C-147/97

1 — It is customary to distinguish between three categories of remail services: — */\HCI remai)', where mail originating i n Country A is transported by private companies to Country B and put into the postal system there for forwarding via the traditional international postal system to Country C, where the final addressee resides; — 'ABB remail', where mail originating in Country A is 1. By orders of 25 March 1997 received at transported by private companies to Country B and nur into the postal system there in order to be delivered to the Court Registry on 17 April 1997, the the final addressee who resides in Country B; Oberlandesgericht (Higher Regional Court) — 'ABA remail', where m a i loriginating in Country A is transported by private companies to Country B and put Frankfurt am Main asked the Court for the into the postal system there for forwarding via the traditional international postal system back to Country interpretative guidelines necessary in order A, where the final addressee resides. to determine the compatibility with the To those three traditional types of remad should be added so-called 'non-physical remail'. In this form of remail, Treaty of a provision of national law which information from Country A is sent electronically to Country B, where, with or without processing, it is printed, authorises the public postal operator ('the transported and put into the postal system of Country B or PPO') to charge postage at national rates or Country C i n order to be forwarded via the traditional international system to Country A, B or C, where the final to refuse to provide a delivery service for addressee resides. As the defendants have pointed nut, the term 'non-physical remail', while widely used i n practice, is technically a misnomer because there is no object which physically crosses the national border twice but just one object which is made up in a foreign country on the basis of * Original language: Italian. data transmitted from the State of destination.

Is the second paragraph of Article 5 of the EC Treaty (now the second para- graph of Article 10 EC) to be inter- (2) Are Article 30 of the EC Treaty (now, preted as meaning that a law of Mem- after amendment, Article 28 EC) et ber State A ratifying the Conventions seq. and Article 59 of the EC Treaty of the Universal Postal Union of (now, after amendment, Article 49 EC) 14 December 1989 is completely inap- et seq. to be interpreted as meaning plicable or only in so far as payment of that the power of the postal service in internal postage in addition to the Member State A to demand internal postal charges paid in Member State postage for the delivery of letter-post B and/or in addition to the terminal items posted in Member State B to dues collected pursuant to the Univer- addressees resident in Member State A sal Postal Convention or the CEPT or to refuse to deliver such letters if A g r e e m e n t m a y be d e m a n d e d or internal postage is not paid is contrary enforced by refusing to deliver the mail to the guarantee of the free movement in question?'

I - 828

DEUTSCHE POST

3. Citicorp Kartenservice GmbH ('CKG'), the defendant in Case C-148/97, is an undertaking in the Citibank group which 2. The fact that the questions referred by undertakes the administration of the Citi- the national court in the two cases are bank Visa and Diners credit cards issued by partly identical reflects the fact that the Citibank Privatkunden AG and Diners factual and legislative background to both Deutschland GbmH respectively, members cases are essentially the same. Gesellschaft of the group. CKG states that up to 30 June für Zahlungssysteme mbH (GZS) (herein- 1995 the processing of debit and credit data after ' G Z S ' ) , the defendant in Case relating to the current accounts of users of C-147/97, is the leading operator in data- German-issued credit cards was carried out processing in respect of transactions carried at its own computer centre in Frankfurt. out with Eurocard credit cards issued in The processed data were then transmitted Germany. GZS, whose members are credit electronically to Citicorp European Service

I - 829

OPINION OF M R LA PERGOLA — JOINED CASES C-147/97 AND C-148/97

At processed in places of business in various first instance, that court had dismissed the countries, but at a single centre for the actions brought by DP in 1995 against GZS whole world. According to the defendant, and CKG claiming payment of the internal the data on commercial transactions with postage rate, namely DEM 1 per letter for authorised traders, the amounts relating to letters posted in Denmark and the Nether- use of credit cards issued in Germany and lands and delivered by DP to addressees the debit balances of cardholders are input resident in Germany. The applicant had by the data-processing centre in Frankfurt relied for that purpose on Article 25(3) of and then transmitted via satellite to Citi- the Convention (see point 5 below), which bank's world data-processing centre in was implemented in the German legal South Dakota (United States).

the exclusive right to form and operate undertakings forwarding written messages and other communications between individuals for reward. Moreover, under Para- 2 — These letters, on which the sender was stated as being graph 7 of the PTNeuOG, which refers to the Gesetz Uber 'Citibank European Service Center, P.O_ Box 5411, 6802 EK die Regulierung der Telekommunikation und des Postwe- Arnhem, The Netherlands' or 'Citicorp European Service sens [Law Regulating Telecommunications and Postal Center BV, P.O_ Box 5200, 7570 GE Oldenzaal, The Services ('the PTRegG'); BGBl. 1994 Part I, p. 2371], DP Netherlands', were then handed over to the Netherlands is bound by a universal service obligation: everybody has the PPO which conveyed them to DP for delivery to addressees right to use its postal services other than those services resident in Germany. According to CKG's written observa- liberalised by way of derogation from Paragraph 2 of the tions, in addition to the defendant itself, undertakings and Postal Law. As from 1 January 1998, distribution of the branch networks of the Citibank group in France, Belgium, following items is reserved to DP: (i) letters and addressed catalogues up to a weight-limit of 200 grams where the cost Spain, Portugal and Greece are l i n k e d t o the central CESC of sending them is not greater than five times the basic rate facility for data acquisition, data processing, data print-out in force on 31 December 1997 and (¡i) direct advertising by and mailing; the intention is for undertakings from other mail up to a weight-limit of 50 grams per item where the European countries to link up as well, once there are enough total number of items sent is less than 50.

