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23.4.

2003 EN Official Journal of the European Union C 94/3

Notice pursuant to Article 19(3) of Council Regulation No 17 (1)

Case COMP/38.170 — REIMS II Terminal Dues


(2003/C 94/03)

(Text with EEA relevance)

1. INTRODUCTION 2. THE PARTIES

1. On 18 June 2001, the REIMS II Agreement was renotified 5. Thirteen public postal operators (‘PPOs’ (5)) had signed the
to the Commission pursuant to Regulation No 17 with a original REIMS II Agreement. Four more PPOs have since
view to obtaining a negative clearance under Article 81(1) joined. The 17 REIMS II parties (‘the Parties’) (6) now
of the EC Treaty/53(1) of the EEA Agreement or an comprise the PPOs of all the Member States of the EU
exemption under Article 81(3) of the EC Treaty/53(3) of other than the Netherlands, and the PPOs of Norway,
the EEA Agreement, upon the expiry of the exemption Iceland and Switzerland (7).
decision adopted by the Commission on 15 September
1999 (‘the 1999 Exemption Decision’) (2).

6. Participation in the Agreement is open to public and


private operators of a mandatory, universal postal
service, provided that they have, or contract to have, an
2. The REIMS II agreement (‘the Agreement’) is the obligation to provide this service to the other Parties.
instrument by which certain Public Postal Operators (3)
(PPOs) collectively determine Terminal Dues (TDs). TDs
are the remuneration that PPOs pay each other for the
delivery of incoming cross-border mail. The receiving
PPO is remunerated by the sending operator for the 3. THE MARKETS CONCERNED
delivery of the latter's cross-border mail.
7. The notified Agreement concerns the markets for normal,
as opposed to express, cross-border mail between the
countries concerned, i.e. cross-border mail exchanged
between ‘REIMS II’ countries. More specifically, the
3. In the Agreement, TDs are expressed as a percentage of Agreement covers all letter-post items as defined in
domestic tariffs in the receiving country. The original Article 8 of the Universal Postal Convention (8). This defi-
REIMS II agreement was first notified to the Commission nition comprises items which in general weigh up to 2 kg.
in 1997 which exempted it under Article 81(3) by The importance of cross-border mail varies from country
Decision of 15 September 1999. According to the to country. In smaller Member States, cross-border mail
original REIMS II-agreement, TDs were to increase over a generally represents a higher share of the overall mail
transitional period until they reached a maximum of 80 % market than in larger Member States. On average, cross-
of domestic tariffs in 2001. In the 1999 Exemption border mail has been estimated to represent well under
Decision, however, the Commission only exempted the 10 % of the overall mail market in the Community.
Agreement until the end of 2001 and limited the
exemption to a level of TD not higher than 70 %. (5) Public Postal Operators (PPOs) are corporations or government
departments with the primary obligation of providing universal
postal services across the national territory, often at a unitary
price. They are also obliged to provide international postal
services passing international mail to PPOs in other countries for
distribution and delivery of incoming international mail. In the
4. The re-notification in 2001 included a request for a context of the notified Agreement, PPO refers to both public and
renewal of the exemption. In the renotified version, the private postal operators which are subject to a universal delivery
80 % level would not be reached until 1 January 2004 and service obligation.
two intermediate steps were introduced (73,3 % on 1 (6) Austrian Post, La Poste/De Post (Belgium), Post Danmark, Finland
January 2002 and 76,6 % on 1 January 2003). A short Post, La Poste (France), Deutsche Post, Hellenic Posts ELTA, Iceland
summary of the notification was published in the Official Post, An Post (Ireland), Poste Italiane, Entreprise des Postes & Télé-
communications (Luxembourg), Norway Post, CTT Correios de
Journal of the European Communities inviting third parties to Portugal, Correos y Telegrafos (Spain), Sweden Post, Swiss Post
comment (4). (Switzerland) and The Post Office (United Kingdom).
(7) The notification has been filed by all the Parties except for Swiss
(1) OJ 13, 21.2.1962, p. 204/62. Post, Switzerland, and Entreprise des Postes & Télécommunications,
Luxembourg which are aware of the notification and have received
(2) Commission Decision of 15 September 1999 relating to a a copy of it.
proceeding under Article 81 of the EC Treaty and Article 53 of
the EEA Agreement (Case No COMP/36.748 — REIMS II) (OJ L (8) The Universal Postal Union (UPU), a specialised agency sorting
275, 26.10.1999, p. 17). under the United Nations, is the international organisation
responsible for international cooperation for postal affairs. The
(3) The Parties comprise the PPOs of all Member States of the UPU convention (UPC) provides the regulatory framework for the
Community (except for the Netherlands) and the PPOs of international exchange of mail. Since 1969 the UPC contains
Norway, Iceland and Switzerland. provisions stipulating that member countries remunerate each
(4) OJ C 195, 11.7.2001, p. 11. other for the delivery of international mail by paying TDs.
C 94/4 EN Official Journal of the European Union 23.4.2003

