98/365/EC: Commission Decision of 1 October 1997 concerning alleged State aid granted by France to SFMI- Chronopost [notified under document number C(1997) 3146] (Only the French text is authentic) (Text with EEA relevance)

• Celex Number: 31998D0365
• Coming into Force: 17 October 1997
• End of Effective Date: 31 December 9999
• ELI: http://data.europa.eu/eli/dec/1998/365/oj
• Published date: 09 June 1998
• Date: 01 October 1997
• Official Gazette Publication: Gazzetta ufficiale delle Comunità europee, L 164, 09 giugno 1998,Journal officiel des Communautés européennes, L 164, 09 juin 1998,Diario Oficial de las Comunidades Europeas, L 164, 09 de junio de 1998

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98/365/EC: Commission Decision of 1 October 1997 concerning alleged State aid granted by France to SFMI- Chronopost [notified under document number C(1997) 3146] (Only the French text is authentic) (Text with EEA relevance)

Official Journal L 164 , 09/06/1998 P. 0037 - 0048

COMMISSION DECISION of 1 October 1997 concerning alleged State aid granted by France to SFMI-Chronopost (notified under document number C(1997) 3146) (Only the French text is authentic) (Text with EEA relevance) (98/365/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community, and in particular the first subparagraph of Article 93(2) thereof,

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

Having, in accordance with the provisions of the abovementioned Articles, given notice to the parties concerned to submit their comments and having regard to those comments,

Whereas:

I. THE FACTS

A. Background

In France express delivery service is an activity open to unrestricted competition, unlike the ordinary postal service, which is subject to the monopoly of the French Post Office.

The French Post Office belonged to the French public administration until the end of 1990. On 1 January 1991, pursuant to the provisions of Law No 90-568 of 2 July 1990, it became an autonomous corporation subject to French public law, and as such is free to operate in sectors open to competition, as well as pursuing public sector activities.

At the end of 1985 and the beginning of 1986, the Post Office entrusted the management of its express delivery service, operated under the name of Postadex, to a private company called Société Française de Messagerie Internationale (SFMI) which had been set up for this purpose. SFMI was incorporated with a share-capital of FRF 10 million held by Sofipost (66 %), a holding company wholly owned by the Post Office, and by TAT Express (34 %), a subsidiary of the airline Transport Aérien Transrégional ('TAT`). SFMI provided the express delivery service under the name of EMS/Chronopost.

The conditions for the operation and marketing of the express delivery service were set out in an order of 19 August 1986 by the French Ministry of Posts and Telecommunications. Under this order the service was to be operated by SFMI using mainly the resources of the Post Office supplemented by those of TAT. The arrangements in the order included the requirement that the post office was to provide SFMI with logistical and commercial assistance. The contractual relations between the Post Office and SFMI-Chronopost are regulated by way of agreements entered into by the two parties. The first agreement, which was concluded in 1986 and was in force until 1992, was replaced by a second agreement which entered into force on 1 January 1993.

In 1992 the structure of the express delivery business changed. Sofipost and TAT set up a new company, Chronopost SA ('Chronopost`), in which their respective holdings were again 66 % and 34 %. Chronopost took over the domestic activity of SFMI, which remained responsible for international business. SFMI was acquired by GDEW France, the French subsidiary of the international common operator GDEW whose participants are the Australian company TNT and the German, Canadian, French, Netherlands and Swedish post offices. It is worth remembering that GDEW is a concentrative joint venture which was authorised by Commission Decision of 2 December 1991 (1).

Under this new structure, Chronopost was to act as a service provider and agent on behalf of SFMI (and thus GDEW) in the handling of its international dispatches in France. Moreover, Chronopost could not compete with SFMI and was its exclusive agent until 1 January 1995. Chronopost was also granted until that date exclusive access to the post office's network. (In the course of this Decision reference will be made to 'SFMI-Chronopost`, even when only one of the two companies is involved).

B. SFMI-Chronopost's economic performance

When SFMI-Chronopost started its operations in 1986, the international express delivery service in France was a market dominated by the company DHL with a market share of over 40 %. The Post Office's international turnover corresponding to its product Postadex was FRF 45 million in 1985 (approximately 10 % of the market). This market has constantly grown since the entry of SFMI-Chronopost in 1986 (total sales grew from FRF 500 million in 1986 to FRF 2,7 billion in 1996).

