedings always depends on a judgment based on
         the facts and on the national legal rules, which is the responsibility of the national court. The fact that a reply given
         by the Court of Justice does not, in itself, enable a ruling to be given in the dispute before the referring court does not
         mean that it may not be necessary and useful for those purposes. To my mind, the reference is therefore admissible.
      
      B –    Interpretation of Article 7(2) of Directive 97/67
      16.   The question referred by the Spanish court concerns the interpretation of the wording of Article 7(2) and, in particular,
         the definition of the parameters delimiting the possibility, provided for in Directive 97/67, of reserving certain services,
         including ‘cross-border mail’, to the universal service provider. 
      
      17.   The Tribunal Supremo wishes to know whether Directive 97/67 must be interpreted as meaning that the Member States may allow
         the reservation of services only if they establish that, in the absence of such a reservation, the financial balance of the
         universal service provider would be in danger, or if they may also retain the reservation on the basis of other considerations,
         particularly considerations linked to expediency or to the general situation of the postal sector, including the degree of
         liberalisation of that sector at the time when the decision to reserve certain services is taken. 
      
      18.   The positions of the interveners can be summarised as follows. On the one hand, the applicant (International Mail Spain SL)
         and the Commission of the European Communities have argued for a strict interpretation of Article 7(2) of Directive 97/67.
         According to the Commission, Article 7(2) must be interpreted as meaning that the reservation of services is permitted only
         in so far as is necessary to ensure the operation of the universal service in balanced financial conditions. In order to determine
         this need, it is necessary to take into account, inter alia, the degree of liberalisation of the postal service and the specific
         characteristics of the various national postal services.
      
      19.   On the other hand, the Spanish and Belgian governments both interpret Article 7(2) of Directive 97/67 more broadly, contending
         that it is possible for the Member States, for the purposes of the allocation of reserved services, to act on the basis of
         considerations linked to the general situation on the postal services market, such as the degree of liberalisation of the
         sector or the specific characteristics of the postal services of a Member State, in accordance with the guidance provided
         by Directive 2002/39. According to the Kingdom of Spain, Directive 2002/39 allows the choice as to whether or not to reserve
         the services listed in Article 7 to the universal service provider to be made on the basis of an assessment of expediency
         undertaken by the Member States (and not linked simply to the maintenance of financial balance).
      
      20.   First, as regards the dichotomy between financial balance and other considerations to be taken into account, it must be stated
         that – contrary to what the question may suggest – there is not necessarily any contradiction between them. As will subsequently
         be examined, what is important is to determine the conditions in which the other considerations may be taken into account.
         The key lies in the interpretation of the concept of ‘necessary for maintenance of the universal service’ and its relationship
         with the concept of the financial balance of the universal service provider.
      
      Legal assessment 
      21.   The postal sector has been subject to a progressive process of opening up and liberalisation of the market. That development
         was regulated, for the first time, by an instrument of secondary legislation: Directive 97/67. The possibility, provided for
         in Article 7 of that directive, of reserving certain services constitutes an exception to the application of fundamental rules
         of the Community legal order laid down in the EC Treaty. Exceptions must be narrowly construed. (8) Furthermore, it is clear that Directive 97/67 cannot introduce a framework of rules different from the framework provided
         for in the Treaty. Recital (41) in the preamble to Directive 97/67 states that: ‘this Directive does not affect the application
         of the rules of the Treaty, and in particular its rules on competition and the freedom to provide services’.
      
      22.   The progressive nature of the liberalisation process is revealed clearly in Recitals (8) and (19) in the preamble to Directive
         97/67. According to Recital (8), ‘measures seeking to ensure the gradual and controlled liberalisation of the market and to
         secure a proper balance in the application thereof are necessary in order to guarantee, throughout the Community, and subject
         to the obligations and rights of the universal service providers, the free provision of services in the postal sector itself.’
         Recital (19) continues in the same vein: ‘it is reasonable to allow, on an interim basis, for direct mail and cross-border
         mail to continue to be capable of reservation within the price and weight limits provided; … as a further step towards the
         completion of the internal market of postal services, a decision on the further gradual controlled liberalisation of the postal
         market, in particular with a view to the liberalisation of cross-border and direct mail as well as on a further review of
         the price and weight limits, should be taken …’. 
      