8. The relevant market can be further divided into a market for 13. On 15 September 1999, the Commission granted an
the forwarding of outgoing cross-border mail, on which exemption pursuant to Article 81(3) (Article 53(3) of the
PPOs and private companies collect mail from customers EEA Treaty) in respect of the REIMS II Agreement on TDs,
in the originating country for delivery in other countries, until 31 December 2001. The Commission thereby limited
and a sub-market for delivery of incoming cross-border the increase of TDs up to 70 % of the domestic tariffs. The
mail on which PPOs (and for a very small part other postal Commission stated that the final increase up to 80 % of
operators) offer mail delivery services for cross-border mail the domestic tariffs should only take place after the
to PPOs and private mail companies (9). Commission had the opportunity to review the system
on the basis of proper cost accounting data, which was
not available in 1999.

9. The distinction between these two sub-markets has been


reinforced by the recent amendments made to the 97/67
Postal Directive (10) by the new Postal Directive (the new
Postal Directive) (11). Under the new Postal Directive, as of
January 2003, outgoing cross-border mail will be
liberalised in all Member States where it is not necessary 4.2. Assessment of the REIMS II Agreement in the 1999
to maintain the monopoly in order to sustain the Exemption Decision
provision of the universal services.
4.2.1. Applicability of Article 81(1) (Article 53(1) of the EEA
Treaty)
14. In the 1999 Exemption Decision, the Commission
10. The new regulatory rules will therefore expose PPOs to considered that the Agreement constituted a restriction of
increased competition regarding the forwarding of cross- competition falling within the scope of Article 81(1) (Article
border mail from one EU country to another. This circum- 53(1) of the EEA Treaty) because it collectively established a
stance confirms and reinforces the different competitive common level of TDs expressed as a percentage of the
conditions which characterise the two markets. domestic tariff in the receiving country. The Commission
concluded that, although the amounts in absolute terms
were not fixed, the Agreement had the effect of jointly
fixing prices. By linking the price for the cross-border
delivery service to the price for the domestic service,
whose price is determined primarily by domestic
4. THE EVOLUTION OF THE REIMS II AGREEMENT UNTIL considerations, the Parties eliminated or reduced their
THE RE-NOTIFICATION freedom to set the prices they charge for the delivery of
incoming cross-border mail. In fact, the Agreement elim-
4.1. The original REIMS II Agreement inated any incentive to conclude separate agreements on a
bilateral basis between the Parties, although contractually
11. The original REIMS II Agreement was notified to the this remained possible.
Commission in 1997. On that occasion, after a
preliminary examination, the Commission indicated to
the parties several aspects which had to be changed,
adapted or clarified before it could consider adopting a
positive attitude with regard to the agreement.

