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A Model of the Transformation Process of Statutory Monopolies in European Community Law: From Practice to Theory

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Abstract

This article proposes a model of the transformation process of statutory monopolies in European Community (EC) Law, on the basis of the liberalisation of the markets which has taken place in the past ten years. Despite discrepancies between the paths chosen for the various public utilities’ sectors, EC institutions, including the Court of Justice of the European Communities, have pursued a policy, which they have constantly refined, regarding the transformation of statutory monopolies, regardless of its legal basis in the EC Treaty. After first defending a very far-reaching approach in favour of total liberalisation, EC institutions have adopted a more balanced attitude towards statutory monopolies. This is reflected in a four-tier transformation programme, which comprises both a functional and a structural transformation.

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References

  1. See, e.g., P. Wachsmann, Les monopoles publics (Unpublished PhD, University of Strasbourg 1982) p. 28; L. Rapp, Techniques de privatisation des entreprises publiques (Paris: Librairies Techniques 1986) 78.

  2. See, e.g., P.A. Franck, “Les entreprises visées aux articles 90 et 37 du traité CEE”, in: Collège d’Europe, L’entreprise publique et la concurrence (Bruges: Collège d’Europe 1969) 47; R. de Beaumont, L’aménagement des monopoles d’Etatfrançais visés par l’article 37 du traité de Rome (Paris: LGDJ 1964) 114; A. de Laubadère and P. Delvolvé, Droit public économique (Paris: Dalloz 1986)216.

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  3. Note that in EC Law, the concept of “undertaking” (an entity engaged in an economic activity) and the concept of “company” (public and/or private limited companies governed by EC Company Law Directives) are not equivalent, the former being wider than the latter. The present article, however, will use both concepts interchangeably.

  4. Case C-41/90 Höfner and Elser v. Macrotron [1991] ECR I-1979, para. 21 [emphasis added]; Joined cases C-159/91 andC-160/91 Poucet and Pistre, [1993] ECR I-637, para. 17;Case C-364/92 SAT FluggesellschaftmbH v. Eurocontrol, [1994] ECR I-43, para. 18 [emphasis added].

  5. Criteria used to define an economic activity range from the requirement that the activity, in principle, be operated by private persons (although this criterion is not always used) to the requirement that there be an offer of goods and services on a market. For a detailed analysis of the case law of the ECJ in this respect see V. Kronenberger, Le monopole des alcools en Finlande: exemple de la mutation des monopoles publics en droit communautaire (Lille: Presses Universitaires du Septentrion 1999) pp. 73–125.

  6. See Case C-41 /90 Höfner and Elser, supra n. 4; however, this is presented as a criterion providing further evidence by the Court of First Instance (CFI) in T-128/98 Aéroports de Paris v. Commission, 12 December 2000, nyr, para. 124.

  7. Cf. C-364/92 SAT Fluggesellschaft mbH v. Eurocontrol, [1994] ECR I-43, para. 30, and Case C-343/95 Diego Calì, [1997] ECR I-1547, para. 23.

  8. Joined Cases C-159/9I and C-160/91 Poucet and Pistre, [1993] ECR I-637, para. 18; a contrario, Case C-244/94 Fédération Française des sociétés d’assurance v. Ministère de l’agriculture et de la pêche, [1995] ECR I-4013, para. 19.

  9. Case C-275/92 Her Majesty’s Customs and Excise v. G. Schindler and J. Schindler, [ 1994] ECR I-1 039.

  10. Ibid., para. 16. This argument was put forward by Belgium, Germany, Ireland, Luxembourg and Portugal and was rejected by the Court.

  11. Cf. Case 41/83, Italy v. Commission (“British Telecommunications”), [1985] ECR 873.

  12. Cf. Case T-128/98 Aéroports de Paris v. Commission, supra n. 6. See infra section 2.2.1.

  13. White Paper on the achievement of the internal market, COM (85) 310 final (6 June 1985).

  14. Regulation (EC) 2887/2000 of the European Parliament and the Council of 18 December 2000 on unbundled access to the local loop, OJ(EC) [2000] L 336/4. Note that this is the first time that a Regulation is adopted as a liberalisation instrument in this sector.

  15. See respectively, Directive 97/67 on common rules for the development of the internal market of Community postal services, OJ(EC) [1998] L 15/14; Directive 91/440 on the development of Community’s railways, OJ(EC) [1991] L 237/25, as amended by Directive 2001/12/EC, OJ(EC) [2001] L 75/1, and its two “daughter” directives, i.e., Directive 95/18 on the licensing of railway undertakings, OJ(EC) [1995] L 143/70, as amended by Directive 2001/13/EC, OJ(EC) [2001 ] L 75/26 and Directive 95/19 on the allocation of railway infrastructure and the charging of infrastructure fees, OJ(EC) [1995] L 143/75, replaced by Directive 2001/14/EC on the allocation of railway infrastructure capacity and the levying of charges for the use of railway infrastructure and safety certification, OJ(EC) [2001] L 75/29; Directive 96/92 concerning common rules for the internal market in electricity, OJ(EC) [1997] L 27/20; and Directive 98/30 concerning common rules for the internal market in natural gas, OJ(EC) [1998] L 204/1. A proposal to amend these two Directives was presented by the Commission in March 2001: see COM (01) 125 final.

