(12) Article 86(1) of the Treaty, provides that, in the case of public undertakings and of undertakings to which Member States grant special or exclusive rights, Member States must neither enact nor maintain in force any measure contrary to the rules contained in the Treaty, in particular those relating to competition. PI is a public undertaking within the meaning of Article 86(1) because it is wholly owned by the Italian State. In addition, by virtue of Article 4 of the Decree, the state has granted PI exclusive rights.
(13) Under Article 86(1), Member States may not, by laws, Regulations or administrative measures put public undertakings and undertakings to which they grant special or exclusive rights in a position which the said undertaking could not themselves attain by their own conduct without infringing Article 82(7). Accordingly, where the Commission identifies a State measure that is enacted or maintained in violation of Article 86(1) in conjunction with Article 82, Article 86(3) empowers it to "address appropriate... decisions to Member States."
(14) It is apparent from the wording of Article 86(3) and from the rationale behind Article 86 as a whole that the Commission may take all action it considers necessary in order to safeguard the competition rules(8). The Commission enjoys the discretion to determine whether it is expedient to take action against a Member State under Article 226 or Article 86(3) of the Treaty(9). Therefore, if the Commission deems it necessary in order to safeguard the competition rules, it may proceed under Article 86(3) instead of Article 226(10). The Italian Government cannot, therefore argue that the Commission's action with respect to Article 4(4) should have been based solely on Article 226 and that this procedure is a lex specialis in relation to the Article 86(3) proceedings.
(15) Furthermore, the proceedings launched under Article 86(3) of the Treaty fully safeguard the Member States' rights of defence(11), Proceedings are opened by sending a letter of formal notice to the Member State concerned, which is given the opportunity to express its views within a deadline of two months. The Commission is entitled to adopt the decision foreseen in Article 86(3) only, after considering the Member States' observations submitted within this deadline(12). In addition, without being under any legal obligation to do so, in the present case the two-month deadline has been extended repeatedly in order to provide both PI and the Italian Government with a series of further opportunities to make their arguments known. Finally, the legality of the Commission's decision is subject to review by the European Courts. Review by the European Courts of all Commission measures taken pursuant to Article 86(3) ensures the balance between the institutions. Contrary to the view of the Italian Government, proceedings under Article 86(3) therefore do not distort the institutional balance between Member States, the Council and the Commission.
A. The relevant markets
(16) Two markets are relevant for this decision: 1. Non-conventional deliveries, which comprise the above mentioned guaranteed day- or time-certain deliveries, and 2. Conventional deliveries, which are governed by delivery targets but do not provide for certainty and guarantee as to the exact day or time of delivery.
(17) Guaranteed-time or day-certain deliveries differ significantly from the conventional deliveries as regards 1. their features, and 2. the needs they satisfy:
1. the conventional delivery service does not offer any guarantee as to the day or time on which the item of correspondence is delivered(13). The conventional delivery service is governed by general delivery targets which never specify the exact day or exact time of delivery. The conventional delivery service does not offer a guarantee as to the precise day or time the item is delivered;
2. the conventional delivery service cannot match the above-described demand for guaranteed day or time certain deliveries. The two services are not interchangeable. As mentioned above, time- or day-certain deliveries meet the special need of business customers which require that a series of time-sensitive items of correspondence are delivered at the precise date or time. The conventional delivery service, on the other hand, meets the general need of the public. For these customers the precise day or time at which the item is delivered is not relevant(14).
(18) As they offer different features and satisfy significantly different needs, it is not correct for PI to assert that guaranteed day- or time-certain deliveries are a mere evolution, and adaptation of the conventional delivery service(15). Furthermore, contrary to the Italian Government's assertion, the platform on which the letter mail item was produced was not used for defining the market. The distinction between conventional deliveries and day- or time-certain deliveries is made on the basis of the different features and different needs the two services satisfy and is thus independent of whether the mail item was collected and transported physically or electronically. The Italian Government and PI are thus wrong to argue that the Commission's definition of the relevant market was undertaken on the basis of the mode of production for the mail item.
(19) PI argues that there is no real demand for a day- or time-certain delivery service(16). However, private operators have undertaken the investment to establish the infrastructure necessary to provide the hybrid electronic mail service with day- or time-certain delivery. This is an indication that these operators have concluded that there is customer demand for the day- or time-certain delivery service. In addition, the fact that banks and insurance companies may be more price-sensitive than time-sensitive with respect to their non time-sensitive standard letter mail items(17), does not alter the fact that they are time-sensitive with respect to the particular mail items mentioned above.
(20) Finally, day- or time certain-delivery is also different from the delivery on appointment feature that PI claims to be part of its "Postacelere" service(18). PI describes this feature as an ad hoc delivery service for individual mail items outside of the postman's regular delivery round(19). According to PI, once the item has arrived in the distribution centre, the postman arranges for a prior appointment with the recipient in order to establish a mutually convenient delivery date and time(20). It becomes clear that this service differs fundamentally from the guaranteed time or day certain delivery service in several respects:
- the postman only arranges for an appointment when the item has arrived in the distribution centre. The ad hoc delivery does not change the fact that the service, as all other PI services mentioned above, is governed by delivery targets rather than by a guarantee that delivery takes place at a pre-arranged day or time. A system of non-binding delivery targets differs fundamentally from a guarantee that mail items are delivered on a precise pre-arranged day or at a pre-arranged time(21),
- payment for the "Postacelere" service is not conditional on the accomplishment of guaranteed delivery at a precise day or time. No conventional delivery service in Europe, including Italy, makes payment conditional on the successful accomplishment of delivery on a precise pre-arranged day or at a pre-arranged time.