4.2.2. Applicability of Article 81(3) (Article 53(3) of the EEA


Treaty)
12. The Parties, in order to qualify for exemption, prepared a 15. In the 1999 Exemption Decision, the Commission found
first amendment to the Agreement (the First that the Agreement fulfilled the four cumulative criteria
Supplementary Agreement) which entered into force on required for exemption under Article 81(3) EC (Article
1 October 1998. 53(3) of the EEA Treaty). The Commission's reasoning
may be summarised as follows.
(9) Concerning the definition of the relevant markets, see also
‘Deutsche Post II’, Commission Decision of 25 July 2001, OJ
[2001] L-331/40, points 84 to 87. The reasoning there builds
upon but is consistent with the definitions made for the
purposes of the Exemption Decision.
(10) Directive 97/67/EC of the European Parliament and of the Council
of 15 December 1997 on common rules for the development of 16. The Agreement improves the production and/or
the internal market of Community postal services and the
improvement of quality of service (OJ L 15, 21.1.1998 p. 14). distribution of goods. A transition towards a more
(11) Directive 2002/39/EC of the European Parliament and of the
cost-based system and the quality-of-service incentives
Council of 10 June 2002 amending Directive 97/67/EC with would improve the financial situation for the participating
regard to the further opening to competition of Community PPOs and allow them to improve the quality of their cross-
postal services (OJ L 176, 5.7.2002, p. 21). border mail services.
23.4.2003 EN Official Journal of the European Union C 94/5

17. The higher quality for cross-border mail services would appropriate quality of service targets and penalties as of
benefit consumers, and remuneration based on actual 2002; (ii) The review of the quality of service standards.
delivery costs would reduce cross-subsidises previously The previous version of the Agreement identified two
necessary to cover losses incurred in delivery of cross- groups of parties (A and B) each one with a different
border mail. However, the Commission obliged the quality of service target (95 % for the parties in Group
REIMS II parties to accept that the full rate of TDs A and 90 % for the parties in Group B), the new
would only be paid if quality-of-service actually improved. agreement led to a convergence of the groups to a
universal standard of 93 %.

18. In order to make the benefits fully available to consumers,


the Commission imposed the condition that the Parties
provide each other with a low cost alternative to TDs
for bulk and commercial mail (the so-called Level 3 23. On 7 June 2001, most of the Parties executed a Fourth
access) (12). Supplementary Agreement. In the meantime, 17 Parties
have signed this agreement. The main objective of the
Fourth Supplementary Agreement was to extend the tran-
sitional period by another three years. According to the
Fourth Supplementary Agreement, TDs would reach 80 %
19. Finally, the Commission considered that an agreement of domestic tariffs in the year 2004, i.e., two years later
collectively fixing TDs as a common maximum percentage than planned. The 80 % rate would be replaced by 73,3 %
of domestic tariffs was indispensable to attain the desired in 2002 and by 76,6 % in 2003 (13).
benefits of the Agreement. However, the Commission
could not verify whether the ultimate level of remun-
eration agreed upon — 80 % of domestic tariffs — was
indispensable in this respect. The duration of the
exemption was therefore limited to 31 December 2001,
and the parties were allowed to increase the common
percentage to a maximum level of 70 % in 2001, until 24. In addition to extending the transitional period, the Parties
adequate cost accounting data provided by them would also agreed on a freeze of the domestic tariffs used as a
prove the proposed level of 80 %. basis for the calculation of TDs until the end of the year
2004. Therefore, increases of a Party's domestic tariff after
1 September 2001 will not be taken into account in the
calculation of TDs (14). However, decreases of domestic
tariffs will be taken into account, so that the ‘freeze’
20. In this regard, in the 1999 Exemption Decision the effectively creates a ceiling, but allows for downward
Commission obliged the Parties to introduce, by the end adjustments (15).
of 1999, a transparent cost-accounting system ensuring
that all significant cost elements could be identified,
quantified, compared and controlled.

