Explanatory Memorandum to COM(2006)594 - Amendment of Directive 97/67/EC concerning the full accomplishment of the internal market of Community postal services - Main contents
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| dossier | COM(2006)594 - Amendment of Directive 97/67/EC concerning the full accomplishment of the internal market of Community postal services. |
|---|---|
| source | COM(2006)594  |
| date | 18-10-2006 |
As part of the process of reconciling the twin objectives of a gradual, controlled opening of the postal market to competition and that of a durable guarantee of the provision of the universal service, as foreseen by the Council in its Resolution of 7 February 1994 on the development of Community postal services i, the Postal Directive i provides for a timetable for decisions on further opening to competition of the postal markets. Article 7 of the Postal Directive, states that:
- the Commission must submit by 31 December 2006 a report to the European Parliament and the Council accompanied by a proposal confirming, if appropriate, the date of 2009 for the full accomplishment of the postal internal market or determining any other step;
- the Commission proposal must be based on the conclusions of a prospective study which will assess, for each Member State, the impact on universal service of the full accomplishment of the postal internal market in 2009.
The present proposal is based on the conclusions of the Prospective Study on the impact on universal service of the full accomplishment of the postal internal market in 2009 i, as required by the Postal Directive, an Impact Assessment Report i and a Report on the application of the Postal Directive i which includes a thorough review of the sector. In these documents more detailed information can be found regarding the general background and reasoning for this proposal as outlined in the following sections.
Contents
- 2. THE COMMISSION'S PROPOSAL
- 2.1. Legal aspects
- 2.1.1. Subsidiarity principle
- 2.1.2. Proportionality
- 3. ELEMENTS OF THE PROPOSAL
- 3.2. Complementary and accompanying measures to safeguard the universal service
- 3.2.1. Alternative cost effective measures for ensuring the universal service (Articles 3 and 6)
- 3.2.2. Reinforcing and clarifying the principle that universal service tariffs must be oriented to costs (Article 12, second indent, and Article 2, paragraph 20)
- 3.2.3. Financing of the universal service (Article 7)
- 3.3. Other measures included in the proposal
- 3.3.1. Authorisation and licensing (Article 9)
- 3.3.2. Access to key postal infrastructure and services (Article 11a)
- 3.3.3. Control of fair competition (Articles 12, sixth indent, 14)
- 3.3.4. Reinforcing consumer protection (Articles 12, first indent, 19, 22, 22a)
- 3.3.5. Exercise of implementing powers by the Commission (Article 21)
- 3.3.6. National regulatory authorities (Article 22)
- 3.3.7. Provision of information to national Regulatory authorities (Article 22a)
- 3.3.8. Review and reporting on the application of the Postal Directive (Article 23)
- 3.3.9. Removal of expiring provision (Articles 26, 27)
- 3.3.10. Coherence and better regulation (Articles 1, 2, 9, 10, 11)
The objectives of the proposed action are to achieve an internal market for postal services through the removal of exclusive and special rights in the postal sector, safeguard a common level of universal services for all users in all EU countries and set harmonised principles for the regulation of postal services in an open market environment, with the aim of reducing other obstacles to the functioning of the internal market.
These objectives cannot be sufficiently achieved by Member States alone. The most striking example of this is that a number of Member States retain monopolies of varying scope over the provision of certain postal services in order to finance universal service, while others have completely or partly removed service monopolies or have firm plans to do so before 2009.
These objectives can, by the reason of the scale or effects of the proposed action, be better achieved at Community level and it is submitted that the Community can therefore adopt measures in accordance with the principle of subsidiarity as set out in Article 5 of the EC Treaty.
In accordance with the principle of proportionality, as set out in Article 5 of the EC Treaty, this Directive does not go beyond what is necessary in order to achieve the proposed objectives.
This proposal for an amended Directive continues to provide for a general framework of regulatory elements, rather than a detailed set of rules to regulate the sector.
The principle of proportionality is the reason why the proposal contains a range of choices for Member States on how best to attain the proposed objectives:
- the methods of financing proposed in Article 7 leave Member States a large choice of options to choose from, rather than imposing one single solution;
- the issue of access to the network is addressed in the proposed new Article 11a and leaves it to Member States to assess the need for and extent of regulation concerning access to certain elements of the postal infrastructure or services and to regulate downstream access to sorting and delivery parts of the network;
- it is proposed to remove the requirement to monitor cross-subsidies though sector specific rules currently in Article 12, sixth indent, and to leave the effective regulation of this issue to Member States;
- it is not proposed to create new bodies to coordinate the activities of national regulatory authorities.