(21) In light of the above, non-conventional delivery services can be distinguished by their day- or time-certain delivery which forms the object of a contractual guarantee. They form a market distinct from the conventional delivery service, which neither provides for day- or time-certain delivery nor offers any guarantee in this respect. In view of this clear distinction between non-conventional and conventional services, PI cannot claim that private operators would advertise day- and time-certain deliveries merely as a screen for providing conventional delivery services(22).
B. The relevant geographic markets
(22) The geographic scope of the markets concerned is Italy. The general letter mail monopoly, including the delivery phase of the hybrid electronic mail service reserved by Article 4(4) of the 1999 Decree, covers the entire Italian territory.
C. The dominant position
(23) Article 4 of the Decree grants the public postal operator an exclusive right covering the entire Italian territory. Therefore, the beneficiary of this right holds a dominant position as regards the service covered by the exclusivity. According to the jurisprudence of the Court, an undertaking vested with a legal monopoly in a particular market may be regarded as occupying a dominant position in that market within the meaning of Article 82 of the Treaty(23). In addition, the territory of a Member State to which that monopoly extends constitutes a substantial part of the common market(24)
D. Abuse of dominant position
(24) According to the Court, an abuse within the meaning of Article 82 is committed where, without any objective necessity, an undertaking holding a dominant position on a particular market reserves to itself other activities in separate and distinct markets(25), although these activities could also be carried out by another undertaking as part of its activities on this neighbouring but separate market(26).
(25) With respect to the combined application of Articles 86 and 82 of the Treaty, the Court has held that the extension, by means of a measure adopted by the State, of a monopoly into a neighbouring and competitive market, without any objective justification, is prohibited as such by Article 86(1) in conjunction with Article 82(27).
(26) PI has submitted that, at this stage, it does not offer a day- or time-certain delivery service in Italy(28). Nevertheless, a State measure reserving a neighbouring but separate market contravenes Article 86(1) in conjunction with Article 82 whether or not the incumbent is already active on the distinct service market itself:
- In so far as the extension of the reserved area to include days- or time-certain deliveries induces PI to offer day- or time-certain deliveries itself, Article 4(4) is liable to extend PI's dominant position with respect to conventional deliveries into the neighbouring but distinct market for day- or time-certain deliveries,
- In so far as PI does not offer day- or time-certain deliveries, Article 4(4) induces PI, by the simple exercise of its exclusive right, to limit supply of the relevant service, as private operators are precluded from satisfying the demand for guaranteed day- or time-certain deliveries(29).
(27) It is not relevant whether the delivery phase of the hybrid electronic mail service was or was not open to competition prior to the entry into force of Article 4(4). Even if the delivery of the hybrid electronic mail services was reserved prior to the entry into force of Article 4(4), which is not born out by the relevant Italian legislation cited above, Article 4(4) would still be contrary to Article 86 in conjunction with Article 82, because Article 86(1) also prohibits maintaining State measures contrary to Article 82.
(28) To the extent that the Italian Government argues that the extension of the reserved area is objectively justified in order to safeguard the financial equilibrium of PI, reference is made to the section on Article 86(2), below.
E. Effect on trade between Member States
(29) The responsibility of Member States pursuant to Articles 86(1) and 82 of the Treaty only arises where the abuse is capable of affecting trade between Member States. Such an effect exists in this instance because the exclusion of competition in a market distinct from and separate to the reserved area prevents undertakings established in other Member States, who have considerable expertise in providing day- or time-certain deliveries, to extend their activities to Italy.
F. Article 86(2) of the Treaty
(30) Under Article 86(2) of the Treaty, the rules of the Treaty and, in particular the competition rules, apply to the incumbent postal operator entrusted with a service of general economic interest, unless their application obstructs the performance, in law or in fact, of the particular tasks assigned to it. It is for the Member State to prove that the application of the competition rules would have such an effect. For the following reasons the Italian Government and PI cannot consider either 1. that competition with respect to day- or time-certain deliveries would jeopardise the financial equilibrium of PI(30), or 2. that opening the time- or day-certain delivery phase to private operators would result in the creaming off of PI' s revenues(31).
- firstly, as mentioned above, PI, at this stage, does not offer a guarantee for day- and time-certain delivery as part of any of its postal services(32). Therefore PI would not suffer any loss of revenue, which it would have otherwise gained on this market. In addition, in order to ensure day- or time-certain deliveries, PI would have to undertake a complete reorganisation of its sorting and delivery phases. This makes PI's entry into this market unlikely in the short and medium term. In any event, the additional revenue to be gained by providing highly specialised time-sensitive mailings would remain marginal in relation to PI's deficit,
- secondly, day- and time-certain deliveries satisfy a very special but limited demand with respect only to time-sensitive mailings. Time-sensitive mailings are a new service which creates additional mail volume. Therefore, time-sensitive mailings do not replace or attract away demand from conventional (reserved) deliveries and consequently will not reduce the conventional mail volume and the revenue generated by PI in the reserved area,
- thirdly, the private operators' delivery infrastructure already covers the entire territory of several provinces in Italy. These provinces together amount to a nationwide coverage of 40 %. This service, covering the territory of entire provinces, is not limited to the profitable urban mail routes, leaving the unprofitable rural mail routes to PI.
III. CONCLUSION
(31) In light of the above, the Commission considers that Italy, by excluding competition with respect to the day- or time-certain delivery phase of hybrid electronic mail service, infringes Articles 86(1) and 82 of the Treaty, read in combination. As no other Member State except Italy has adopted a provision like Article 4(4), which specifically reserves the delivery phase of the hybrid electronic mail service irrespective of the special features offered in this phase, the Commission has to adopt a decision with respect to Italy only,
HAS ADOPTED THIS DECISION:
