European Union Competition Law - Liberalisation

Liberalisation

The EU liberalisation programme entails a broadening of sector regulation, and extending competition law to previously state monopolised industries. The EU has also introduced positive integration measures to liberalise the internal market. There has at times been a tension between introduction of competition and the maintenance of universal and high quality service.

In the Corbeau case, Mr Corbeau had wanted to operate a rapid delivery service for post, which infringed the Belgian Regie des Postes exclusive right to operate all services. The ECJ held the legislation would be contrary to Article 86 where it was excessive and unnecessary to guarantee the provision of services of general economic interest. It pointed out however that the postal regime (as was the case in most countries) allowed the post office to "offset less profitable sectors against the profitable sectors" of post operations. To provide universal service, a restriction of competition could be justified. The court went on to say,

"to authorise individual undertakings to compete with the holder of the exclusive rights in the sectors of their choice corresponding to those rights would make it possible for them to concentrate on the economically profitable operations and to offer more advantageous tariffs than those adopted by the holders of the exclusive rights since, unlike the latter, they are not bound for economic reasons to offset losses in the unprofitable sectors against profits in the more profitable sectors."

This meant a core of economic sectors in postal services could be reserved for financing the state industry. This was followed by Directive 97/67/EC on Postal services, which required Member States to "ensure that users enjoy the right to a universal service involving the permanent provision of a postal service... at all points in their territory." This means once a working day deliveries and pickups, and that services that could be reserved for state monopolies include "clearance, sorting, transport and delivery of items of domestic correspondence and incoming cross-border correspondence". For countries that had not liberalised postal services in any measure, the directive contained provisions to gradually open up to competition. It was intended to strike a balance between competition and continued quality service. In the Deutsche Post decision the Commission took strong enforcement action. Deutsche Post was accused of predatory pricing in the business parcel delivery sector (i.e. not one of the services "reserved" under the directive) by the private firm UPS. The Commission ordered the structural separation of the normal postal services from business deliveries by Deutsche Post.