I - 830

DEUTSCHE POST

system by the Law of 31 August 1992 on reciprocal exchange of postal correspon­ the Conventions of the UPU of 14 Decem­ dence, the countries which have adopted ber 1989, 4 in conjunction with Para­ the UPU Constitution (see footnote 5) form graph 9 of the Postal Law. a single postal territory throughout which freedom of transit is guaranteed. However, by way of derogation to Article 1, Arti­ cle 25 of the Convention ('Posting abroad of letter-post items') provides as follows:

4 — See BGBl, ľ a n II, p. 749. 2. Paragraph 1 shall be applied without 5 — The first version of the Convention dates from 1874. A provision corresponding to the current Article 25 (see below distinction both to correspondence made in the main text) was introduced for the first time in the up in the country where the sender resides 1924 Convention (sec Article IV of the Final Protocol). As from 1 July 1948, the UPU has been a specialised agency of and then carried across the frontier and to the UN with the following mission: to oversee the organisa­ correspondence made up in a foreign tion and development of postal services; ro promote flic development of communication between peoples by means country. of the effective functioning of these services; to contribute to cooperation in the cultural, social and economic fields and to participate in the provision of technical assistance required by member countries (which currently number 189). The UPU's Constitution (which sets out its general and detailed regulations as well as the Convention itself) is a diplomatic convention subject to ratification by the compe­ tent authorities of each member country. The Constitution was adopted by the XV Universal Postal Congress held in Vienna in 1964 and entered into force (Ml 1 January 1966. It was amended by the Congresses of Tokyo ( 1969), Lausanne (1974), Hamburg (1984), Washington (1989) and Seoul (1994). The version of the Convention applicable to the 3. The administration concerned may present cases is that of 1989, the most recent to have been ratified by the Federal Republic of Germany at the material either return its items to origin or charge time. Finally, a European Conference of Post and Tele­ communications administrations ('CUPT') has been estab­ postage on the items at its internal rates. If lished under the aegis of the UPU. the sender refuses to pay the postage, the

DEUTSCHE POST

them. However, with the passage of time this assumption of an overall equilibrium between inward and outward mail was contradicted by market data. Accordingly, in 1969 the UPU member countries adopted a system of fixed rates of recipro- cal compensation according to the type and weight of postal item. However, this system did not adequately reflect the cost struc- tures of the various operators or the economic value of the delivery service provided by them. Moreover, it also 8 — Proceeding IV/32.791 initiated by the Commission (pur- appeared to take no account of the reality suant to Council Regulation No 17 of 6 February 1962, First Regulation implementing Articles 85 and 86 of the of delivery costs (for example, it is less Treaty, OJ, English Special Edition 1959-1962, p. 87) costly to deliver one item weighing one following a complaint lodged by the International Express Carrier Conference (IECC), resulted in three separate kilogram than fifty letters each weighing decisions.

By decision of concluded an agreement in Bern to intro- 6 April 1995, the Commission notified IECC of its rejection of the part of the complaint relating to the operation by a duce a new formula for calculating the number of public postal operators of a system designed to rates of terminal dues ('the CEPT Agree- allocate the national postal markets by means of the interception of 'physical ABA remail (commercial or non- ment'). Under the CEPT Agreement the commercial), non-physical remail and normal cross-border mail' on the basis of Article 23 (now Article 25) of the terminal dues payable by the originating Convention. The Commission found that commercial ABA remail, by preventing the receiving public postal operator post office to the receiving post office for from recovering its costs of delivering the mail in so far as the service of delivering incoming interna- terminal dues are not based on the real costs of providing the service, amounted to a circumvention of the statutory tional mail were substantially higher than postal monopoly of the public postal operators and decided that interception of this type of remail, in the specific under the previous system and consisted of circumstances, could not be described as constituting an the sum of a fixed component per item abuse within the meaning of Article 86 of the Treaty. Finally, on 14 August 1995, the Commission adopted a final (0.147 SDR in 1993) 7and a weight-based decision rejecting the part of the complaint by IECC relating to the alleged interception of ABC remail by a number of public postal operators.

cation of Article 85 of the Treaty. Finally, may I recall that the Court of the First Instance annulled the part of the Commission's decision of 6 April 1995 with respect to IECC (see above) containing the Commission's assessment of the legality of interception of commercial physical ABA remail, in Joined Cases T-133/95 and T-204/95 IECC v Commission 7 — Special Drawing Rights are based on a basket of the major [1998] ECR II-3645, point 2 of the operative part and currencies used by the International Monetary Fund. In paragraphs 94 to 106 of the grounds). 1997 one SDR was worth ECU 0.824.

11 — See Commission notice on the renewed notification of an agreement on terminal dues (REIMS II) between postal operators (OJ 1998 C 5 3 , p. 3). 12 — See Commission notice on the notification of an agreement 9 — The final version of this agreement was signed and notified on terminal dues between postal operators (OJ 1998 to the Commission in December 1995 under the aforemen- C 3 7 1 , p. 7). The REIMS II Agreement provides for a tioned Regulation N o 17 for the purpose of obtaining smoother rise in terminal dues over the transitional period negative clearance or individual exemption (see Commis- (of four years), thus obviating the need for a very sharp sion notice on the notification of an agreement on terminal increase on 31 December 2001 in order to bring them up dues (REIMS) between postal operators, OJ 1996 C 42, to the stipulated final level of 8 0 % of domestic tariffs (see p. 7). footnote 10 above). Starting from the current CEPT rate, the percentage of the domestic tariff was raised to 55% in 10 — Starting from the CEPT rate then in force, this percentage 1998 and will rise to 65% in 1999 and 7 0 % in 2000. was to increase during the course of the transitional period However, as a result of amendments made in 1998, these (lasting five years at most, as from 1 January 1997) to increases will not take place if the quality of service offered reach ultimately 8 0 % of the domestic tariff, conditional on by a PPO falls below standards set in the Agreement. the pursuit of specific quality-of-service targets. The Whether such deterioration has occurred is determined by mechanism envisaged under the REIMS I Agreement was comparing the PPO's quality-of-service performance in a based on four annual increases in terminal dues by a fixed given year with the average quality-of-service performance percentage (15% or 20%) of the current maximum level. If achieved by it in preceding years, beginning with 1997. As at the end of the transitional period the level of 8 0 % of the under the REIMS I Agreement, the contracting parties domestic tariff had not yet been reached, the terminal dues further agreed not to apply Article 25 of the Convention as would be raised to that level in a single 'leap' (see between themselves following the end of the transitional Commission notice cited in footnote 9 above, pp. 7 and 9). period.