  16. In this respect, one should mention the request by the European Council, during its meeting in Lisbon on 23–24 March 2000, to “speed up the liberalisation in areas such as gas, electricity, postal services and transport”: see Presidency conclusions, para. 17, at <http://ue.eu.int/en/Info/eurocouncil/index.htm>

  17. Cf. Case C-202/88 France v. Commission, [1991] ECR I-1223 and ECJ, joined Cases C-271/90, C-281/90 and C-289/90 Spain v. Commission, [1992] ECR I-5833.

  18. Article 16 EC reads as follows: “Without prejudice to Articles 73, 86 and 87, and given the place occupied by services of general economic interest in the shared values of the Union as well as their role in promoting social and territorial cohesion, the Community and the Member States, each within their respective powers and within the scope of application of this Treaty, shall take care that such services operate on the basis of principles and conditions which enable them to fulfil their missions.” See for comments on this provision: S. Rodrigues, “Les services publics et le traité d’Amsterdam: genèse et portée juridique du nouvel article 16 du traité CE”, 414 Revue du Marché commun et de l’Union européenne (1998) 37; M. Ross, “Article 16 EC and services of general interest: from derogation to obligation?”, 25 ELRev. (2000) 22. Note that this provision is not applicable to the EFTA States, either to those which are Contracting Parties to the European Economic Area (EEA) Agreement or to Switzerland. This provision, together with Article 36 of the Charter of Fundamental Rights of the European Union, proclaimed at the European Council of Nice in December 2000 (see OJ(EC) [2000] C 364/1), is described as being the “expression of a fundamental value inherent to EC law”: see the opinion of Advocate General Alber delivered on 1 February 2001 in case C-340/99 TNTTraco SpA v. Poste Italiane, delivered on 17 May 2001, nyr, para. 94.

  19. See, S. Dessalas and S. Rodrigues, “Marché unique et Services publics: la Cour poursuit sa quête de l’équilibre. A propos de l’arrêt de la CJCE du 23 octobre 1997 Commission c. France relatif aux monopoles d’importation et d’exportation d’EDF et de GDF”, 20 Petites Affiches (1998) 9; V. Kronenberger, “Les monopoles publics et le droit communautaire: entre neutralisation et justification”, 53–54 JTDE (1997) 193.

  20. Similar provisions exist in the EEA Agreement concluded between the Community, its Member States and the EFTA Member States, except Switzerland, in May 1992, in force since 1 January 1994. These provisions are Article 16 EEA in respect of state trading monopolies and Articles 36 (services), 54 (dominant position) and 59 (undertakings entrusted with exclusive or special rights) in respect of statutory monopolies on services.

  21. In connection with the issue of a consistent approach of EC law towards statutory monopolies, one should mention the statements made in 1990 by P.J.G. Kapteyn and P. Verloren van Themaat who wished to see “legal monopolies in the telecommunications field adjusted in a similar manner to State trading monopolies”. According to these authors, “such a view, based on similar grounds to those mentioned in Article 37 EEC would fit with the scheme of the Treaty. However, direct reliance on Article 37 EEC itself would only be possible if it was seen as the expression of a general principle of Community law (...)”, in: Introduction to the Law of the European Communities (The Hague: Kluwer 1990) at p. 452.

  22. J. Mégret, “L’aménagement des monopoles français en exécution de l’article 37 instituant la CEE”, 3 RTDE (1972) 559.

  23. Article 86 (1) EC does not give any definition of “special rights”. In the telecommunications sector, the Commission maintains that these are rights “granted to a limited number of undertakings, through any legislative, regulatory or administrative instrument which, within a given geographical area, limits to two or more the number of such undertakings, otherwise than according to objective, proportional and non-discriminatory criteria, or designates, otherwise than according to such criteria, several competing undertakings, or confers on any undertaking or undertakings, otherwise than according to such criteria, legal or regulatory advantages which substantially affect the ability of any other undertaking to engage in any similar activities in the same geographical area under substantially equivalent conditions”. See Art. 1 (b) of Directive 94/46 amending Directive 88/301 and Directive 90/388 in particular with regard to satellite communications, OJ(EC) [1994] L 268/15. No definition of “special rights” has, so far, been given by the ECJ, although it should have done so in a recent case involving rights granted to three undertakings on the same geographical market, in which quite surprisingly the Court ruled that these companies had been granted exclusive rights! Cf. Case C-209/98 FFAD-Sydhavnens Sten & Grus v. Municipality of Copenhagen, [2000] ECR I-3743, commented on by V. Kronenberger, “EC competition law, exclusive rights and the protection of the environment”, 7/8 European Law Reparler (2000) 254–258.