      23.   Article 7 of Directive 97/67 provides for the possibility of reserving, ‘[t]o the extent necessary’ certain services, inter
         alia (as indicated in Article 7(2)), that of cross-border mail, within the price and weight limits laid down in that directive.
         By the same token, Recital (42) in the preamble to Directive 97/67 clearly states that ‘nothing shall prevent Member States
         from maintaining in force or introducing measures for the postal sector which are more liberal than those provided for by
         this Directive, nor, should this Directive lapse, from maintaining in force measures which they have introduced in order to
         implement it, provided in each case that such measures are compatible with the Treaty.’
      
      24.   That clearly goes to show that Directive 97/67 establishes the limits within which restrictions on competition which are compatible
         with Community law may be introduced in the postal sector; the point submitted to the Court for clarification concerns the
         exact interpretation of the expression used in the directive: ‘[t]o the extent necessary to ensure the maintenance of universal
         service’. The reply seems to me to be provided by the provisions of the directive itself and by its recitals, preference being
         given to the interpretation which renders the provision of secondary legislation consistent with the Treaties. (9)
      
      25.   Directive 97/67 provides a finalised framework for the general liberalisation of the postal services market and the body of
         rules which it lays down does not allow the Member States to limit the application of the competition rules set out in the
         Treaty. Recital (16) in the preamble to Directive 97/67 is very explicit in that regard, stating that ‘the maintenance of
         a range of those services that may be reserved, in compliance with the rules of the Treaty and without prejudice to the application
         of the rules on competition, appears justified on the grounds of ensuring the operation of the universal service under financially
         balanced conditions’. This makes it clear that the directive envisages a very strict link between the operation of the universal
         service and the provision of reserved services; those reserved services play an ancillary role in the maintenance of the universal
         service, that of enabling it to operate in a state of ‘financial balance’. (10)
      
      26.   From the wording of Directive 97/67, it is clearly necessary to assess, first, the need to guarantee the economic and financial
         balance of the supply of the universal service. It is important to note that there is no need for the economic viability of
         the undertaking entrusted with the general interest objective to be in danger for it to be permissible to reserve certain
         services to the universal service provider, if that reservation proves necessary in order to guarantee the economic and financial
         balance of the supply of the universal service; it is necessary only to enable the universal service provider to carry out
         its task and fulfil its obligations in economically acceptable conditions, so that the maintenance of the universal service
         is ensured. The reserved rights must be granted only in terms of the needs of the universal service. The concept of financial
         balance must be understood by reference to the maintenance of the universal service as such, not – as has also been suggested
         in the reference for a preliminary ruling – by reference to the service provider. 
      
      27.   The obligations imposed by the universal service, which entail costs for the provider, must be offset by the benefits guaranteed
         by the grant of exclusive rights in the form – in the case envisaged by Article 7 of Directive 97/67 – of services reserved
         to the universal service provider. According to that view, it may prove useful and acceptable to allow the universal service
         provider to offset less profitable sectors against the profitable sectors. (11) The aim is to avoid what is called ‘skimming’ by the competitor who is not subject to the obligations arising from universal
         service, that is to say, the practice of concentrating on sectors of economic activity, within those covered by the universal
         service, which are financially profitable. The competitors of the universal service providers may have more competitive prices
         for the simple reason that, unlike the universal service provider, they are not obliged to use the profits gained in the profitable
         sectors to cover, in whole or in part, the losses suffered in the non-profitable sectors. (12)
      
      28.   Through the mechanism of allocating reserved services, the States ensure that the undertaking providing the universal service
         is able to achieve its goal (with regard only to the obligations arising from the universal service) in economically acceptable
         conditions. That is to say, the allocation of reserved services is permitted only in cases where the reservation of profitable
         activities is necessary to offset the costs of carrying out unprofitable activities, thus guaranteeing financially balanced
         conditions. That allocation of reserved rights must not ‘adversely effect the conditions of competition’, as Recital (28)
         in the preamble to Directive 97/67 makes clear. This means that cross-subsidies from the reserved sector to the non-reserved
         sector must not adversely affect the conditions of competition in the non-reserved sectors for undertakings which have not
         been granted special rights.
      