Let me add, for the sake of completeness, the legal basis for 'horizontal' cooperation that Directive 97/67/EC of the European between national administrations. 14 P a r l i a m e n t a n d of the C o u n c i l of 15 December 1997 on common rules for the development of the internal market of C o m m u n i t y p o s t a l services and the improvement of quality of service 13 pro- vides that in order to ensure the cross- border provision of a universal postal service Member States are to encourage their universal service providers to arrange that in their agreements on terminal dues the following principles are respected: (i) terminal dues are to be fixed in relation to the costs of processing and delivering incoming cross-border mail; (ii) levels of remuneration are to be related to the quality of service achieved, and (iii) term- 9. The fixing of appropriate terminal dues inal dues are to be transparent and non- is also dealt with in bilateral agreements discriminatory (see Article 13). This provi- between postal operators. A recent instance sion, to my mind, re-affirms in this area the is the agreement between the Swedish PPO, general principle of cooperation in good Sweden Post, which operates in a compe- faith which requires Member States to take titive environment, and the private opera- all appropriate measures to ensure the tor T N T Post Group, which holds a application and effectiveness of Commu- statutory monopoly in the Netherlands on nity law (see Article 5 of the Treaty) and the delivery of letter-post (up to the weight which, in the context of the 'community and price limits prescribed by law). This governed by the rule of law' established by agreement provides for the immediate dis- the Treaty, governs the entire subject of application of Article 25 of the Convention relations between Member States and Com- and a phased increase (of 15% each year) munity institutions. On the basis of the in terminal dues, conditional on achieve- Court's case-law, Article 5 also constitutes ment of the quality-of-service targets set in the agreement, so as to reach 7 0 % of the operators' respective domestic rates by the end of the transitional period (3 I Decem- ber 2003); this agreement was granted exemption from the application of the Community rules on competition by deci-

sion of the Commission of 18 September entitled under the Convention to terminal 1998. 15 dues of DEM 0.16 per standard letter (or DEM 0.18 if the total annual volume of incoming mail from a given member coun- try exceeds 150 tonnes). Under the CEPT Agreement terminal dues were raised to DEM 0.36 per standard letter. According to DP, moreover, the only cost saving made on 10. It is widely acknowledged that terminal incoming international mail relates to the dues are currently set at a level so low that collection of letters from the post offices or they do not cover the public postal opera- access points in the public postal network. tors' costs of sorting and distributing the As against that, international mail is actu- mail. The reason usually given for this ally more expensive to deliver than domes- situation is that the developing countries, tic mail in the following respects: (i) foreign whose domestic tariffs are lower than the mail has to be carried longer distances (a terminal dues set by the Convention, have high proportion of domestic mail is for blocked the adoption of higher rates. delivery within the same town or urban However, this explanation clearly does area, or even within the same delivery not apply where terminal dues are set by office district); (ii) addresses are often multilateral or bilateral agreements hand-written (or are otherwise not between European postal administrations machine-readable) and (iii) post-codes are (see paragraphs 8 and 9 above). Moreover, often missing or incorrect. Furthermore, it seems to me that the very notion of DP submits that delivering mail is a highly having one rate of remuneration for the labour-intensive operation, the cost of provision of cross-border postal service which is largely determined by the wages which is identical for all operators who paid to the PPO's employees. For that are party to the agreement from which the reason, the applicant claims, it would be notion is derived is hard to reconcile with wrong to attribute the high level of domes- the considerable variation among the dif- tic postage rates to inefficiency on the part ferent countries of destination both in the of the PPO providing the service. universal service provider's actual costs and in postage rates.

Furthermore, the Convention does not sure which, if enacted or maintained in require PPOs to deduct terminal clues force by the Member State concerned with already received from the domestic postage respect to a public undertaking or an charged under Article 25(3). However, in a undertaking to which special or exclusive press release issued on 17 April 1997 DP rights have been granted, is contrary to the announced that it would do so unilaterally Community rules on free movement of (and it repeated this intention at the goods, on freedom to provide services and hearing). on competition under Article 90( 1 ) of the Treaty. At the end of the first question the national court also asks the Court to interpret Article 90(2) of the Treaty in order to give guidance as to whether the national postal administration in question, in respect of which the contested measure was enacted, must be regarded as exempted 12. The discussion up to this point has from the application of the Treaty rules shown how the remail phenomenon (see where the conditions laid clown in that footnote 1 above) owes its origin to the article are satisfied. It is the settled case-law differences in the prices charged for deli- of the Court that Article 90(1) and (2) of vering mail (national and international) in the Treaty may be relied upon directly by the various UPU member countries com- individuals before a national court if there bined with the relatively low level of is proof of the infringement of other Treaty terminal dues agreed by the public postal provisions having direct effect. 16 operators. The remailer aims, inter alia, to exploit those price differences by inviting businesses to consign their mail to the postal operators which offer the best qual- ity/price ratio for a particular destination.