  24. Case 78/82 Commission v. Italy, [1983] ECR 1955, para. 11 [emphasis added].

  25. ECJ, Case C-202/88, France v. Commission [1991] ECR I-1223, para. 22; Case C-353/89 Commission v. the Netherlands, [1991] ECR I-4069, para. 34; Case T-266/97 VTM v. Commission, [1999] ECR II-2329, para. 106.

  26. M van der Woude, “Article 90: competing for competence”, ELRev., suppl. Competition Law Checklist (1991) 60; R. Kovar, “La “peau de chagrin” ou comment le droit communautaire opère la réduction des monopoles publics”, 7 Europe (1992) 1. See also C.-D. Elhermann who speaks of “the inevitable abuse argument” in “Managing Monopolies: The Role of the State in Controlling Market Dominance in the European Community”, 2 ELRev. (1993) 61.

  27. Case C-41/90 Höfner and Elser v. Macrotron, supra n. 4; Case C-55/96 Job Centre, [ 1997] ECR I-7119. See also the reasoning of Commission Directive 88/301/EEC concerning competition on the market of telecommunications terminal equipment (OJ(EC) [1988] L 131/73), which has been described as relying “on the unacceptable assumption that Article 86 prohibits the very existence of a monopoly”: see A. Papparlardo, “State measures and Public Undertakings: Article 90 of the EEC Treaty revisited”, 1 ELRev. (1991 ) 29, at p. 38.

  28. Cf. N. Rangone, “Les limitations du pouvoir des Etats membres à la création des monopoles de service public”, 2 Rivista Italiana di Diritto Pubblico Comunitario (1994) 375.

  29. In respect of import monopolies, see Case 59/75 Pubblico Ministem v. Manghera, [1976] ECR 91; EFTA Court, Case E-l/94 Restamark v. Helsingin Piiritullikamari, [1995] EFTA Court Rep. 17; as regards export monopolies, see Case C-159/94 Commission v. France, [1997] ECR I-5815.

  30. Cf. A. Mattera, Le marché unique européen: ses règles, son fonctionnement (Paris: Jupiter 1990) 37–38; I. F. Hochbaum, “Artikel 37” in: Kommentar zum EWG-Vertag (v.d. Groeben/Thiesin/Ehlermann (eds.)) (Baden-Baden: Nomos 1991) 587; Communication of the Commission on the SEITA (French tobacco monopoly), 4 Bull. EC (1980) 40.

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  31. Case C-159/94 Commission v. France [1997] ECR I- 5815, para 41. See also Case C-157/94 Commission v. the Netherlands [1997] ECR I-5699, para. 24, and Case C-158/94 Commission v. Italy [1997] ECR I-5789, para. 33. Only Case C-159/94 concerned natural gas.

  32. Directives 96/92 and 98/30, supra n. 15.

  33. See R. Kovar, “La fée électricité: plus de lumière sur les articles 37 et 90 du traité CE”, 12 Europe (1991) 3.

  34. Case 6/64 Flaminio Costa v. ENEL, [1964] ECR 1141.

  35. Case T-266/97 Vlaamse TelevisieMaastschappij N.V.v. Commission, [1999] ECR II-2329. For a comment on this important judgement, see V. Kronenberger, “La liberté d’établissement met-elle fin aux monopoles?”, 214 Petites Affiches (1999) 17–21.

  36. Commission Decision 97/606/EC, OJ(EC) [1997] L 244/18.

  37. Indeed, it should be recalled that decisions adopted pursuant to Art. 86 (3) EC [ex Art. 90 (3) ECT] are addressed to the Member States and not to the undertakings involved, which are therefore considered as third parties. This means that these undertakings need to demonstrate that they are parties having direct and individual interest in the contested decision, namely that their situation will be directly affected by the adoption of the decision, in order to seek annulment of the contested decision. See further on third parties’ rights in these proceedings: M. Rantala and V. Kronenberger, “Les droits des tiers dans la procédure d’adoption des décisions de l’article 90, paragraphe 3, du traité CE”, 42 JTDE (1997) 169.

  38. T-266/97 Vlaamse Televisie Maastschappij N.V. v. Commission, supra n. 35, para. 114 [emphasis added].

  39. See also Case C-19/92 Kraus, [1993] ECR I-1663, para. 32, which, however, did not concern the granting of an exclusive right.

  40. Cf. Case C-353/89 Commission v. the Netherlands (‘Mediawet’), [1991 ] ECR I-4069, para. 25, where the Court found that legislation granting the exclusive right to a company to furnish technical means for the production of television programmes was contrary to Article 59 ECT [now Art. 49 EC], since “it is not necessary for all undertakings in a Member State to be advantaged in comparison with foreign undertakings. It is sufficient that the preferential system set up should benefit a national provider of services.”

  41. Case C-189/95 Franzén, [1997] ECR I-5909.

  42. Recital 15 of the Directive, OJ(EC) [1990] L 192/10. See also Case C-260/89 ERT [1991] ECR I-2925.

  43. Case C-163/96 Silvano Raso, [1998] ECR I-533, para. 28.

  44. Ibid., para. 30.

  45. Ibid., para. 31.

  46. Infra, section 3.1.

  47. The amendments to Art. 31 EC [ex Art. 37 ECT], introduced by the Treaty of Amsterdam, were only meant to be understood in the light of the simplification process of the Treaty, by repealing (transitional) provisions which were no longer in force.

  48. Case C-189/95 Franzén, para. 40. See also concerning the interpretation of Art. 16 EEA, EFTA Court opinion E-1/97 Gundersen v. Oslo Komune, [1997] EFTA Court Rep. 108, para. 21.

  49. For a detailed analysis of this assessment, see V. Kronenberger, supra n. 5, pp. 287–306. It is in this context that one should view the case brought by the EFTA Surveillance Authority before the EFTA Court on 21 December 2000, challenging Norwegian rules, which discriminate, at retail level, between alcoholic beverages between 2.5 per cent and 4.75 per cent vol. and beer of the same alcohol content (pending Case E-9/00 EFTA Surveillance Authority v. Norway).

  50. Art. 154 (2) EC [emphasis added].

  51. Like the Open Network Provision in the telecommunications sector, or third party access, whether compulsory or negotiated, in the electricity and gas Directives.

  52. Article 18 of Directive 96/92, OJ(EC) [1997] L 27/20. Although requested by France during the negotiations of the Directive, the system of third party access has been preferred to the single buyer method. In its recent proposal to amend this Directive (COM (01) 125 final), the Commission has therefore proposed to abandon the single buyer method.

  53. Cf., for instance, Art. 16 of Directive 96/92, which provides that “for the organisation of access to the system... both sets of procedure shall operate in accordance with objective, transparent and non-discriminatory criteria”; Art. 14 of Directive 98/30 on natural gas, with an identical formula; see also the principle enshrined in Art. 11 of Directive 97/67 on postal services which refers to future harmonisation measures to be adopted in order “to ensure that users and the universal provider(s) have access to the public postal network under conditions which are transparent and non-discriminatory”. The Commission is of the opinion that this principle already derives from competition law rules: see Notice on the application of competition law rules to the postal sector, OJ(EC) [1998] C 39/2, para. 8.6 (b).

  54. Commission Decision 94/119/EC Port of Rødby, OJ(EC) [1994] L 55/52, para. 12.

  55. Case T-128/98 Aéroports de Paris, supra n. 6, para. 122, confirming the Commission’s Decision 98/513/EC, OJ(EC) [1998] L 230/10. For a more detailed comment on the case, see V. Kronenberger, “Access to airport facilities and EC Competition Law”, 1 European Law Reporter (2001) 13–16.

  56. Decision 98/190/EC FAG-Flughafen Frankfurt /Main AG, OJ(EC) [1998] L 72/30.

  57. See Decision 95/364/EC, OJ(EC) [1995] L 216/8 concerning The airport of Brussels /Zaventem; Decision 99/198/EC Ilmailulaitos OJ(EC) [1999] L 69/24 concerning The airport of Helsinki /Vantaa; Decision 99/199/EC Portuguese Airports OJ(EC) [1999] L 69/31.

  58. Case C-163/99 Portugal v. Commission, delivered on 26 June 2001, nyr.

  59. Case registered under no. T-l 16/99 Ilmailulaitos v. Commission.

  60. See V. Kronenberger, “Les monopoles publics et le droit communautaire: entre neutralisation et justification”, supra n. 19, at pp. 198–199.

  61. CFI Joined Cases T-374-5/94, T-384/94 and T-388/94 European Night Services Ltd v. Commission, [1998] ECR II-3141, para. 209.

  62. See Case T-128/98 Aéroports de Paris, supra n. 6, para. 142.

  63. Cf. L. Idot, Comment on Joined Cases T-374/94 and e.a., 11 Europe (1998) 17–18.

  64. Joined Cases T-374-5/94, T-384/94 and T-388/94 European Night Services Ltd v. Commission, supra n. 61, para. 211

  65. Ibid., paras. 212 and 218.

  66. Regarding intellectual property rights, see, e.g., Joined Cases 56/64 and 58/64 Grundig-Consten [1996] ECR 429; Case C-9/93 Idéal Standard, [1994] ECR I-2789; regarding the CAP, see Case 44/79 Mauer v. Rheinland-Pfalz, [ 1979] ECR 3727 and Case 182/83 Fearon v. Irish Land Commission, [1984] ECR 3677.

  67. Commission Decision 98/190/EC of 14 January 1998 relating to a proceeding under Art. 86 EC (Flughafen Frankfurt /Main AG) OJ(EC) [1998] L 72/30.

  68. Ibid., para. 92 of the Decision. In the Portuguese case concerning a discriminatory system of discount of landing charges, Portugal’s claim that the Commission’s decision was in breach of Art. 295 EC was dismissed by the ECJ on the grounds that Art. 86 [current Art. 82 EC] applies both to private and public entities, provided that they are in a dominant position on a relevant market: cf., C-163/99, cited above, para. 59.