      29.   Linking the granting of reserved services to the maintenance of the universal service, rather than the financial balance of
         the undertaking providing the services, means ensuring that special rights are granted in accordance with an objective criterion
         closely linked to the costs imposed by the universal service. The use of that objective criterion will lead either to the
         allocation of reserved services to offset the costs entailed in carrying out the task of providing a universal service, even
         though such compensation is not essential for the economic survival of the undertaking supplying the service, or, on the contrary,
         it will serve to prevent, in principle, the reservation of services which are not strictly necessary in order to offset financially
         the costs imposed by the provision of the universal service, but which are designed rather to ensure the economic viability
         of the universal service provider.
      
      30.   In the first situation, where there is no risk to the economic viability of the universal service provider, the offsetting
         brought about by means of reserved services serves the purpose of not putting that undertaking in an economically unfavourable
         position by comparison with other undertakings which are not required to discharge the obligations arising from the provision
         of the universal service. Indeed, without compensation for the provision of non-profitable services within the universal service,
         undertakings would have no economic incentive to carry them out, and consequently, the very survival of the universal service
         would be placed in jeopardy.
      
      31.   In the second situation, the aim is to prevent States from continuing to finance inefficient undertakings indirectly and thereby
         to distort competition on the market, in so far as the undertakings benefiting from reserved services are in competition with
         other undertakings in the sectors left open to competition. However, although it is necessary, in principle, to distinguish
         between the financial balance of the universal service and the financial balance of the undertaking providing the service,
         it cannot be ruled out that in certain cases the objectives underlying the maintenance of the universal service may be closely
         linked to ensuring the survival of the universal service provider. Besides, such a concern also explains the progressive nature
         of liberalisation in the sector. In that case, it must be possible to reserve certain services according to the need to ensure
         the viability of the provider, whether or not there is a close link with the costs arising from the provision of the universal
         service.
      
      32.   To make it possible to verify the link between the granting of reserved services and the financial balance of the universal
         service provider, Directive 97/67 makes the granting of reserved services conditional upon full financial transparency enabling
         verification to be made, at any moment, of the need to allocate special rights and to derogate from the rules of the Treaty.
         Furthermore, the provision of transparent accounting rules (Articles 12 to 15) confirms this by requiring the figures relating
         to reserved services to be kept strictly separate in the accounts from those relating to non-reserved services, and, as far
         as the accounts of non-reserved services are concerned, by requiring the services which are part of the universal service
         to be kept strictly separate from those which are not.
      
      33.   That interpretation of Article 7 of Directive 97/67, which concerns the possibility of reserving the outgoing cross-border
         mail, does not change with the new version of that article in Directive 2002/39 (except that it becomes stricter). Under the
         re-worded provision introduced by the latter directive, it is possible to continue to reserve cross-border mail ‘to the extent
         necessary’ and, for example, ‘when certain sectors of postal activity have already been liberalised or because of the specific
         characteristics particular to the postal services in a Member State’. In fact, that provision gives only examples relating
         to factors capable of affecting the achievement of the general interest service in a state of financial balance. They are
         useful indicators to guide the assessment relating to the allocation of the special rights as well as the reservation of services.
         Those factors must be taken into account in so far as they have an effect on the economic viability of the universal service.
      
      34.   Some light is shed by Recital (16) in the preamble to Directive 2002/39, as well as by the process for the adoption of that
         directive, on the reference to further factors for the purposes of assessing whether reservations are compatible with Community
         law. 
      
      35.   The first proposal drafted by the Commission, which envisaged the complete liberalisation of the service, did not provide
         for the possibility of reserving outgoing cross-border mail. It was only after the intervention of the European Parliament
         (13) that the wording of the proposal for the thoroughgoing amendment of Directive 97/67 started to consider the possibility of
         a reservation for cross-border mail services as plausible. 
      
      36.   Recital (16) in the preamble to Directive 2002/39 is clear about the exceptional nature of the possibility of reserving cross-border
         mail: ‘opening outgoing cross-border mail fully to competition with possible exceptions to the extent necessary to ensure
         the provision of universal service, represent relatively simple and controlled further phases which are nevertheless significant’.
         Accordingly, in order to emphasise more strongly that the reservation of cross-border mail must be regarded as an exception
         – justified only in order to ensure the financial balance of the universal service – that provision sets out factors to be
         taken into account at the time of assessing the need to reserve the cross-border service.
      
      37.   It is clear, in the context of the progressive liberalisation of the postal market, that the ensuring of the financial balance
         of the universal service must be approached progressively, and that the various levels of liberalisation mean different contexts
         and different economic situations for the undertakings responsible for the universal service. The reduction of the number
         of reserved sectors and the opening up of this field to competition could, in theory, reinforce the relative importance of
         the grant of monopolies in certain sectors of activity in order to ensure the financial balance of the universal service provider.
         An increase in the areas subject to competition could produce, in fact, an increase in the risk of financial instability for
         the universal service provider. On the other hand, the reference made to the specific characteristics of postal services in
         a Member State is understandable because the characteristics of the cross-border service differ from one Member State to another,
         reflecting the varying economic impact of the outgoing cross-border mail service and of its costs. As a consequence of those
         differences in the structural and economic characteristics of the national postal services, the assessments of the need for
         a reservation in order to preserve the economic balance will perforce vary widely according to the Member States concerned.
      
      38.   In the light of the foregoing, it is possible to conclude that Article 7(2) of Directive 97/67 must be interpreted as meaning
         that the condition to be fulfilled for the allocation of reserved services is to be understood as being designed to ensure
         the financial balance of the universal service task as defined by that directive itself. Considerations regarding the general
         situation of the postal sector and the level of liberalisation may be taken into account in so far as they are relevant for
         the purposes of determining the need to reserve certain services in order to ensure the provision of a universal service in
         financially balanced conditions. The discretion of the State, as regards the reservation of services, is limited by the responsibility
         incumbent upon it to show the need for reserved services in order to safeguard a financial balance in the carrying out of
         the supplies of services covered by universal service.
      
      III –  Conclusion
      39.   In conclusion, I propose that the Court give the following answer to the national court’s question:
      Article 7(2) of Directive 97/67/EC of the European Parliament and of the Council of 15 December 1997 on common rules for the
         development of the internal market of Community postal services and the improvement of quality of service, as originally worded
         and after its amendment by Article 1(1) of Directive 2002/39/EC of the European Parliament and of the Council of 10 June 2002,
         must be interpreted as meaning that Member States are authorised to reserve cross-border mail services to one or more universal
         service providers in so far as is necessary to ensure the operation of the universal service in financially balanced conditions.
      
      1 –	Original language: Portuguese.
      
      2 –	OJ 1998 L 15, p. 14.
      
      3 –	OJ 2002 L 176, p. 21.
      
      4 –	BOE [1998] No 167, p. 23473.
      
      5 –	Case 128/88 Di Felice [1989] ECR 923, paragraph 7, and Case C-181/00 Flightline [2002] ECR I-6139, paragraph 20.
      
      6 –	See Cases C-415/93 Bosman [1995] ECR I-4921, paragraph 59, and Flightline, paragraph 21.
      
      7 –	See my opinions of 1 March 2007, in the Joined Cases C-222/05, C-223/05, C-224/05, C-225/05  Van der Weerd and Others [2007] ECR I-0000, paragraph 12, and Cases C-231/89 Gmurzynska‑Bscher [1990] ECR I-4003, paragraph 20; C-412/93 Leclerc‑Siplec [1995] ECR I-179, paragraph 11; C-358/93 and C-416/93 Bordessa and Others [1995] ECR I-361, paragraph 10; C-167/01 Inspire Art [2003] ECR I-10155, paragraph 44, and C-144/04 Mangold [2005] ECR I-9981, paragraph 35.
      
      8 –	See Case 410/04 ANAV [2006] ECR I-3303, paragraph 26 and Case C-26/03 Stadt Halle and RPL Lochau [2005] ECR I-1, paragraph 46.
      
      9 –	Case 218/82 Commission v Council [1983] ECR 4063, paragraph 15 and Case C-135/93 Spain v Commission [1995] ECR I-1651, paragraph 37..
      
      10 –	The same concept of ‘financial balance’ was used by the Court, with regard to the postal services sector, in Case C-320/91
         Corbeau [1993] ECR I-2533, and in Case C-340/99 TNT Traco [2001] ECR I-4109.
      
      11 –	Corbeau, paragraph 17 and TNT Traco, paragraph 55.
      
      12 –	See the Opinion of Advocate General La Peregola in Joined Cases C-147/97 and C-148/97 Deutsche Post [1999] ECR I-825, point 27.
      
      13 –	Legislative Resolution on the Opinion of the European Parliament on the Proposal of the Commission (OJ 2001 C 232, p. 244,
         287).