3.1. Confirmation of the market opening timetable set in the Directive on the basis of the conclusions of the Prospective Study on the impact on universal service of the full accomplishment of the postal internal market in 2009
The Prospective Study concludes that the achievement of an internal market for postal services in all Member States in 2009 is compatible with the maintenance of a high quality universal service and confirms full market opening by the 1st of January 2009.
The confirmation of 2009 as the date for completion of the internal market for postal services will allow the benefits of greater competition to improve service levels, in terms of quality, prices and choice available to customers and to unlock the growth and employment potential of the sector. It is also a necessary and proportionate response to the needs both of users and of the broader European economy.
In order to maintain territorial and social cohesion, and taking into account that Member States may adapt some specific service features to accommodate local demand by applying flexibility provided in the Postal Directive, it is appropriate to fully maintain the universal service and the associated quality requirements set out in the said Directive.
Consequently, this proposal provides for a new Article 7 which, in its first paragraph, prohibits Member States to grant or maintain exclusive and special rights in the postal sector.
The Prospective Study has identified a number of accompanying, or 'assisting', measures, at both EU and national level that Member States may adopt to safeguard the universal service if this becomes necessary. Some of these are regulatory and some are market based, but all are designed to facilitate and/or safeguard the provision of the universal service under financially viable conditions in a competitive market. These measures are considered sufficient to make market opening possible in all Member States.
Additional safeguards, in the form of specific financing mechanisms have also been identified to compensate, if necessary and proportionate, the uneconomic cost of providing the universal service, in ways which would be less distortive for the internal market than the retention of monopolies.
Some of the regulatory measures designed to safeguard the universal service are already available under the current Postal Directive, such as adapting the provision of universal service to users' needs within the limits of the Postal Directive, introducing service obligations on licensed operators, intervention of regulatory authorities to protect competition and, as appropriate, the introduction of downstream access to the sorting and delivery part of the network. To the extent that additional regulatory assisting measures would be required at Community level, these have been reflected in this proposal.
Furthermore Member States should themselves decide on the measures that are either connected with the operation of the market or are not part of the Community framework. As illustrated in the Prospective Study and sector studies, these may include further increased efficiency measures to be adopted by incumbent universal service providers, diversification of their sources of revenues, and measures to stimulate volume.
In accordance with the proposed EU postal framework, Member States will be able to determine the best adapted combination of the different measures that could be implemented to safeguard the universal service in the new market environment.
Article 4 of the Postal Directive established a preference for the provision of the universal service through the mandatory ex-ante designation of universal service provider(s). The development of greater competition and choice in the market means that there may be other equally effective ways of ensuring the provision of the universal service. This proposal provides, through proposed amendments to Articles 4 and 3 i, that Member States have the possibility to determine the most efficient and appropriate mechanism to guarantee the availability of the universal service, while respecting the principles of objectivity, transparency, non discrimination, proportionality and least market distortion.
These mechanisms may facilitate the provision of the universal service or parts of it by, for instance, leaving its provision to market forces or allowing Member States to identify the specific services or regions where the universal service cannot be ensured by market forces and procuring those services in a cost effective manner through public tendering.
Coherent with the enhanced flexibility of Member States to ensure the provision of the universal service in ways other than the ex ante designation of the universal service provider(s), this proposal provides, through an amendment to Article 6, that Member States can decide how best to ensure that the information concerning universal services is made available to the public.
3.2.2. Reinforcing and clarifying the principle that universal service tariffs must be oriented to costs (Article 12, second indent, and Article 2, paragraph 20)
The principle that services must be cost oriented has been translated in a different manner in the different language versions of Directive 97/67/EC, leading to possible differences of interpretation. The use of the concept cost orientation, in the language versions where this is still not the case at present, will contribute to the uniform application of this principle. Furthermore, the principle that prices must stimulate efficiency gains will improve the application of this provision for the benefit of users. Article 12, second indent, of the Postal Directive allows Member States to deviate from the principle that tariffs of universal services must be cost oriented by applying a uniform national tariff, which applies irrespectively of distance and other service costs, so as to better ensure social and territorial cohesion.
As highlighted by sector studies, the mandatory provision of uniform tariffs in a fully competitive environment may lead to increasing costs for and risks to the viability of certain services, as the universal service provider will risk loosing profitable business in those areas subject to competitive pressure. Sector studies also show that the uniform tariff is likely to be maintained by universal service providers after full market opening for a large number of services.
Under these circumstances, Member States should limit regulatory intervention to ensure the financially viable provision of the universal service. By allowing universal service providers the necessary flexibility to react to competition, any risks to the financial equilibrium of the universal service will be limited. For this reason, this proposal provides, through an amendment to Article 12, second indent, that Member States should limit tariff uniformity to items, including those for national and EU destinations, subject to single piece tariffs (such as the ones paid through stamps), which are mostly used by consumers and small enterprises and for which competition is expected to be limited. A definition of the term single piece tariff is included in Article 2, paragraph 20.
The proposed amendment includes also the possibility for Member States to require uniform tariffs whenever other legitimate public interests are at stake, such as in cases where postal services are used for press distribution in absence of other distribution channels. This aspect is further specified in Recital 24.
In some cases following the adoption of accompanying measures to safeguard the universal service, financing the residual costs of the provision of universal service may still be necessary in some Member States. Through a new Article 7 this proposal clarifies the alternatives available to Member States in cases where there is a need for external financing of the universal service.
Member States should enjoy the freedom to decide the method of financing that is best adapted to their particular situation, while taking care at the same time of avoiding any disproportionate distortions to the functioning of the market.
The financing alternatives in the new Article 7 include public compensation through direct state subsidies (paragraph 3) or, indirectly, financing through the use of public procurement procedures (paragraph 2). As there is a detailed body of Community rules and case law regulating public procurement and public compensation for services of general economic interest, which also applies to the postal sector, it is not necessary to introduce any new rules in these areas.
Finally, the proposed paragraphs 3(b) and 4 of Article 7, continue to provide for the possibility, previously included in Article 9 of the Postal Directive, to introduce a compensation fund to compensate for the unfair burden incurred by the universal service provider(s) in the provision of the service. To date, experience with the compensation fund as a mechanism for financing universal postal service has been very limited. However, this is not surprising, as the substantial reserved area still in place in most Member States was an obvious source of financing. Without the reserved area however, it is likely that several Member States may revisit the need for a compensation fund, making it a potential safeguard that should be maintained. Article 7, paragraphs 3(b) and 4, also highlight the possibility of solving any residual net costs of universal service, through the introduction of a fee on service providers and/or users.
Member States may continue to use authorisation and individual licenses whenever justified and proportionate to the objective pursued, subject to the provisions of Article 9 of the Postal Directive. However, as highlighted by the third Commission Report on the Application of the Postal Directive, further harmonisation of the conditions that may be introduced and the principles applicable to those conditions and procedures appears to be necessary so as to reduce unjustified barriers to the provision of services in the internal market.
This proposal provides for an amendment to Article 9, paragraph 2, which introduces the following list of prohibited conditions, drawn from practical experience and sector studies:
- Limiting the number of licensees. This measure has been used in other network industries in which duplication of the infrastructure is not economically, physically or socially desirable, reasons which do not apply in the postal sector.
- The concurrent requirement to contribute to a sharing mechanism and the imposition of universal service or quality obligations for the same quality, availability and performance requirements. The universal service obligations spread the uneconomic costs of the service between several companies while the compensation fund imposes a levy on companies to finance the uneconomic cost incurred by one company, making its combined application unjustified.
- Duplicate conditions which are applicable to undertakings by virtue of other, non sector specific, national legislation; this will limit unnecessary administrative costs on postal service providers.
- Disproportionate or unjustified technical or operational conditions. Any conditions aimed at, for instance, protecting the confidentiality of mail, or facilitating the return of wrongly delivered mail would continue to be acceptable.
These prohibitions do not apply to designated universal service provider(s), which may be subject to a different type of regulation as they may have to meet different objectives or operate under a distinct legal basis, such as public ownership.
Drawing on the experience of some Member States, this proposal introduces a new Article 11a in order to require Member States to assess whether, in a multi-operator environment, a number of elements of the postal infrastructure or services:
- may be indispensable for or greatly facilitate the provision of services by operators willing to compete with universal service provider(s); and/or
- benefit users and consumers by reducing the number of items which are wrongly addressed or cannot be returned to its sender, ensuring overall quality of mail and the protection of essential requirements to the benefit of all operators and users.
As the legal status and market situation of these elements of the postal infrastructure or services is different in Member States (e.g. owned or provided exclusively by the universal service provider, owned or provided by several operators), it is proposed to limit this requirement for Member States to that of adopting an informed decision on the need and extent for regulation, the choice of the regulatory instrument and any eventual compensation that may be required.
The proposed Article 11a does not modify the regulation of downstream access to the sorting and delivery part of the network. As regards the latter, Member States must continue to comply with Article 12, fifth indent, and may, in the light of national conditions, introduce other measures to ensure access to the public postal network under conditions which are transparent and non discriminatory.
In a fully competitive environment, Member States must conduct the delicate exercise of providing sufficient freedom to universal service providers to adapt to competition and at the same time, ensure adequate monitoring of the behaviour of the likely dominant operator in order to safeguard effective competition.
Because this exercise will require an assessment of the market conditions, institutional arrangements and oversight capacities of every Member State, it is appropriate to leave Member States the freedom to decide the precise regulatory mechanisms for the control of the incumbent operator, while maintaining a necessary minimum common ground. This justifies, on the one hand, the deletion of the requirement imposed on Member States to monitor cross-subsidies through sector specific rules and, on the other, the maintenance of the rules on transparency of accounts.
Concerning cross-subsidies, and the absence of a reserved area as a clear source of competitive distortions that justified current rules, this proposal provides, therefore, through the proposed deletion of Article 12, sixth indent, that Member States should decide on how best to ensure that the behaviour of the universal service provider, which will often be a dominant operator in a market, does not lead to competitive distortions. Member States may for that purpose establish specific ex ante controls (as required by the current Directive) or rely on the ex-post application of competition law by competition authorities and/or national regulatory authorities.
Concerning the rules on accounting transparency applicable to universal service provider(s), an adapted cost accounting separation requirement is still necessary during the transition towards a competitive market. The proposed amendments to Article 14 reflect the new situation where there will no longer be a reserved area. Given the existence of cooperation between national regulatory authorities to develop best practices and common approaches in this area (e.g. by the Committee of European Postal Regulators) it is not necessary, in accordance with the principles of better regulation, to introduce more detailed and binding rules on cost allocation in the Directive.
In line with existing rules applicable to other service areas and in order to enhance consumer protection in an evolving market, this proposal provides, through an amendment to Article 19, to extend the application of minimum principles concerning complaint procedures beyond universal service provider(s).
Consumer interests are also further protected through: 1) the enhanced inter-operability between operators resulting from access to certain elements of infrastructure and services, as provided for in the proposed new Article 11a, as further explained above; 2) the requirement for cooperation between national regulatory authorities and consumer protection bodies included in the proposed amendment to Article 22, second paragraph; 3) the clarification of the role and powers of national regulatory authorities to monitor and supervise the universal service in Article 22, third paragraph, and Article 22a, first paragraph.
Finally, given the importance of postal services for blind and partially sighted persons as consumers of postal services, it its proposed to confirm in Article 12, first indent, that the process of market opening should not curtail the continuing supply of certain free services for blind and partially sighted persons introduced by the Member States in accordance with applicable international obligations established in the framework of the Universal Postal Union.
The Committee established by the Postal Directive is charged with assisting the Commission in the exercise of its implementing powers and, in particular, with the amendment of Annex 1 concerning quality of service objectives for intra-Community cross-border services, and adopting conditions of standardised quality measurement (cfr. Article 16 of the Directive).
As the regulatory functions of this Committee concern the amendment of non essential elements of the Directive it is appropriate to align the rules that govern it with the regulatory procedure recently introduced in the Council Decision laying down the procedures for the exercise of implementing powers conferred on the Commission i, which provides the European Parliament with additional mechanisms to scrutinise such measures.
The role of national regulatory authorities is likely to remain crucial, in particular in those Member States where the transition to competition still needs to be completed. In order to improve the effective functioning of those bodies, and drawing on the experience in similar regulated areas and discussions in the European Committee of Postal Regulators as well as various sector studies, this proposal provides for the following amendments to Article 22:
- Structural separation of the regulatory functions from activities associated with ownership or control in an operator. In accordance with the principle of separation of regulatory and operational functions, Member States should guarantee the independence of the national regulatory authorities, in particular concerning functions associated with ownership where a clear conflict of interest in government may exist, thereby ensuring the impartiality of their decisions. This requirement, which exists in other network industries, does not necessarily entail the creation of any new administrative structures, but does require that there be a clear and stable separation of the functions exercised by different public bodies (Article 22, first paragraph).
- Transparency in the allocation of regulatory functions and cooperation between national bodies exercising regulatory functions. Due to the frequent involvement of different national bodies in the exercise of regulatory functions, it is proposed to require that further transparency, and hence clarity, is introduced in the allocation of their tasks. Due to the frequent overlap in the tasks of the bodies responsible for sector regulation, the application of competition rules and the protection of consumers, it is proposed to require these bodies to cooperate in order to better ensure the effective accomplishment of their tasks (Article 22, first and second paragraph).
- Confirmation of the right to appeal against decisions made by national regulatory authorities and of their temporary standing, in order to guarantee market clarity during the market opening process and without prejudice to Member State's division of competences within their national judicial systems and to the rights of legal entities or natural persons under national law (Article 22, third paragraph).
- Enhanced cooperation between EU national regulatory authorities, in order to provide legal support and impetus to the existing work carried out by existing bodies, such as the Committee of European Postal Regulators and the Postal Directive Committee, in promoting best practice and promoting harmonisation of regulatory practices in the internal market without necessarily requiring the creation of new administrative structures (Article 22, second paragraph).
National regulatory authorities need to gather information from market players in order to carry out their tasks effectively. The absence of specific powers to collect information from postal operators has been continuously highlighted by the European Committee of Postal Regulators, statistical bodies and sector studies as a major shortcoming for the enforcement of the Directive and implementing national rules. This proposal provides for the introduction of a new Article 22a to empower national regulatory authorities to collect information whenever proportionate and justified, including for statistical purposes.
This proposal provides for the retention of regular monitoring and reporting on the application of the Directive to Council and Parliament in order to anticipate any further regulatory measures that may be necessary to ensure the universal service and/or the market opening process. Drawing on past experience, it is proposed to amend Article 23 to extend the reporting period from two to three years. This reporting period takes into account the pace of market developments and social aspects of the application of the Directive, and provides a sufficient timeframe on which to base any policy recommendations.
In line with the decision to remove special and exclusive rights in 2009 (Article 7, first paragraph), this proposal provides for the repeal of the existing expiring provision in Articles 26, paragraph 2, and 27 of the Postal Directive.
This proposal provides a number of amendments in order to improve the legal clarity and coherence of the Postal Directive.
- Article 1, second indent: the proposed amendment is coherent with the amendment to Article 7 to reflect that postal services may no longer be reserved;
- Article 2, paragraph 6: the proposed amendment clarifies the scope of application of the Directive, and in particular that the Directive applies to all postal service providers and not only universal service providers;
- Article 2, paragraph 8: the proposed amendment is coherent with the amendment to Article 7, as the concept of direct mail has only been used in connection with the services that may be reserved;
- Article 9, paragraph 5: the proposed amendment is coherent with the amendment to Article 7, as the concept of direct mail has only been used in connection with the services that may be reserved;
- Title of Chapter 4: the proposed amendment to the tile of Chapter 4 is coherent with the amendment to Article 7 to reflect that the difference between reserved and non-reserved postal services no longer exists under this proposal;
- Article 10: the proposed amendments reflect the new numbering of the EC Treaty and also that the difference between reserved and non-reserved postal services no longer exists under this proposal;
- Article 11: the proposed amendment reflects the new numbering of the EC Treaty;
- Article 12, fifth indent: the term private is deleted as the fact of whether a customer is public or private is irrelevant and may be misleading;
- Article 26, paragraph 1: the proposed deletion of Article 26 i is coherent with the amendment to Article 7 to reflect that postal services may no longer be reserved and more liberal measures cannot therefore be introduced.
In order to facilitate consistent transposition of the adapted regulatory framework, the Commission is determined to overseeing and discussing with Member States the proper transposition, implementation and enforcement of the new provisions of the Directive.