SFMI-Chronopost has been a successful business. It has conquered market shares and consolidated its market position and been constantly profit-making. SFMI-Chronopost increased its market share from 4 % in 1986 to 22 % in 1996 and has distributed dividends each year. The reasons for its profitability lie in the rapid growth of the express delivery market in France, in SFMI-Chronopost's access to the parent company's network, in the choice of a sound commercial strategy and in the significant advertising investments made.

In particular, especially during the early years of operation, SFMI-Chronopost subcontracted most of its activity to the Post Office and therefore incurred limited start-up costs (in particular, fixed costs). This explains why the company was provided with very limited equity capital (FRF 10 million).

SFMI-Chronopost, unlike its competitors which were mainly active on the international market, decided to enter both the international and the domestic French market. This permitted SFMI-Chronopost to operate in a new market characterised by little competition and to benefit from the synergies stemming from the combined operation of the international and domestic markets.

Moreover, the EMS/Chronopost product was less sophisticated than other products offered by the competitors and in particular than DHL's products. Unlike the latter, EMS/Chronopost was targeted at the casual customer. The characteristics of SFMI-Chronopost's product enabled it to charge prices lower than those of its competitors. In particular, SFMI-Chronopost normally collected the occasional customers' dispatches at the postal offices, while competitors collected dispatches at home. SFMI-Chronopost did not guarantee delivery deadlines, whilst DHL did so. Geograpical coverage was also more limited than DHL's (100 countries in 1988 compared with 175 countries for DHL). Ancillary services, particularly informatics services giving a permanent control of the service provided, were less advanced than those of competitors.

SFMI-Chronopost has enjoyed increasing autonomy from the Post Office, and the share of business subcontracted to the latter has decreased over time (collection decreasing from 67 % in 1987 to 39 % in 1994 and distribution decreasing from 94 % in 1987 to 45,8 % in 1994). In 1996 SFMI-Chronopost employed 1 870 people, had 32 offices, two transit centres, six international exchange centres and 600 vehicles. SFMI-Chronopost dealt with 450 subcontractors, amongst which there was the Post Office.

As regards marketing activities, by 1996 SFMI-Chronopost had 95 salesmen and only one quarter of its sales was made through the Post Office.

C. The complaint and the procedure

On 21 December 1990, the Syndicat Français de l'Express International ('SFEI`), a consortium of companies providing express delivery services in competition with SFMI-Chronopost, lodged a complaint with the Commission on the grounds that the logistical and commercial assistance provided by the post office to SFMI-Chronopost involved State aid under Articles 92 and 93 of the EC Treaty. This aid allegedly enabled SFMI-Chronopost to charge much lower prices than its competitors. An economic study by Braxton, a consulting firm appointed by SFEI, was attached to the complaint. This study quantifies the amount of the alleged aid received by SFMI-Chronopost over the period 1986 to 1989.

By letter of 10 March 1992, the Commission informed the complainant that the file had been shelved. SFEI and a number of SFMI-Chronopost's competitors brought an action before the Court of Justice for annulment of the letter. The Commission withdrew the letter in order to obtain further information.

At the Commission's request, France provided information by letter of 21 January 1993, by fax from the competent government departments on 3 May 1993, and by letter of 10 June 1993.

SFEI and five of its member undertakings brought an action before the Paris Commercial Court on 16 June 1993 against SFMI-Chronopost, the French Post Office and others. A second study by the consultancy Braxton was attached to the application. This study updated the valuation of the aid carried out in the previous one up to the end of 1991.

On 5 January 1994, the Paris Commercial Court, on the basis of Article 177 of the Treaty, put eight questions relating to the interpretation of Articles 92 and 93 of the Treaty to the Court of Justice. The Commission presented its comments on the matter on 6 May 1994. The French Government, which intervened in May 1994, attached to its comments a study by the firm Ernst & Young, in response to the two Braxton studies.

In February 1996 the Commission opened the procedure provided for under Article 93(2) of the Treaty, in respect inter alia of the assistance provided by the Post Office to SFMI-Chronopost over the period 1986 to 1991(2). The Commission considered that the possibility that State aid had been granted to SFMI-Chronopost by France (directly or through the intermediary of the Post Office) could not be ruled out.

In particular, as regards the assistance by the Post Office to SFMI-Chronopost, the information available suggests that only in 1992 did the prices charged by the postal administration match actual costs plus a profit margin. The Commission did not have sufficient information to rule out the possibility...