  69. C. Stoffaés, “Reconcilier les services publics et la construction européenne. Le cas du secteur électrique”, 486 Revue de l’Énergie (1997) 238. S. Desselas and S. Rodrigues, supra n. 19, at p. 9.

  70. For a convincing reasoning in this respect, see A. Wachmann and F. Berrod, “Les critères de justification des monopoles après l’affaire Corbeau”, 1 RTDE (1994) 39–61. One should recall that the Franzén (C-189/95) and Commission v. France (C-159/94) cases exclude any possibility for States to justify state trading monopolies on the basis of Art. 30 [ex Art. 36 ECT], an issue extensively debated in past. For an overview of this question see V. Kronenberger, supra n. 19, at pp. 195–197.

  71. The issues relating to a revenue-producing monopoly will not be dealt with. Actually, this exception has so far never given rise to case law developments: see, for further discussion, in relation to possible justification of alcohol monopolies in the Nordic countries: V. Kronenberger, supra n. 5, at pp. 384–393.

  72. Communications on Services of general interest in Europe, OJ(EC) [1996] C 281/3 and OJEC [2001] C 17/4, Annex II, at p. 23.

  73. Ibid.

  74. Cf. L. Rapp, “La politique de libéralisation des services publics en Europe, entre service public et service universel”, 389 Revue du Marché Commun et de l’Union européenne (1995) 355.

  75. See, for instance, Case T-106/95 FFSA v. Commission, [1997] ECR II-229, para. 189 using the concepts of service of general economic interest and public service in the postal sector, and, more explicitly, Case C-266/96 Corsica Ferries France, [1998] ECR I-3949, paras. 45 and 60, which refers to the concept of Art. 86 (2) ECT, when it addresses the “universal mooring service for reasons of safety in port waters”, and finally holds that “the mooring service constitutes a technical nautical service which is essential to the maintenance of safety in port waters and has the characteristics of a public service (universality, continuity, satisfaction of public-interest requirements, regulation and supervision by the public authorities)” [emphasis added].

  76. Case C-320/91 Corbeau, [1993] ECR I-2533.

  77. Case C-393/92 Municipality of Almelo v. Energiebedrijf Ijsselmij NV, [1994] ECR I-1477.

  78. See Case C-266/96 Corsica Ferries France, [1998] ECR I-3949, para. 60 and Case C-340/99 TNT Traco Spa v. Poste Italiane, supra n. 18, para. 53; see also Art. 3 of Directive 97/67 concerning postal services, which provides that the universal service involves “the permanent provision of a postal service of specified quality at all points in the territory at affordable prices for all users”, whereas Art. 3 of Directive 96/92, supra n. 15, on the electricity market provides that public service obligations may be imposed relating to “security, including security of supply, regularity, quality and price of supplies and to environmental protection. Such obligations must be clearly defined, transparent, non-discriminatory and verifiable”.

  79. See Case C-l8/88 RTT v. GB-InnoBM, [1991] ECR I-5941, para. 22, and C-266/96 Corsica Ferries France, [1998] ECR I-3949, para. 45.

  80. Cf. F. Hamon, “Note sous Commission c. France, aff. C-l59/94”, 12 Actualité Juridique-Droit Administratif (1997) 1001.

  81. C-320/91 Corbeau, supra n. 76, para. 16.

  82. C-340/99 TNT Traco SpA v. Poste Italiane, supra n. 18.

  83. For a comment on this decision, see V. Kronenberger, “Postal services and EC Competition Law”, 6 European Law Reporter (2001) 208–211.

  84. C-340/99 TNT Traco SpA v. Poste Italiane, supra n. 18, para. 55.

  85. Art. 7 of Directive 97/67. See also Art. 9 (4) according to which the Member States are allowed to establish a compensation fund when the universal service obligations represent an unfair financial burden on the provider.

  86. The most common form of re-mailing operations consists in the so-called “A-B-A” operations. The A-B-A re-mail operations consist in conveying the internal mail of a customer of State A towards State B, without making use of the postal operator’s facilities of the former State (e-mail for instance). The mail is thus transported to State B and then forwarded by the postal operator of this State back to State A in which it is distributed by the postal operator in State A to its final addressee(s) in that State. The objective of the companies using this system is to profit from the lower postal tariffs of State B, in comparison with the internal tariffs of State A, although both the addresser and the addressee reside in State A. Not only these companies, but also and especially the postal operator of State B, benefit from the delivery costs of incoming cross-border mail of the postal operator of State A. These costs are below their real level, since this operator is required to distribute this mail on the basis of flat-rate costs fixed in accordance with agreements on “terminal dues” adopted within the framework of the Universal Postal Union Conventions.

  87. Joined Cases C-147/97 and C-148/97 Deutsche Post v. CZS and Citicorp, [2000] ECR I-825, paras. 43 and 44. The obligations are imposed by the Universal Postal Union Conventions. For a more detailed comment on this case, see V. Kronenberger, “Service universel postal, contournement des monopoles postaux et droit communautaire de la concurrence. Quelques réflexions à la suite de l’arrêt de la CJCE du 10 février 2000, Deutsche Post”, 7 Revue du Droit des Affaires Internationales (2000) 893.

