C-174/97

Fédération Nationale des Syndicats d'Agents Généraux d'Assurances (FNSAGA), an association governed by French law, established in Paris,

Federation Française des Courtiers d'Assurances et de Réassurances (FCA), an association governed by French law, established in Paris,

Bureau International des Producteurs d'Assurances et de Réassurances (BIPAR), an association governed by French law, established in Paris,

represented by Xavier de Roux and Dominique Voillemot, of the Paris Bar, with an address for service in Luxembourg at the Chambers of Jacques Loesch, 11 Rue Goethe,

appellants,

* Language of the case: French.

French Republic, represented by Kareen Rispal-Bellanger, Deputy Director at the Legal Affairs Directorate of the Ministry of Foreign Affairs and Jean-Marc Belorgey, Special Adviser in the same directorate, acting as Agents, with an address for service in Luxembourg at the French Embassy, 8B Boulevard Joseph II, and

La Poste, a public-law corporation, established in Boulogne-Billancourt (France), represented by Hervé Lehman, of the Paris Bar, with an address for service in Luxembourg at the Chambers of Aloyse May, 31 Grand-Rue,

interveners,

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T H E C O U R T (Fourth Chamber),

2 According to the contested judgment, on 12 December 1990, the Bureau Interna- tional des Producteurs d'Assurances et de Réassurances (BIPAR), the Fédération Nationale des Syndicats d'Agents Généraux d'Assurances (FNSAGA) and the Fédération Française des Courtiers d'Assurances et de Réassurances (FCA) lodged

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a complaint with the Commission concerning the aids which, in their view, had been granted to La Poste by Law N o 90-568 of 2 July 1990 on the organisation of the public postal and telecommunications services, published in the Journal Offi- ciel de la République Française (hereinafter 'the J O R F ' ) of 8 July 1990 (hereinafter 'the 1990 Law') (paragraphs 4 and 7 of the contested judgment).

3 Under Article 1 of the 1990 Law, La Poste is, as from 1 January 1991, converted into a public-law corporation under the authority of the Minister for Posts and Telecommunications.

7 By letter of 21 February 1995 the Commission sent a copy of the contested decision to the complainants FFSA, Groupama and USEA for information pur- poses (paragraph 15).

8 By application lodged at the Registry of the Court of First Instance on 24 April 1995, the applicants initiated proceedings before the Court of First Instance.

9 For a more detailed account of the facts which gave rise to the dispute, reference is made to paragraphs 1 to 24 of the contested judgment.

The contested judgment

10 In the contested judgment, the Court of First Instance dismissed the application.

1 1 The applicants' first and second pleas, alleging infringement of the rights of the defence and breach of the obligation to state the reasons for the contested decision, were held inadmissible (paragraphs 49 and 61 of the contested judgment).

99. That discretion is notably wider in relation to compliance by Member States with the competition rules because, in the first place, Article 90(2) requires the Commission to take account, in exercising that discretion, of the demands inherent in the particular tasks of the undertakings concerned and, secondly, because the authorities of the Member States may in some instances have a sufficient degree of latitude in regulating certain matters, such as, in the present case, the organisation of public services in the postal sector (judgment of the Court of First Instance in Case T-32/93 Ladbroke Racing v Commission [1994] ECR II-1015, paragraph 37).

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100. Since the present case involves an assessment of complex economic facts, the discretion exercised in evaluating additional public service costs is all the more wide, since it is comparable to that exercised by the Commission when applying Article 92(3) of the Treaty (judgments of the Court of Justice in Case C-301/87 France v Commùsion [1990] ECR I-307, paragraph 49, in Case C-142/87 Belgium v Commission [1990] ECR I-959, paragraph 56, and in Case C-303/88 Italy v Commission [1991] E C R I-1433, paragraph 34).

101. Furthermore, as the case-law makes clear, the Community court's function in an action for annulment is solely to determine whether the contested decision is vitiated by one of the grounds of illegality set out in Article 173 of the Treaty; it cannot substitute its own assessment of the facts for that of the deciding authority especially in the economic sphere (judgment of the Court of Justice in Case C-225/91 Matra v Commission [1993] E C R I-3203, paragraph 23). It follows that the review which this Court is called upon to perform in the present case in rela- tion to the Commission's assessment must be confined to verifying the accuracy of the facts found and establishing that there is n o manifest error of assessment.

107. The Court finds that the applicants' submissions alleging defects in the meth- ods of calculation are not such as to disturb the Commission's evaluation.

112. N o r have the applicants demonstrated that an alternative, more accurate method for calculating the additional costs on the basis of the information avail- able at the time could have been used.

113. Since the applicants contest the assessments made by the Commission in a general way only and without producing any specific evidence or arguments to call those assessments into question, it must be concluded, in view of the foregoing considerations, that the applicants have not demonstrated that the Commission based its decision on factually incorrect data or exceeded its power of assessment in the matter when evaluating the additional public service costs.

114. It is not contested that the tax concession in question enjoyed by La Poste under Article 21 of the 1990 Law, namely the 8 5 % reduction in the basis of assess- ment to local taxation, amounted in 1994 to FF 1.196 billion. The Court therefore finds that the Commission was correct to consider that the amount of that tax concession did not exceed the additional public service costs, even if

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tax advantage enjoyed by La Poste exceeds its additional public service costs, is open to challenge. There are two main aspects to this argument.

135. First, in the absence of any analytical accounts at La Poste, it is impossible to assert, as does the Commission, that the tax concession does no more than balance the additional public service costs: it benefits the undertaking "La Poste", that is to say all the activities of La Poste including activities it also pursues in the insurance sector, something which is contrary to the competition rules. In this regard, the applicants point out that the same offices and staff are simultaneously assigned to the public interest services and competitive services. They also point out that the Court of Justice has held that aid granted to an undertaking like La Poste in order to offset additional public service costs enables it to release other resources for competitive activities or, at least, to promote the development of those activities at less cost (judgment of the Court of Justice in Case C-303/88 Italy v Commission, cited above, paragraph 14).

136. Still on this aspect, the applicants assert that the aid in question is not strictly targeted at public service activities as Community law requires because, according to Article 21 of the 1990 Law, the 8 5 % reduction in the bases for assessing La Poste to local taxation includes La Poste's total costs and turnover, including the proportion represented by competitive activities.

137. Furthermore, the data compared by the Commission is not genuinely com- parable because post offices are maintained in rural areas not out of concern for profitability but owing to the need to maintain an "administrative base" in rural areas as part of regional planning. Consequently, the cost of a public service depends only on political decisions and is nothing other than the cost which the public at large wishes to devote to it.'

165. It is clear from Article 90 of the Treaty that, save only for the reservation in Article 90(2), Article 92 covers all undertakings, private or public, and all their production (judgment in Case 78/76 Steinike & Weinlig [[1977] ECR 595], para- graph 18). Thus, the Commission's power, under Article 93 of the Treaty, to assess the compatibility of aid with the common market also extends to State aid granted to the undertakings referred to in Article 90(2), in particular those which the Member States have entrusted with the management of services of general econ- omic interest (judgment in Case C-387/92 Banco Exterior de Espana [[1994] ECR I-877], paragraph 17). Furthermore, the Court of Justice has held that the rules of competition also apply to the postal sector (judgments in Joined Cases C-48/90 and C-66/90 Netherlands and Others v Commission [1992] E C R 1-565 and in Case C-320/91 Corbeau [[1993] ECR 1-2533]).

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166. As stated in paragraph 114 above, it is not disputed that the tax concession enjoyed by La Poste amounted to FF 1.196 billion for 1994.

167. In principle, that tax concession constitutes State aid within the meaning of Article 92(1) since, although not taking the form of a transfer of State resources, it places La Poste in a more favourable financial situation than other taxpayers, including the companies represented by the applicants (judgment in Case C-387/92 Banco Exterior de España, cited above, paragraph 14).

168. It has been consistently held that aid within the meaning of Article 92(1) of the Treaty covers advantages granted by the public authorities which, in various forms, mitigate the charges normally included in an undertaking's budget (judg- ments of the Court of Justice in Case C-241/94 France v Commission [1996] I-4551, paragraph 34, in Case C-39/94 SFEI and others [1996] I-3547, paragraph 58, and in Case C-387/92 Banco Exterior de España, cited above, paragraph 13).

172. It follows from the wording of that provision, in particular from the words "in so far as the application of such rules [which are those contained in Article 92 of the Treaty] does not obstruct the performance ... of the particular tasks", that, where Article 90(2) may be relied upon, a State measure caught by Article 92(1) may nevertheless be considered to be compatible with the common market (judg- ment in Case C-387/92 Banco Exterior de España, cited above, paragraphs 14 and 15, and see, to the same effect, the Opinion of Advocate General Lenz in that case, E C R [1994] I-879, paragraph 66). Although the aid involved is still State aid within the meaning of the latter provision, the effect of the competition rules may never- theless be curtailed in such a case (judgment of the Court of Justice in Case 66/86 Ahmed Saeed Flugreisen and Others [1989] E C R 803, paragraph 56), so that a pro- hibition on giving effect to new aid, inferred from Articles 92 and 93(2) and (3) read together, may be declared inapplicable.