25. Finally, the Fourth Amendment Agreement introduced a


4.3. Amendments to the Agreement following the 1999 ‘geographic coverage’. If a Party whose domestic market
Exemption Decision is liberalised can prove that the geographical structure of
incoming mail from a sending PPO has changed to such
21. On 14 January 2000, the Parties concluded the Second an extent that the percentage of the domestic tariff used
Supplementary Agreement whose aim was, on the one under the REIMS II Agreement is insufficient to meet the
hand, to implement the Commission's conditions set costs incurred by the Party in question as a receiving PPO
forth in the 1999 Exemption Decision and, on the other for the delivery of that mail, the Party can ask for a
hand, to take into account the accession of Swiss Post to re-negotiation of the TDs paid by the sending PPO (16).
the agreement.
(13) In view of the discounts that they will grant until the end of 2004
(see below), Deutsche Post AG and Poste Italiane SpA would only
reach the full 80 % level in 2005.
(14) Subparagraph 4 of paragraph 3 of Annex 4 to the REIMS II
22. On 4 April 2000, the Parties signed the Third Agreement as added by Article 3(3) of the Fourth Supplementary
Supplementary Agreement whose key feature were Agreement.
mainly: (i) to ensure end-to-end quality of service: The (15) Deutsche Post AG continues to grant the discount agreed in the
agreement contemplated the inclusion of the measurement Third Supplementary Agreement until the end of 2004. Poste
of the performance of sending PPOs with respect to Italiane SpA has also agreed to give a discount until that date:
outgoing mail in a future model refinement and to apply Paragraphs 9 and 10 of Annex 4 to the REIMS II Agreement as
amended by the Fourth Supplementary Agreement.
(16) Article 11(4) to (7) of the REIMS II Agreement as added by Article
(12) See point 5(7). 2.2 of the Fourth Supplementary Agreement.
C 94/6 EN Official Journal of the European Union 23.4.2003

5. THE RE-NOTIFIED AGREEMENT — Level 2: The receiving PPO may offer rebates on the
Level 1 remuneration on the basis of work sharing/
preparation of mail (e. g. by pre-sorting mail
5.1. Purpose according to format or destination). The same
discounts must be offered to all sending PPOs when
26. According to the Parties, the main aims of the REIMS II
equal conditions are met.
Agreement are 1. to provide the Parties with fair compen-
sation for the delivery of cross-border mail which reflects
more closely the real costs of delivery of each party, and 2.
to improve the quality of the cross-border mail service. — Level 3: All the parties are obliged to grant each other
access to the ‘generally available domestic rates’ (such
as bulk rates for direct mail, printed matter or peri-
5.2. Products covered odicals) in the country of delivery. This remuneration
level (which will normally be lower than the other
27. The Agreement covers all mail items as defined in Article levels) is of particular importance for a significant
8 of the UPU Convention (with the exception of so-called volume of cross-border business mail.
‘M bags’) (17).

— Non-priority mail: To mail designated as


5.3. Terminal dues ‘non-priority’ TDs will be applied that are 10 % less
than the TDs for Level 1 mail.
5.3.1. Principle

28. The REIMS II Agreement links TDs to domestic mail tariffs


in the country of destination and to the quality of service 5.3.4. Transitional period
provided by the PPO that delivers the mail. According to
the notified version of the Agreement, TDs are to increase 31. In the notified agreement TDs are to be increased, subject
over a transitional period until they reach a maximum of to penalties which will accrue if the required quality-
80 % of domestic tariffs in 2004, subject to penalties of-service target is not met over a transitional period as
which will accrue if the requisite quality-of-service target follows:
is not met.
2002: 73,3 % of domestic tariffs,

5.3.2. Domestic tariffs serving as reference


2003: 76,6 % of domestic tariffs,
29. Domestic tariffs usually distinguish between different
weight steps (e. g. 20, 50 and 100 g for letters).
According to the Agreement, these different tariffs are 2004: 80 % of domestic tariffs.
converted, on the basis of a standard structure, into
so-called linear tariffs for the purpose of calculating
TDs (18).
5.3.5. Quality of service/penalties' system
5.3.3. Levels of terminal dues 32. The REIMS II Agreement introduces a system of quality-
of-service standards for Level 1 and Level 2 mail in order
30. The Agreement distinguished between four different levels to improve the quality of service. The standards are
of TDs: defined as the percentage of incoming cross-border mail
(from a particular PPO) which has to be delivered within
— Level 1: Priority mail items presented in mixed bags one working day after the day of its arrival (J) in the office
(which may contain letters, flats and packets). TDs for of exchange of the receiving PPO, provided that it arrives
such items will ultimately be 80 % of domestic tariffs there before the Latest Arrival Time (20). A standard of
excluding VAT (19). ‘80 % J+1’ for example means that 80 % of the incoming
mail will have to be delivered to its final destination within
one working day following its arrival at the office of
(17) Bags containing bulk mail for one addressee. exchange. The performance of the individual Parties is
(18) In doing so, the Agreement distinguishes between three categories:
(i) Letters up to C5 size and a maximum weight of 100 grams; (ii)
measured by means of diagnostic systems set up by
Flats up to C4 size and a maximum weight of 500 grams; (iii) IPC (21).
Packets of all shapes up to limits of weight and size set by the
UPU. Linear tariffs are calculated on the basis of this standard (20) The LAT is defined as the latest acceptable time of touchdown,
structure, using the so-called ‘least squares’ statistical method. permitting delivery of airmail items the next working day.
(19) In countries where postal services have been fully liberalised, where
(21) The International Post Corporation is a company co-owned by a
a uniform tariff is applied throughout the country and where VAT
number of PPOs (including all the REIMS II Parties). Inter alia, it
is applied to domestic postal services, the domestic tariff to be used provides administrative and practical services to the REIMS II
for the calculation of TDs is to be increased by a percentage Parties. The UNEX quality-of-service measurement system, which
equivalent to half the rate of VAT, subject to a maximum of serves as the basis for the REIMS II quality targets and determines
12,5 %. penalties, is operated by the IPC.
23.4.2003 EN Official Journal of the European Union C 94/7

33. A penalty system, or curve, is applied when the agreed Agreement at any time. Such withdrawal becomes effective
standards are not met The level of TDs which would at the end of the first full calendar year after notice has
otherwise be payable is reduced by 1½ % where the been given. In particular circumstances, a Party may also
actual result amounts to between 90 % and 100 % of the withdraw from the Agreement by giving six months
target to be reached and 3½ % where the actual result notice.
amounts to between 80 % and 90 % of the target to be
reached respectively for each percentage point by which
the PPO concerned fails to reach the requisite quality-
of-service standard (22). In the worst case, if the result
actually achieved by the delivering PPO amounts to no 5.6. Link between TDs and quality of service
more than 80 % of the target, these penalties will thus
reduce the TDs to which a PPO is entitled by 50 %. 38. The Agreement establishes the principle that no increase in
TDs will take place during the transitional period if the
quality of service of the party concerned goes down. In
5.3.6. Non-discrimination rule order to determine whether this is the case, the quality-
of-service performance in a given year is compared to the
34. According to the Agreement (23) ‘each Party shall apply the average quality-of-service performance achieved by that
same rates of terminal dues to all other parties provided Party in preceding years. There will be no margin of inter-
that the transactions are equivalent.’ This means that, in pretation. This rule does not apply to those PPOs for
principle and provided that no special bilateral agreement which transitional arrangements exist. It will naturally
has been signed, two REIMS II PPOs competing for also not be applicable if the quality-of-service of a PPO
outgoing cross-border mail in a given REIMS II country deteriorates but still matches the relevant standard set by
would bear the same costs for the delivery of this mail in the Agreement. TDs may also be increased if it can be
the country of destination. The same rate, however, will shown that a deterioration of a Party's quality of service
not be available to non-REIMS II operators competing in is caused by special efforts undertaken by this Party to
the same market which will be obliged to pay the full improve its delivery system and is only temporary in
domestic tariff in the State of origin minus any available nature.
discount (24).

35. This circumstance is particularly important since,


according to the new Postal Directive, outgoing cross-
border mail is liberalised as from 1 January 2003 in 5.7. Level 3
most of the EU Member States.
39. The parties have clarified that they are bound under the
REIMS II Agreement to grant Level 3 access (i.e. access to
5.4. Articles 25 and 49 of the UPU Convention domestic bulk mail rates) to each other. In order to
facilitate such access, the 1999 Exemption Decision
36. Article 43 of the UPU Convention contains provisions on obliged the Parties to relax domestic regulations for
the treatment of domestic mail posted abroad, so-called other Parties where these regulations are not justified
remail. Article 49(4) concerns TDs for incoming bulk and which would in reality bar the other Parties from
mail. According to the notified Agreement, after the end access to domestic bulk mail rates. Where the domestic
of the transitional period, Articles 25 and 49(4) of the regulations concerned have been set by the State, the
UPU Convention will no longer be applied between the Parties are meant to use their best efforts to remove
Parties (25). them in cooperation with the competent national auth-
orities.
5.5. Term
37. The Agreement is entered into for an indefinite period of
time. Any Party may however withdraw from the 40. All the tariffs and conditions relevant for Level 3 access
have to be made available to all the parties through a
database managed by IPC. The Parties have undertaken
(22) For example if the quality-of-service target provides that 90 % of to update this database without delay when their
incoming cross-border mail must be delivered the next day, and
that the actual result is that only 87 % of the mail is delivered respective tariffs and conditions change.
within this time, then only 97 % of the target is reached (87 is
97 % of 90). Thus, the loss of quality is 3 %. Since this figure is
within the 90 % to 100 % range, a penalty of 1½ % for each
percentage point accrues. The penalty is thus 3 x 1½ % = 4½ %
of TDs payable. This means that the delivering PPO concerned is
allowed to charge only 95½ (100 %-4½ %) of the full TDs to which 5.8. Bilateral agreements
it would otherwise be entitled. In 1998 when TDs for Level 1
amounted to 55 % of domestic rates, the PPO would thus 41. The REIMS II Agreement clarifies that the Parties are free
receive TDs amounting to 52½ % of domestic rates (i. e. 95½ % to conclude bilateral or multilateral agreements on TDs
of 55 %). between themselves in which different conditions, in
(23) Article 2.11 of the REIMS II Agreement. particular other levels of TDs, may be fixed. Where a
(24) This is the interpretation of this clause that the Parties have given Party grants another Party, or other Parties, lower TDs in
in the course of the investigation. such an agreement, it is obliged to apply the same TDs to
(25) See point 7.1.3. all the Parties, provided the transactions are equivalent.
C 94/8 EN Official Journal of the European Union 23.4.2003

5.9. Late, lost and damaged mail Commission has obtained detailed accounting data
regarding each Party's costs for the inbound delivery of
42. The Parties have introduced provisions on late, lost and cross-border mail items coming from REIMS II countries.
damaged mail according to which a proper system for
dealing with and analysing complaints will be introduced,
including an acknowledgement of receipt for each
complaint and standard time limits for the reply to such 47. This information, which was not available when the 1999
complaints. Customer services and access to such services Exemption Decision was adopted, has permitted a more
will thus be improved, for example by introducing a ‘green thorough evaluation of the levels of TDs (27).
number’ for complaints and by cooperating with consumer
organisations.
48. In particular, it appears that the TDs to be applied for the
delivery of REIMS II cross-border mail as defined in the
notified Agreement (28) are not in line with the cost data
6. MAIN DEVELOPMENTS SINCE THE 1999 EXEMPTION provided by the Parties. Accordingly these levels of TDs
DECISION are not indispensable for the attainment of the positive
effects that the agreement is meant to bring about.

6.1. Improvements in cross-border mail quality of service

43. According to the 1999 Exemption Decision ‘The most


substantial advantage which the (REIMS II) Agreement is 6.2.2. Level 3 access
expected to produce consists in a substantial increase in
the quality of cross-border mail services.’ The information 49. The 1999 Exemption Decision obliged the Parties to take
gathered in the course of the procedure shows that, during all the necessary steps in order to grant each other
the period of the exemption, the overall quality of the effective Level 3 access (29).
service of cross-border mail delivery provided by the
Parties has indeed improved substantially (26).
50. The investigation carried out in the course of the current
procedure has shown that Level 3 access does not function
as desired by the Commission in the 1999 Exemption
Decision. Although the Parties have offered each other
6.2. Other important developments
Level 3 access, it is still extremely difficult for most of
44. After the adoption of the 1999 Exemption Decision, there them to take advantage of this opportunity. Thus, the
have been important developments which have partially Commission considers that Level 3 access does not
modified the elements on the basis of which it was function as a viable, less costly alternative to REIMS II TDs.
adopted. These new elements have accordingly influenced
the Commission's current preliminary assessment of the
Agreement. In particular, as a consequence of those devel-
opments, the Commission considers that the conditions 6.2.3. The new Postal Directive
under which an exemption can be granted need to be
different from those imposed in the 1999 Exemption 51. On 10 June 2002 the Council of the European Union and
Decision. the European Parliament adopted the new Postal Directive
on further liberalisation of the European postal markets.