  88. Para. 51, Joined Cases C-147-148/97 Deutsche Post, supra n. 87.

  89. See Proposal for a European Parliament and Council Directive, amending Directive 97/67/EC, OJ(EC) [2000] C 337 E/20 and the amended proposal submitted on 21 March 2001, OJ/(EC) [2001]C 180E/291.

  90. According to Art. 2 of Directive 97/67, terminal dues constitute “the remuneration of universal service providers for the distribution of incoming cross-border mail comprising postal items from another Member State or from a third country.”

  91. Joined Cases C-147-148/97 Deutsche Post, supra n. 87, para. 56.

  92. See further on these agreements, V. Kronenberger, supra n. 87, at pp. 903–910.

  93. Cf. Commission Decision 99/695/EC, REIMS II, OJ(EC) [1999] L 275/17.

  94. CFI, joined cases T-133/95 and T-204/95 IECC v. Commission, [1998] ECR II-3645, para. 100.

  95. Joined cases C-449/98 P and C-450/98 P, International Express Carriers Conference v. Commission, delivered on 17 May 2001, nyr; for a comment, see: V. Kronenberger, 5 European Law Reporter (2001), 160–165.

  96. Case C-157/94 Commission v. the Netherlands, [1997] ECR I-5699, para. 69.

  97. See on this question, F. Murphy, “The Jurisdiction of National Courts under Article 90 (2) EEC”, 1 European Business Law Review (1993) 4.

  98. See, for instance, Notice concerning the application of EC competition rules to the telecommunications sector, OJ(EC) [1991] C 233/7, para. 23.

  99. Case T-16/91 Rendo NV v. Commission [1992] ECR II-2417, para. 99, confirmed by the ECJ in Case C-19/93 P Rendo NV, [1995] ECR I-3319, para. 18.

  100. See for some examples, Case C-266/96 Corsica Ferries France, [1998] ECR I-3949 and Joined Cases C-147-148/98 Deutsche Post, [2000] ECR I-825.

  101. Case C-202/88 France v. Commission [1991] ECR I-1223, para. 12, and Case C-159/94 Commission v. France, [1997] ECR I-5815, para. 55 [emphasis added].

  102. Art. 3 (3) of Directive 96/62.

  103. This is even harder in the context of the EEA Agreement. Art. 59 (2) of this Agreement, which is identical to Art. 86 (2) EC, does not refer to “the interests of the Community” but to “the interests of the Contracting Parties”. The EFTA Court judged that this sentence means that “Article 59(2) EEA calls for an application of a proportionality test to assess whether the required balance has been struck between the common interests of the Contracting Parties to the EEA Agreement and the legitimate interests of Norway”: Cf. Case E-4/97 Norwegian Bankers’Association v. EFTA Surveillance Authority [1998] EFTA Court Rep. 38, para. 70.

  104. Art. 16 EC.

  105. For an excellent economic analysis of cross-subsidisation, see G. Abbamonte, “Cross-subsidisation and Community Competition Rules: Efficient Pricing Versus Equity?”, 23 ELRev. (1998)414.

  106. Guidelines on the application of EEC competition rules to the telecommunications sector, OJ(EC) [1991] C 233/2, at para. 102.

  107. It may be legitimate to cross-subsidise if both activities are completely closed to competition, or if they are entirely open to competition.

  108. Notice on the other economic activities of the monopoly and on the assessment of certain State measures relating to postal services, OJ(EC) [1998] C 39/2, at para. 3.1 [emphasis added].

  109. In the postal sector, the Commission indeed indicates that “on a case-by-case basis, it would investigate the matter under Article 86 [now 82], or under Article 86 and 90(1) or under Article 92 [now 87]”: see Notice, supra n. 108, para. 3.4.

  110. Case C-242/95 GT Link A/S v. DSB, [1997] ECR I-4449.

  111. This case is very similar to the decision of the Commission concerning the port of Rødby.

  112. Case C-242/95 GT Link A/S v. DSB, supra n. 110, para. 41.

  113. Case C-242/95 GT Link A/S v. DSB, supra n. 110, para. 42.

  114. See also, in respect of the Commission’s practice, Decision 97/81/EC of 30 July 1996 concerning aid granted by the Austrian Government to Head Tyrolia Mares in the form of capital injections, OJ(EC) [1997] L 25/26, concerning the granting of capital injections from the Tobacco State Monopoly (Austria Tabakwerke) to one of its subsidiaries, in which the Commission stated that “in the case of a profitable State-owned undertaking such as AT, the investment of its capital as a grant to HTM, without any prospect of a return, will result in a reduced future level of AT’s profits (dividends plus retained profit), that is to say, a reduced level of return on the State’s stake in AT. Such a lack of return may be a granting of State resources in favour of HTM”. The Commission is also currently investigating the cross-subsidisation of various activities of Deutsche Post AG “within the context of the rules on State aid”: see the joint answer to written questions P-1392/00 and P-1393/00 in OJ(EC) [2001] C 26 E/165.