173. Because Article 90(2) of the Treaty lays down a derogating rule, it must be interpreted restrictively. So, in order that the derogation from the application of the rules of the Treaty provided for by that provision may apply, it is not sufficient that the undertaking in question has been entrusted by the public authorities with the operation of a service of general economic interest: the application of the rules of the Treaty, specifically those of Article 92, must also obstruct the performance of the particular tasks assigned to the undertaking and the interests of the Com- munity must not be affected (judgment of the Court of Justice in Case C-179/90 Merci Convenzionali Porto di Genova [1991] E C R I-5889, paragraph 26).

175. In its judgment in Case C-393/92 Almelo [1994] E C R I-1477, paragraph 46, the Court of Justice held that restrictions on competition from other economic operators may be permissible pursuant to Article 90(2) in so far as they are neces- sary to enable the undertaking to perform a task of general interest assigned to it. In particular, the Court held in this regard that "it is necessary to take into con- sideration the economic conditions in which the undertaking operates, in particu- lar the costs which it has to bear and the legislation, particularly concerning the environment to which it is subject" (paragraph 49). In that case, the Court thus found that the application of an exclusive purchasing clause could escape the pro- hibitions laid down in Articles 85 and 86 to the extent that the restriction on com- petition entailed by the clause was necessary in order to enable the undertaking in question to perform its task of general interest.

176. In its judgment in Case C-320/91 Corbeau, cited above, the Court similarly held that the grant of exclusive rights as regards the collection, carriage, and dis- tribution of mail to the Belgian Régie des Postes, which were capable of entailing restrictions on competition, could be justified to the extent that those restrictions were necessary to ensure performance of the particular task assigned to that under- taking.

177. In that case, the Court examined the question as to whether the exclusion of competition was necessary in order to provide the holder of the exclusive rights with economically acceptable conditions. It considered that the starting point for such an examination must be "the premiss that the obligation ... to perform [the] services in conditions of economic equilibrium presupposes that it will be possible

180. In those circumstances, even though the financial results from those years cover all La Poste's activities, there being no analytical accounts permitting La Poste's performance in its different sectors of activity to be distinguished, the Court considers that the Commission was entitled to take the view, without breaching the limits of its power of assessment, that in the present case the tax concession in question was not greater than was necessary to ensure that the tasks of public interest assigned to La Poste are performed, namely in particular the obligation to maintain a postal presence in rural areas, as it can be assumed that the resulting additional costs correspond to equivalent losses for La Poste. The

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fact of having authorised State aid 'which stayed below those additional costs can- not therefore render Article 90(2) of the Treaty inapplicable in this case and, accordingly, it cannot constitute an infringement of Article 92 of the Treaty.

181. The Court also considers that the applicants have not produced any evidence or arguments to support their assertion that the aid in question is not necessary for the performance of the public service obligations assigned to La Poste. The sub- mission challenging the necessity for the aid in question must therefore be dis- missed.

182. The applicants' submissions to the effect that the methods used by the Com- mission were inappropriate must now be examined. According to them, because La Poste has no analytical accounts, it is impossible to say that the tax concession in question does not, contrary to Community law, benefit its competitive activities.

186. However, there is as yet no Community legislation providing for the intro- duction of an analytical accounts system for undertakings which, whilst entrusted with public service tasks, engage in activities in competitive sectors.

187. Secondly, the actual application of the competition rules in circumstances such as those existing in the present case necessarily involves complex economic and legal assessments which must be made within a Community context (see, for example, the judgment of the Court of Justice in Case C-303/88 Italy v Commis- sion, cited above, paragraph 34). Consequently, the Commission must be allowed a certain discretion in deciding on the most appropriate method for making sure that the competitive activities do not receive any cross-subsidy.

188. Whilst it is true that the grant of State aid to an undertaking may allow the undertaking to release other resources for other activities (judgment in Case C-303/88 Italy v Commission), the Court nevertheless considers that where the aid concerned is granted to an undertaking of the kind contemplated in Article 90(2) of the Treaty, the possibility of a cross-subsidy taking place is excluded to the extent to which the aid in question remains lower than the additional costs gener- ated by the particular task referred to in that provision.

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189. Moreover, as was held in paragraph 178 above, Community law does not pre- clude a Member State from granting State aid to an undertaking entrusted with the management of a service of general economic interest in order to offset the addi- tional costs of the particular task assigned to it, provided that the aid is necessary in order for that undertaking to be able to perform its public service obligations under conditions of economic equilibrium. Consequently, unless Article 90(2) of the Treaty is to be rendered entirely ineffective, the Court considers that it must be acknowledged that the method of comparison used by the Commission in the present case was appropriate for making reasonably sure that the grant of State aid in question involved no cross-subsidy contrary to Community law.

193. Contrary to what the applicants maintain, the fact that the Commission has urged the French Government to ensure that La Poste's accounting system is improved in the future provides no ground for inferring that in adopting the con- tested decision the Commission recognised that a cross-subsidy existed. Even if La Poste's accounting system may be improved in the future so as to afford greater transparency in the breakdown of costs, the Commission was nevertheless entitled, as held in paragraphs 183 to 189 above, to find, on the basis of the information available at the time, that the grant of the tax concession in question entailed no risk of a cross-subsidy.'

The appeal

18 In their appeal, the appellants are asking the Court to annul the contested judg- ment, to annul the contested decision and to declare that, under Article 92(1) of the Treaty, the provisions of the 1990 Law in question are incompatible with the common market.

19 In support of their appeal, the appellants raised a single plea in law, consisting of three parts.

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24 According to settled case-law, where an appeal merely repeats or reproduces ver- batim the pleas in law and arguments previously submitted to the Court of First Instance, including those based on facts expressly rejected by that Court, it fails to satisfy the requirements under Article 51 of the E C Statute of the Court of Justice and Article 112(1)(c) of the Rules of Procedure. In reality, such an appeal amounts to no more than a request for re-examination of the application submitted to the Court of First Instance, which, under Article 49 of the EC Statute, falls outside the jurisdiction of the Court of Justice (see, in particular, the order of 12 December 1996 in Case C-49/96 P Progoulis v Commission [1996] E C R I-6803, paragraph 25, and the order of 16 September 1997 in Case C-59/96 P Koelman v Commission [1997] ECR I-4809, paragraph 52).

25 In the present case, it must be held that, as is apparent from paragraphs 134 to 136 of the contested judgment, the appellants have merely repeated the arguments pre- viously submitted to the Court of First Instance, without attempting to establish that its findings are vitiated by errors of law. The first part of the plea must there- fore be dismissed as clearly inadmissible.

The second part of the plea

26 By the second part of their plea, the appellants claim that the Court of First Instance misapplied the interpretation of Article 90(2) of the Treaty adopted by the Court of Justice in Corbeau, cited above, in excluding La Poste's competitive activities from the scope of that provision and holding that the aid was intended to enable the undertaking to fulfil its public service obligations on a break-even, or even a profitable, basis.

31 The Court of First Instance rightly held, at paragraph 174 of the contested judg- ment, that such a reference to that case-law was necessary in order to determine whether Community law precluded a Member State from granting State aid to off- set the additional costs assumed by an undertaking entrusted with the operation of a service of general economic interest within the meaning of Article 90(2) of the Treaty where those additional costs arise from performance of the particular task assigned to it.

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32 Second, the appellants claim that the Court of First Instance misapplied paragraph 19 of the judgment in Corbeau, according to which Article 90(2) of the Treaty does not apply 'as regards specific services dissociable from the service of general interest which meet special needs of economic operators and which call for certain additional services not offered by the traditional postal service ...'. In their opinion, the distribution of financial and insurance products by La Poste constitutes spe- cific services which satisfy the criteria laid down in Corbeau. It is therefore inap- propriate to exclude them from competition and to exempt them pursuant to Article 92(1) of the Treaty.

36 This argument, in so far as it concerns the assessment of the additional costs relat- ing to La Poste's public service obligations with a view to determining whether those costs could be offset by the aid in question, bears upon the facts of the dis- pute as determined by the Court of First Instance.

37 At paragraph 114 of the contested judgment, the Court of First Instance found that it was not contested that the tax concession in question enjoyed by La Poste under Article 21 of the 1990 Law, namely the 8 5 % reduction in the bases of assess- ment to local taxation, amounted in 1994 to FF 1.196 billion. In the same para- graph, the Court of First Instance held that the Commission rightly concluded that the amount of that tax concession did not exceed the additional public service costs, even if the minimum estimate was taken into account, that is to say addi- tional costs of FF 1.32 billion.

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38 To the extent that by this argument it is claimed that the Court of First Instance erred in considering that the aid did not entail cross-subsidisation of La Poste's competitive activities, it overlaps in any event with the first part of the plea.

39 This argument is therefore clearly inadmissible.

43 This part of the plea must therefore be dismissed as clearly inadmissible.

The application for a declaration that the 1990 Law is incompatible with Com- munity law

44 The appellants asked the Court to declare, pursuant to Article 92(1) of the Treaty, that the contested provisions of the 1990 Law are incompatible with the common market.

45 In response to this claim, it is sufficient to note that it was not put forward at first instance.

46 According to Article 113(2) of the Rules of Procedure of the Court, the subject- matter of the proceedings before the Court of First Instance may not be changed in the appeal.

47 This claim is therefore clearly inadmissible.

T H E C O U R T (Fourth Chamber),

hereby orders:

1. The appeal is dismissed.

2. The appellants are ordered to bear the costs.

Luxembourg, 25 March 1998.

R. Grass H . Ragnemalm