my view precedes and transcends the sought to defend itself against fraudulent others. The applicant maintains — and conduct by third parties, the action it took the Commission agrees — that postal items in response to such conduct was not mailed to addressees resident in Germany unlawful. from another Member State, the content of which is ultimately determined by a Ger- man economic operator affiliated to and/or having a contractual relationship with the physical sender, are necessarily subject to Germany's domestic postage rates. It is thus not open to the defendants, their partners or the Danish and Netherlands postal operators to rely on the protection con- ferred by the relevant Treaty provisions since the practices in issue, aimed as they are at circumventing DP's statutory mono- poly, are by nature fraudulent. In the particular case of CKG, despite the fact that it belongs to a multinational group of companies, the motive for relocating print- ing and posting operations for its 'German' 15. In my recent Opinion in Centros I letters to the Netherlands was obviously observed, and I now reiterate, that 'the that of saving on postage costs. DP suggests question of abusing the law can arise only if the case comes within the Van Binsbergen the rule that is apparently being avoided doctrine, 1 7according to which the bene- undoubtedly applies to the legal situation at issue. If the apparent avoidance concerns a ficiaries of provisions of Community law provision of national law, it is therefore may not exercise their rights abusively or essential to ascertain first that the national fraudulently and, consequently, a Member provision it is hoped to apply in the case at State has the right to take measures to issue can be relied on by the court as being prevent its nationals exploiting the possibi- consistent with Community law'. 18 In this lities offered by the Treaty in an attempt to respect, however, it seems to me that DP's avoid the application of domestic legisla- line of argument begs the question. The tion. As for the alleged breach of Arti- applicant's premiss appears to be that Ger- cles 90(1) and 86 of the Treaty, DP argues man legal persons carrying on a business that, because the dominant undertaking directed essentially at the German market may not outsource even one stage of the whole production process of the product or service in question to entities genuinely established in another Member State. According to this argument, the exercise of the freedom, which the Treaty confers on 17 — C a s e 33/74 Van Binsbergen [1974] ECR 1299, para- graph 13, in which it was decided that a Member State the parties concerned, to choose from cannot be denied the right to take measures to prevent the exercise by a person providing services from another among the contractual arrangements and Member State, whose activity is entirely or principally corporate structures offered by the various directed towards the first Member State's territory, of the freedom to provide services for the purpose of avoiding the rofessional rules of conduct which would be applicable to Ehimif he were established within that State. In the same case the Court ruled that Article 59 of the Treaty has direct 18 — S e e my Opinion in Case C-212/97 Centros [19981 effect. ECR I-1459, paragraph 20).

national legal systems the one which best State in which it had been formed itself, suits their purposes could not thus, under thereby avoiding the formation of a differ- any circumstances, have the effect of pre- ent type of company in the Member State venting the application of German domes- where it had established a mere branch and tic mail tariffs to postal items of the kind in the need for compliance with that State's issue. I do not see, however, how this minimum share capital requirements, proposition can be defended at the current which were stricter than those of the stage of European integration, in which a Member State in which the parent com- single market has been all but implemented pany was formed. This result is lawful since thanks to the abolition of national obsta- it is covered by freedom of establishment cles to the free movement of persons and within the meaning of the Treaty. 2 1 capital (see Article 3(c) of the EC Treaty (now, after amendment, Article 3(1)(c)).

In the present case, the provisions of national law, application of which office but in which it conducts no business. the parties concerned have sought to avoid, are rules In that case, the establishment of a branch governing the formation of companies and not rules concerning 'the carrying on of certain trades, professions in another Member State enabled the or businesses. The provisions of the Treaty on freedom of establishment are intended specifically to enable compa- company in question to carry on its entire nies formed i n accordance with the law of a Member State business in that State rather than in the and having their registered office, central administration or principal place of business within the Community to pursue activities in other Member States through an agency, branch or subsidiary.

The ECR 1035, paragraphs 20 to 22, in which it was held Court also made it clear that this interpretation of that where a worker pursues or wishes to pursue an Articles 52 and 58 of the Treaty does not preclude the effective and genuine activity in another Member State authorities of the Member State concerned from adopting and thereby comes within the class of beneficiaries of the any appropriate measure for preventing or penalising rights conferred under Article 48(3) of the VX'. Treaty fraud, either in relation to the company itself, if need be in (now, after amendment, Article 39(3) E C ) and the relevant cooperation with the Member State in which it was secondary legislation, the motives which may have formed, or in relation to its members, where it has been prompted him to seek employment in that Member State established that they are i n fact attempting, by means of are of no account and must not be taken into considera- the formation of a company, to evade their obligations tion as regards his right to enter and reside in the territory towards private or public creditors established in the of that State. territory of the Member State concerned.

2 3 — See, inter alia, Case 10/61 Commission v Italy [1962] ECR 1, in particular p. 17. See also Case C-324/93 Evans Medical and Macfarlan Smith [1995] ECR I-563, para- graphs 2 3 , 32 and 33, in which the Court held that Article 234 of the EC Treaty (now, after amendment, Article 307 EC) takes effect only if an international 22 — As happens, for example, in cases where a service provider agreement concluded prior to entry into force of the carries on from a Member State a business which is entirely Treaty imposes on a Member State an obligation that is or principally directed towards the territory of his Member incompatible with the Treaty. And, consequently, if an State of origin for the purpose of avoiding the professional international agreement 'allows, but does not require, a rules of conduct which would be applicable to him if he Member State to adopt a measure which appears to be were established within that State (see Case C-148/91 contrary to Community law, the Member State must Veronica Omroep Organisatie [1993] ECR I-487, para- refrain from adopting such a measure'. In any event, it is g r a p h s 9 t o 14; and Case C - 2 3 / 9 3 TV10 [1994] the settled case-law of the Court that the provisions of an ECR I-4795, paragraphs 18 to 26, which concern domes- agreement concluded prior to entry into force of the Treaty tic broadcasting organisations established in a Member or prior to a Member State's accession cannot be relied on State other than the Member State to which their broad- in intra-Community relations if, as in the present case, the casts are directed in order improperly to evade their rights of non-member countries are not involved (see obligations concerning programme content under the Joined Cases C-241/91 P and C-242/91 P RTE and ITP v legislation in force in tne latter). Commission [1995] ECR I-743, paragraph 84).