  115. Case T-106/95 Fédération Française des Sociétés d’Assurance (FFSA) v. Commission, [1997] ECR II-229.

  116. Ibid., para. 188.

  117. Case C-39/94 Syndicat Français de l’Express International (SFEI) v. La Poste, [1996] ECR I-3547, para. 62.

  118. Case T-613/97 Union française de l’express (UFEX) v. Commission, 14 December 2000, nyr.

  119. Ibid., para. 74.

  120. Ibid.

  121. In his above-mentioned article, G. Abbamonte was of the opinion that the situation of La Poste was “an example of efficient diversification of a public monopolist into a competitive market”, supra n. 105, p. 432.

  122. State aid must originate from State resources (cf. Joined Cases C-72/91 and C-73/91 Firma Sloman Neptun, [1993] ECR I-887, para. 19). This issue becomes rather complex when the aid originates from State-owned companies having a legal personality independent from the State. Indeed, in such cases it cannot be excluded that resources come from capital market resources rather than the State. Hence, European courts should be more careful in assessing the origin of the resources, in order to avoid criticism relating to the infringement of Article 295 EC. For such criticisms, see A. Wachmann, “Les aides d’Etat doivent-elles encore avoir une origine étatique? Le cas des aides versées par les entreprises publiques à travers l’arrêt Air France/CDC”, 4 Europe (1997) 5. More generally, A. Verhoeven, “Privatisation and EC law: is the European Commission ‘neutral’ with respect to public versus private ownership of companies?”, 4 ICLQ (1996) 861.

  123. Another question, which is not touched upon in the present article, is whether this is economically feasible and viable.

  124. OJ(EC) [1997] L 27/20 [emphasis added]. In the proposed amendments of March 2001, the Commission seeks to clarify the separation requirement of Art. 14 (3), by expressly including distribution and supply activities within the scope of this provision.

  125. Art. 13 (3) of Directive 98/30, OJ(EC) [1998] L204/1.

  126. See Art. 15 of the initial proposal, COM (95) 227 final (26 July 1995) at p. 30.

  127. Art. 27 of the Directive, OJ(EC) [1998] L 15/14.

  128. This is still true in the railways sector where Directive 2001/12/EC (OJ(EC) [2001 ] L 75/1) which amends Directive 91/440/EEC only provides as a minimum but mandatory requirement a separation of profit and loss accounts and balance sheets for transport services and management of railway infrastructure respectively. Member States are nevertheless allowed to provide for a more extensive separation, either organic (creation of distinct divisions within a single undertaking) or institutional by the creation of two separate entities (cf. Article 1, 7) of Directive 2001/12/EC).

  129. Arts. 2 and 3a of Directive 80/723, as amended by Directive 2000/52, OJ(EC) [2000] L 193/75. Note that this obligation only concerns undertakings with a total annual net turnover of at least EURO 40 million.

  130. Ibid.

  131. For instance, the introduction of dissociation of accounts in the postal sector might raise problems in terms of allocation of costs in respect of access of postal services to the postal offices.

  132. Cf., for instance, in France the report of J.L. Dumont concerning the unbundling of the management of the electrical grid and other services (Rapport au Premier Ministre, Réussir la future organisation électrique française (Paris: La Documentation française 1998). However, this proposal has not been introduced in the French system. See also the proposals in the railways sector, D. Vincent (près.), Report from the consultative group on the Future of railways transport in Europe (reproduced in Agence Europe Documents No. 2006/2007,11 October 1996) on the basis of Finnish and Swedish experience.

  133. See respectively Art. 8 of the initial proposal of Council Directive concerning the developments of railways, OJ(EC) [1990] C 34/8; Arts. 8 (2) and 23 of the initial proposal of the Directive on the internal market in electricity, OJ(EC) [1992] C 65/4; Art. 21 of the initial proposal concerning natural gas, OJ(EC) [1992] C 65/14.

  134. V. Kronenberger, supra n. 5, at pp. 681–695 and 777–791.

  135. See Cases 15/74 Centrafarm v. Sterling Drug, [1974] ECR 1147; Case T-102/92 Viho v. Commission, [ 1995] ECR II-17, confirmed by the ECJ in Case C-73/95 P Viho Europe BV,[996] ECR I-5457. According to the decision, it is the criterion of “the single economic unit within which the subsidiaries enjoy real autonomy in determining their course of action in the market, without carrying out the instructions issued to them by the parent company controlling them”, which determines the independence of the subsidiary from its parent company, and consequently, the application of Article 81 EC to agreements between the two undertakings. Note that the legal status of a 100 per cent subsidiary does not permit a presumption of a unified behaviour on the market: see the opinion of Advocate General Darmon in Case C-347/87 Orkem v. Commission, [1989] ECR 3282, para. 19.

  136. OJ(EC) [1999] L 175/9.

  137. See the Communication published in the OJ(EC) [1998] C 71/4, together with the proposal for the Directive.

  138. Recitals 10 and 11 of the Directive [emphasis added].

  139. Cf., e.g., Commission Communication on the development of the Community’s railways, COM (98) 202 final, para. 14, which notes that seven Member States have opted for such dissociation.

  140. Recital 28 of Directive 90/388, OJ(EC) [1990] L 192/10 [emphasis added].

  141. Art. 7 (1) of the Directive.

  142. Art. 6 of Directive 88/301/EEC on competition in the markets in telecommunications terminal equipment, OJ(EC) [1988] L 131/73.

  143. Case C-202/88 Spain v. Commission, [1991] ECR I-1223, and Joined Cases C-271/90, C-281/90 and C-289/90, [1992] ECR I-5833.

  144. Case C-18/88 RTT v. GB-lnno-BM, supra n. 79: “Articles 3 (f), 90 and 86 of the EEC Treaty preclude a Member State from granting to the undertaking which operates the public telecommunications network the power to lay down standards for telephone equipment and to check that economic operators meet those standards when it is itself competing with those operators on the market for that equipment”.

  145. Indeed, the problem was highlighted by Advocate General Tesauro in his opinion in Case C-202/88. He recommended the ECJ to annul Art. 6 of Directive 88/301. He was of the opinion that the Commission Directive wrongly required the dissociation of regulatory functions and economic activities to all telecommunications operators, irrespective of whether they possessed a dominant position or not. In fact, only a concrete assessment of each situation could have called for such a separation. See also, E. Pijnacker-Hordijk, “EC Law versus legal monopolies, a tense relationship”, 5 International Business Law Review/Revue du Droit des Affaires Internationales (1995)601.

  146. Quite surprisingly, in its case Lagauche (Joined Cases C-46/90 and C-93/91, ECR I-5320), the Court, in an application for a preliminary ruling involving the compatibility of the Belgian legislation, ruled that such legislation was incompatible with Art. 6 of Directive 88/301 for the period following the entry into force of the Directive. However, it ruled that Arts. 86 [now 82] and 90 [now 86] ECT were not applicable to this legislation as regards the period prior to the coming into force of the Directive. This finding is difficult to reconcile with earlier cases in which the Court indicated that Art. 6 of Directive 88/301 was based on Arts. 86 and 90 ECT. If this is so, why should their effect be different from that of Art. 6 of Directive 88/301 ? The Court has never answered this question. This is why it has been suggested that the Commission, followed by the Court, had embarked on a quid novi: see H. Chavrier, “La jurisprudence de la cour de justice sur l’application de l’article 90 du traité de Rome”, 509 Cahiers Juridiques de l’Electricité et du Gaz (1995) at pp. 128 and 136; see also V. Kronenberger, supra n. 5, at pp. 536–540.

  147. Cf. Case C-18/88 RTT v. GB-Inno-BM, supra n. 79.

  148. Case C-69/91 Criminal proceedings against F. Gillon, née Decoster, [1993] ECR I-5335.

  149. Ibid., para. 16 [emphasis added].

  150. Case C-91/94 Procureur de la République v. Tranchant, [1995] ECR I-3911, paras. 18–22.

  151. See, in particular, Art. 5 bis of the ONP Directive 90/387/EC, introduced by Directive 97/51/EC, OJ(EC) [1997] L 295/23.

  152. Art. 22 of Directive 97/67/EC, OJ(EC) [1998] L 15/14.

  153. See Art. 1 7) of Directive 2001/12/EC (OJ(EC) [2001] L 75/1); Art. 1 (3) of Directive 2001/13 (OJ(EC) [2001] L 75/26) amending Art. 3 of Directive 95/18/EEC and Art. 4 of Directive 2001/14/EC (OJ(EC) [2001] L 75/29) replacing Directive 95/19/EEC, which reads: “Where the infrastructure manager, in its legal form, organisation or decision-making functions, is not independent of any railway undertaking, the functions, described in this chapter, other than collecting the charges shall be performed by a charging body that is independent in its legal form, organisation and decision-making from any railway undertaking”.

  154. Art. 22 of Directive 96/92, supra n. 15, and Art. 22 of Directive 98/30, supra n. 15.

  155. One will have understood that we refer to the proposed takeovers by French Electricité de France in the United Kingdom and Italy which have given the occasion to the Commission to recall that measures adopted by Member States to oppose such acquisitions or investments may be incompatible with the free movement of capital and the freedom of establishment, but also to stress that there is an urgent need to fully liberalise the energy markets by 2005, in accordance with the recent proposal made by the Commission in March 2001: see IP 01/872,20 June 2001.

  156. See Art. 16 EC.

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    Vincent Kronenberger (Doctor of Law)

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Kronenberger, V. A Model of the Transformation Process of Statutory Monopolies in European Community Law: From Practice to Theory. Eur Bus Org Law Rev 2, 301–338 (2001). https://doi.org/10.1017/S156675290000046X

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