24 — S e e Joined Cases 188/90 to 190/80 France, Italy & the United Kingdom v Commission [1982] ECR 2545, para- graphs 24 to 26, in particular paragraph 25, in winch the 18. To begin with, according to the case- Court approved the definition of a public undertaking as law of the Court, an undertaking such as 'any undertaking over which the public authorities may exercise directly or indirectly a dominant influence.... such DP, which has a statutory monopoly over a influence is to be presumed when the public authorities directly or indirectly hold the major part of the undcr- substantial part of the common market, takings's subscribed capital, control the maionty of the must be characterised as an undertaking in votes, or can appoint more than half of the members of its administrative, managerial or supervisory body', contained a dominant position within the meaning of in Article 2 of Commission Directive 80/723/EEC of 25 June 1980 on the transparency of financial relations Article 86 of the Treaty. The territory of a between Member States and public undertakings (OJ 1980 L 195, p. 35; as amended). I would recall that, according Member State over which such a monopoly to the case-law of the Court, the concept of 'undertaking', extends may constitute a substantial part of in particular in the context of competition law, includes any entity carrying on an economic activity, irrespective of the common market. 26The Court has also its legal form and how it is financed. adopted the principle that, while the simple 25 — See footnote 3 above together with the part of the main fact of creating a dominant position by text to which it refers, and Case C-320/91 Corbeau [1993] UCH 1-2533, paragraph 8; a body which has been granted exclusive rights as regards the collection, carriage and delivery of mail must be regarded as an undertaking to which the Member State concerned has granted exclusive 26 — See, inter AHA, ERT (cited in footnote 16 above), para- rights within the meaning of Article 90(1) of the Treaty. graph 31.

29 — See, mutatis mutandis, Case 27/76 United Brands v Commission [1978] ECR 207, paragraphs 233 and 234; and Case T-229/94 Deutsche Bahn v Commission [1997] ECR II-1689, paragraph 78. See also Case 41/83 Italy v Commission [1985] ECR 873, in which the Court dis- missed the Italian Republic's application for the annulment of Commission Decision 82/861/EEC of 10 December 1982 relating to a proceeding against British Telecommu- nications ('BT'), under Article 86 of the EEC Treaty (OJ 1982 L 360, p. 36), in which the Commission found that BT, which at the time held a statutory monopoly on the management of telecommunications systems, had abused its dominant position by adopting certain rules in the course of its business activity.

ECR 4 8 3 , paragraph 56, in which it was held that a services supplied but which were instead dictated by BT's refusal by an undertaking having a de facto monopoly to intention to protect the revenues of other national provide its services for all those who may be in need of telecommunications authorities. them but who do not come within a certain category of persons defined by the undertaking on the basis of nationality or residence is contrary to Article 86 of the 30 — See Case 3 2 2 / 8 1 Michelin v Commission [1983]

I - 842

DEUTSHE . POST

terminal dues. What is more, the legislation Treaty makes the application of the prohi- in issue to my mind comports a further bition conditional on whether or not GZS form of unequal treatment to the detriment and CKG — who in fact are purchasing a of undertakings in a similar situation to complete service, including delivery of that of the defendants as compared with postal items mailed abroad on their behalf, persons sending items from the same from their respective service providers — Member State in which they were made constitute 'other trading parties' vis-à-vis up and posted but not on the instructions DP. But these objections appear not to take or on behalf of senders resident in Ger- due account of the fact that the conduct

The partners) cannot be a factor which justifies provision of services consisting of the physical production of letters with pre-determincd content — such as the services offered by the partners of GZS and CKG and which became possible only with the advent of modern information and data processing technology — could cease to be viable if the purchaser of the overall service is forced to pay the domestic tariffs of the country of destination in addition to the international tariffs of the country of posting. 32 — Sec, inter aha .

I - 843

OPINION OF MR LA PERGOLA — JOINED CASES C-147/97 AND C-148/97

a refusal by DP to provide service or which the applicability of Article 25 of the Con- calls into question, in either of the two vention therefore concerns, at least poten- cases described above, the equivalence of tially, quite substantial volumes of foreign the services to which DP applies dissimilar mail. contractual conditions.

I - 844

DEUTSCHE POST

committed by the German postal mono- transactions, whatever the nature of those poly. 3 4 On these grounds, provisions such transactions. 35 Postal items of the kind at as those contained in the legislation imple- issue in this case do not, as such, constitute menting the Convention must be regarded objects of sale or other transactions. One as per se contrary to Article 90(1) in cannot therefore speak of a commercial conjunction with Article 86 of the Treaty. transaction in goods, ancillary to, and connected with, the provision of a service but conceptually and economically separ- able from it, nor of a principal transaction which absorbs another transaction which is purely accessory and incidental to it. 3 6 The only transaction identifiable in the present case is the provision of international letter- post services to the sender by the PPO of the country of posting against payment of the relevant postage tariff. 37 Answer to the second question referred (Articles 30, 59 and 90(1) of the Treaty)

I - 845

OPINION OF M R LA PERGOLA — JOINED CASES C-147/97 AND C-148/97

Since it constitutes a derogation to a fundamental principle of the policy, public security or public health'), to Treaty, Article 56 of the Treaty must be strictly construed. Recourse to it presupposes the existence of a genuine and sufficiently serious threat affecting one of the fundamental interests of society (see, inter alia, Case C-114/97 Com- mission v Spain [1998] ECR I-6717, paragraph 46). It follows that the article cannot be invoked for the purpose of pursuing economic aims (see, inter alia, Bond van Adverteerders, cited above, paragraph 34).

Elsewhere, the Court has held located within Germany (Hamburg and Oberhausen respectively). According to the Court's case-law, Article 59 that the Treaty (Articles 48 and 52 in the case in question) of the Treaty applies not only where a person providing also precludes any national measure which, even though it services and the recipient thereof are established in is applicable without discrimination, is still liable to different Member States, but also in all cases where the hamper or to render less attractive the exercise by person providing services offers those services in a Member Community nationals (or companies) of fundamental State other than that in which he is established, wherever freedoms guaranteed by Community law (see, inter alia, the recipients of those services may be established (see Case Case C-19/92 Kraus [1993] ECR I-1663, paragraph 32). A C-398/95 SETTG [1997] ECR 1-3091, paragraph 8).

Besides, resulting limitation placed on the freedom enshrined in Article 59 of the Treaty also applies to services which a Article 59 of the Treaty is necessary and proportionate provider supplies to recipients established in other Member (see, inter alia, Opinion of Advocate General La Pergola States without moving from the Member State in which he delivered on 4 March 1999 in Case C-124/97 Läärä and is established (see Case C-384/93 Alpine Investments Others (ECR I-6067), paragraph 31). [1995] ECR I-1141, paragraphs 21 and 22).

relationships with customers established in Does DP's unilateral commitment to Germany. It is my view that these argu- deduct the terminal dues from the full ments are both valid and pertinent: con- domestic postage rate have a hearing on trary to the view put forward by DP, how the contested national measure is to be Article 59 of the Treaty is also infringed judged? by State rules which, while they do not completely prevent the provision of cross- border services, discourage it, by making it less attractive economically. 42 I would also point out that the contested measure applies only to the delivery of items posted abroad (for our purposes, in other Member 23. The conclusions which I have reached States). In short, the objective invoked by (paragraphs 21 and 22 above) are not DP, that of maintaining sufficient financial contradicted by the fact that DP has equilibrium to enable it to fulfil its uni- unilaterally assumed, independently of any versal service obligation in the provision of requirement under the Convention, an the reserved services, is economic in nature obligation to deduct — whether with pro- and does not justify the measure at issue on spective or retrospective effect, in the the basis of Article 55 or 56 of the Treaty context of the main proceedings — the (see footnote 39 above). Accordingly, the amount of the terminal dues (already second question submitted — in the part received by it from the PPO of the Member which refers to freedom to provide ser- State of posting) from the full domestic vices ·—· should be answered in the affirma- postage rate claimed by it from the sender tive: the national legislation at issue con- in cases to which Article 25 applies. The stitutes a discriminatory measure contrary Court is called upon to interpret Arti- to Articles 90( 1 ) and 59 of the Treaty, since cles 90( 1 ), 86 and 59 of the Treaty, and it operates to the detriment of service considerations of legal certainty dictate providers in other Member States. I shall that it must take account of the abstract deal below with the question of whether an and general rules laid down in the national undertaking in DP's position may, in cir- legislation rather than the way in which the cumstances such as those of the present national legislation may be specifically case, rely on the derogation provided for applied by the privileged undertaking at under Article 90(2) of the Treaty (see issue in the main proceedings. If that be so, points 24 to 30 below). tertium non datur: cither the Court will decide that the Article 90(2) derogation is applicable in the present case (see points 24 to 30 below) and the national legislation implementing the Convention will remain applicable in the light of the whole of Article 25 (subject, naturally, to DP's right unilaterally to waive part of its claims) or else the Court will decide that the criteria for the application of the derogation arc not satisfied in the present case and the national court will be bound not to apply the contested provisions (as I shall discuss 42 — See, mter aha. Case C-76/90 Säger [1991] I - 4 2 2 1 , below in my analysis of the third question p a r a g r a p h 12; and Case C - 4 1 0 / 9 6 Ambry |1998| KCR I-7875, paragraphs 28 and 29. referred; see point 31 below).

24. DP submits in the alternative that if the Court found an infringement of Arti- cle 90(1) in conjunction with Article 86 — or, I would add, Article 59 of the Treaty — to have taken place, an undertaking in its situation would be covered by the deroga- tion provided under Article 90(2) of the Treaty. According to the applicant, the application of the provisions in question 25. As the Court held in Corbeau, the obstructs it in the performance of the collection, carriage and distribution of mail particular tasks assigned to it by the Ger- constitutes a service of general economic man State. The national court, on the other interest. 44 DP is entrusted, by the public hand, seems to find that the applicant is not authorities, with the operation of such a dependent on the right, which it has service for the benefit of all users through- asserted in these proceedings, to charge out the whole of Germany, at uniform internal postage rates in addition to term- tariffs and on similar quality conditions, inal dues, in order to maintain a universal irrespective of the specific circumstances or service at socially acceptable prices. In the degree of economic profitability of each support of this view, the referring court individual operation (see footnote 3 above submits that the applicant receives higher together with the part of the main text to overall revenues from delivering incoming which it relates). 45 Given that this is so, it cross-border mail than from delivering ordinary domestic mail, although the ser- vice costs no more to provide. The national 44 — See Corbeau (cited in footnote 25 above), paragraph 15. court also points out that the level of 45 — Article 90(2) of the Treaty, the Court recently noted, 'seeks national postage rates must, under domes- to reconcile the Member States' interest in using certain undertakings, in particular in the public sector, as an tic law, meet the objective of realising a instrument of economic or fiscal policy with the Commu- nity's interest in ensuring compliance with the rules on modern, economic postal service covering competition and the preservation of the unity of the the entire territory. 43 That being so, it must common market. The Member States' interest being so defined, they cannot be precluded, when defining the be presumed that the amount of the uni- services of general economic interest which they entrust to certain undertakings, from taking account of objectives form tariff offset is sufficient to enable DP pertaining to their national policy or from endeavouring to attain them by means of obligations and constraints which they impose on such undertakings' (see, inter alia, Case C-157/94 Commission v Netherlands [1997] ECR I-5699, paragraphs 39 and 40 (emphasis added). See also Case 43 — See Paragraph 2(2)(1) and Paragraph 4(2) of the PTRegG C-202/88 France v Commission [1991] ECR I-1223, (cited in footnote 3 above). paragraph 12).

must be determined whether or not, in the undertaking concerned, that is to its finan- present case, the two conditions for the cial balance or economic viability. 50 application of the derogation provided under Article 90(2) of the Treaty are met, that is (i) whether the performance of the particular tasks assigned to the PPO would be obstructed, in law or in fact, by the application of the Treaty rules (in this case, 26. In the context of postal services, the the rules on freedom to provide services concept of 'universal service obligation' and those on competition) to the contested ('USO') appears to be founded on a basic measure, 46 and (ii) whether the non-appli- principle of fairness, according to which it cation of the Treaty rules in question would is the State's duty as far as practicable to affect the development of trade to such an create equal opportunities and living con- extent as would be contrary to the interests ditions for all its citizens, including the of the Community, which here consist, in provision of a means of inter-personal my opinion, in the promotion of economic communication, in order to promote social and social cohesion between Member cohesion. 51 A monopoly undertaking sub- States through the establishment of the ject to a USO is thus generally required to internal market in the postal sector. 47 charge uniform prices for delivering the What must be determined is, in other mail to any geographical area within the words — and the burden of proof certainly national territory, although the cost of lies with the party invoking the deroga- providing the service may vary consider- tion: 4 8 the applicant in the present case — ably from place to place because of the w h e t h e r the rights conferred by the distances involved and the density of traffic

service. However, it is not necessary, in respectively. Articles 73 and 86 EC) and 92 of the EC Treaty (now, after amendment. Article 87 EC)], and given order for the derogation to apply, that there the piace occupied by services of general economic interest in the shared values of the Union as well as their role in be a threat to the very survival of the 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 onerate tin the hasis of principles and conditions which cnalile tliem to fulfil their

I - 849

OPINION OF M R LA PERGOLA — JOINED CASES C-147/97 AND C-148/97

at the points of origin and destination or times, frequency of delivery and reliability over a particular segment. 52 In many of the universal service). 54 Moreover, in the countries, besides, the PPO is allowed to present phase of gradual and controlled vary its pricing policy to some extent by liberalisation of the market, it is this need reference to other parameters (such as the to enable the universal service to operate weight of items or handling and delivery under financially balanced conditions times). which justifies the maintenance in almost all the Member States of a range of services, defined by weight and/or price limits, which are reserved to the national PPO. 55 As the Court observed in Corbeau, a USO imposed by a Member State on its postal monopoly presupposes that it will be possible to cross-subsidise between users and destinations and hence justifies a restriction of competition from private undertakings in the economically profitable sectors. In a liberalised market the new 27. In its observations, DP refers to the entrants would tend to engage in 'cream- normal cost implications for a PPO of skimming', in other words to concentrate being subject to a USO. It should be taken on the economically profitable operations into consideration, for example, that the covered by the universal service. In these delivery of mail to remote or thinly popu- sub-markets they would be able to offer lated areas is loss-making at the uniform lower tariffs than the PPO, even if they tariff, although the resulting losses are were less efficient, as long as their costs of covered by the profits generated from delivering the service were less than the providing the service in areas (or fields) uniform tariff charged by the PPO. The which are less costly to serve but charged at simple reason being that, unlike the latter, the uniform 'equalised' tariff. 5 3 The cost of competitors would not be obliged to apply fulfilling the USO also depends on the all or part of the profits earned in the particular terms imposed by the State on profitable sectors to offset losses incurred the PPO, in particular the minimum qual- ity-of-service standards prescribed (delivery

I-850

DEUTSCHE POST

in the unprofitable sectors. 56 In turn, the costs, given that the Netherlands PPO is loss of fairly substantial parts of a postal not a party to that agreement. The fact administration's business to new entrants remains, however, that if DP is nonetheless would reduce the flow of internal resources capable of performing its particular obliga- which it relies upon in order to fulfil its tions to provide services within the scope of USO. 5 7 the universal service, under economically acceptable conditions, the rights conferred by the national measure implementing Article 25 of the Convention in Germany cannot be deemed necessary for the pur- poses of Article 90(2) of the Treaty (sec paragraph 25 above).

and 18. The Court added, moreover, that the exclusion of competition is not justified 'as regards specific services the USO, the postal monopoly must achieve dissociable from the service of general interest which meet the profits needed to fund its operations in special needs of economic operators and which call for certain additional services not offered by the traditional the loss-making sub-markets. In contrast to postal service, such as collection from the senders' address, the facts in Corbeau, here the national greater speed or reliability of distribution or the possibility of changing the destination in the course of transit, in so measure at issue is not aimed at restricting far as such specific services, by their nature ami the conditions m wind) they are offered, such as the geogra- or preventing the possible 'cream-skim- phical area m winch they are provided, do not compromise ming' of the profitable sectors within the the economic equilibrium of the service of general economic interest performed hy the holder of the excluswe reserved services by competitors of the PPO right' (idem, paragraph 19; emphasis added). and thereby at protecting the universal 57 — Under Directive 97/67 (sec footnote 13 above) Member States may now make the granting of licences for the postal service of the Member State con- provision of nou-reseri'ed postal services subject to uni- versal service obligations or to an obligation to contribute cerned. DP, the undertaking subject to the to a fund set up to compensate the universal postal service USO in Germany, is not invoking the provider for the provision of services which represent an excessive financial burden (sec Article 9(2) and (4)). The national measure implementing Article 25 relevant German provisions are contained in Para- graphs 11 to 17 and 52 of the aforementioned Poslgeset/ of the Convention in order to safeguard its of 22 December 1997 (see footnote .Ì above). Provisions own exclusive prerogatives from attack by such as these mark the abandonment of the principle according to which universal service is funded by cross competitors wishing to enter the relevant subsidy from excess profits generated in the reserved sub-market nor does it argue that, within sectors (see J.I_ Campbell Jr, Overview of the International Postal Reform Movement, 1998, p. 10 of the manuscript, the scope of the reserved services, incoming

I - 851

O P I N I O N OF M R LA PERGOLA — JOINED CASES C-147/97 A N D C-148/97

In earnings levels from the potentially adverse addition, the applicant must produce, impact of the Convention provisions on based on a proper internal cost accounting terminal dues, which it in fact helped to system 5 9 and objective and reliable market draft and which it signed together with the other public postal operators. That is why DP invokes the right to refuse to supply one of the services reserved to it (incoming cross-border mail from another Member State), or to make provision of that service conditional on payment of the tariff applic able to another reserved service (domestic mail) in addition to the postage already paid in the country of origin. The applicant seeks to justify this position by asserting that the delivery costs of cross-border mail 59 — The onus of proof of fulfilment of the conditions required posted in another Member State are greater under Article 90(2) of the Treaty includes the criterion of

tariff. According to the applicant, the flow applied by the airlines in question. Indeed, where there is no effective transparency of the tariff structure it is of internal resources on which it can draw difficult, if not impossible, to assess the influence of the task of general interest on the application of the competi to fulfil the USO will thus be irremediably tion rules in the field of tariffs. It is for the national court 58 depleted. to make the necessary findings of fact in that connection' (see Case 66/86 Ahmed Saeed Flugreisen [1989] ECR 803, paragraphs 56 and 57; emphasis added). From the case-file in the present case it is not apparent whether the applicant, as the provider of the universal postal service in Germany, keeps transparent and separate accounts within its internal 58 — DP submitted that, first, the financial losses caused by the accounting system for each of the services within the obligation to deliver 'bogus' incoming international mail reserved sector on the one hand and for the non-reserved would, ultimately, have to be financed by the other users of services (whether forming part of the universal service or the postal service, in the form of increases or forgone not) on the otheiį on the basis of consistently applied and reductions in postage rates. Secondly, the indications were objectively justifiable cost accounting principles.

I-852

DEUTSCHE POST

the task of providing universal postal vention to postal items of the kind in service in Germany under conditions of financial equilibrium. 63 I would add, in question, it will not be able to offset the losses it may incur in the sub-market of incoming cross-border mail, plus those it 62 — See N. Hinihou, The principle oļ žnoportioiuility in Eur- may incur in other sectors covered by the opean Lanc a comparative study, London 1996, p. 169, and C. Cydal, The principle of proportionality Stockholm

The applicant in that case measures, the pcrlormance, under economically acceptable relied on Article 90(2) of the Treaty in challenging the conditions, of the tasks of general economic interest which application of certain provisions of Council Regulation it has entrusted to an undertaking woultl, m its view, be (EKC) No 2408/92 of 23 July 1992 on access (or Com jeopardised — to go even further anil prove, positively, munity air carriers to mtra-Cominunitv air rontes that no other conceivable measure, which by definition (OJ 1992 I. 240, p. 8), adorned under Article 84 of the would be hypothetical, could enable those tasks to he HC Treaty (now, after amendment. Article 80 !·('). performed under the same conditions.

I - 853

OPINION OF MR LA PERGOLA — JOINED CASES C-147/97 AND C-148/97

this regard, that — even were one to accept provision or community law. 64 A measure the applicant's argument that the necessity such as that at issue here cannot have any for the national measure should be assessed bearing on the outcome of the present case, in the light of the need for the incoming unless an undertaking in DP's position may cross-border mail service, taken on its own, come within Article 90(2) of the Treaty — to be provided under conditions of parity as by way of derogation from the directly between income and expenditure —· char- effective rules contained in Articles 90(1), ging the full internal tariff for postal items 86 and 59. of the kind in question would still be disproportionate, since it would be enough for an operator in DP's position to charge the 'virtual' sender the difference between the actual proven costs of the service and the terminal dues received.

I - 854

DEUTSCHE POST

so whether the PPO concerned charges the Answer to the fourth and fifth questions in full amount of the domestic tariff or makes Case C-148/97 (reference) a deduction for the terminal dues it has received. But such issues, clearly, lie entirely outside the scope of the questions referred 32. Turning finally to the remaining two in this case. questions referred by the Oberlandesgcricht in Case C-148/97 alone, it is my opinion that these should be answered in the negative, for the reasons given above (see point 15).

I I I— Conclusion

In the light of the foregoing considerations, I suggest that the Court answer the questions referred to it by the Oberlandesgericht as follows:

A — In Cases C-147/97 and C-148/97:

(2) Article 90(2) of the EC Treaty (now Article 86(2) EC) must be interpreted as not authorising an undertaking holding exclusive rights, which is entrusted with the provision of the universal postal service in the territory of Member State A, to rely on a national measure such as that in issue in the main proceedings to demand internal postage for the delivery of mail sent in Member State Borto refuse delivery if internal postage is not paid, where the content of the letters is determined by an undertaking in Member State A and transmitted by electronic data transfer to an undertaking having its seat in Member State B in order to be printed out, prepared for dispatch and handed over to the postal service there, unless the undertaking entrusted with the provision of the universal postal service in Member State A adduces proof, based on transparent, detailed and verifiable internal accounts and objective and reliable market data, that: (i) the application of Articles 90(1), 59 and 86 of the Treaty to the contested national measure would prevent it from providing the universal postal service under conditions of financial equili- brium and (ii) this objective cannot be achieved by other less restrictive measures.

B — In Case C-148/97 alone:

(3) The answers to Questions 1 and 2 are not dependent on the fact that the undertaking having its seat in Member State B which is responsible for printing out mailings, preparing them for dispatch and delivering them to the postal service in that country is linked, as a member of the same group, to the undertaking having its seat in Member State A which determines the content of the mailings. Similarly, if the two undertakings are independent of one another, it is immaterial whether the undertaking having its seat in Member State B operates only for the undertaking having its seat in Member State A or for a number of principals of the same type.