45. The following are the most important new elements taken
into consideration: (i) The accounting data on the Parties 52. One of the major changes introduced by this Directive is
costs for the delivery of cross-border mail items coming that, as from 1 January 2003, Member States are no more
from other REIMS II countries; (ii) The experience of the allowed to include the market for outgoing cross-border
implementation of the Agreement during the period of the mail in the reserved area (30) unless it is necessary to
exemption; (iii) The adoption by the Council and the ensure the provision of the universal postal service.
European Parliament of the new Postal Directive. Accordingly, as from 1 January 2003, PPOs will face
competition with regard to the forwarding of cross-border
mail from one REIMS II country to another.

(27) See point 5.3.3.


6.2.1. The Parties' cost data
(28) See point 5.3.4.
46. Further to the implementation by the Parties of the obli- (29) See Article 2 of the 1999 Exemption Decision which also stated
gation imposed in the 1999 Exemption Decision to that: ‘In order to facilitate this (Level 3) access, the Parties must
introduce a transparent cost accounting system, the relax domestic conditions for other Parties where those rules are
not justified and could in practice bar other Parties from access to
the domestic rates or (where it is not in their power to do so) they
(26) Information gathered from answers to Article 11 letters to the must use their best efforts vis-à-vis the relevant national authorities
Parties show a substantial increase of quality of service in terms to remove those rules.’
of J+1 delivery for most of the Parties. (30) Article 1(1) of the new Postal Directive.
23.4.2003 EN Official Journal of the European Union C 94/9

7. REMEDIES REQUIRED BY THE COMMISSION AS A 57. The Commission, having revised the cost data provided by
PREREQUISITE FOR A FAVOURABLE ATTITUDE the parties with regard to the delivery of incoming cross-
border mail, considers that these rates correspond to a
53. The arrangements as notified presented a number of sufficiently accurate approximation of parties' costs.
problems from the point of view of competition policy
which stood in the way of a favourable attitude on the
part of the Commission. During the course of the notifi-
cation procedure, the following issues were resolved in a
satisfactory manner, subject to third party comments: 7.1.2. Low price alternative to TDs for direct mail
58. As regards the introduction of a low price alternative to
— Level of TDs to be applied between the Parties TDs for direct mail, Article 2 of the Fifth Supplementary
according to the Agreement; Agreement obliges the Parties, ‘within six months of the
second exemption decision of the Commission . . .’ to
deliver international direct mail items.
— Introduction by the parties of an effective low price
alternative to REIMS II TDs for direct mail;
59. On 24 January 2003, the Parties with the exception of
Royal Mail Group plc. and An Post signed the separate
— Non-discrimination between REIMS II Parties and their ‘Agreement for the Delivery of REIMS International Direct
competitors in the newly emerging markets for Mail’ (‘the REIMS IDM Agreement’) which creates the IDM
forwarding of outgoing cross-border mail from one product (32) with the following features:
REIMS II country to another.

Core product specifications


7.1. Amendments to the Agreement
54. The first two points have been dealt with by means of — common product specifications that obviate the need
amendments to the Agreement. Following discussions to conform with national product requirements,
with the Commission, on 24 January 2003 14 out of
the 17 Parties (31) signed the Fifth Supplementary
Agreement. This agreement amends the notified — direct mail as defined in Directive 97/67/EC,
Agreement with regard to 1. the TDs to be applied
during the transitional period and, 2. the introduction by
the Parties of an effective low cost alternative to TDs for — maximum weight of 2 kg/item,
direct mail.

— a common minimum volume of 500 items,


7.1.1. Level of TDs

55. The Fifth Supplementary Agreement modifies Annex 4 to — a best effort quality of service standard of J+5,
the notified Agreement both as regards the duration of the
Transitional Period and the level of TDs to be applied. The
duration of the Transitional Period has been prolonged — pure cross-border mail product,
from for 31 December 2004 to 31 December 2006.

— UPU specifications for maximum and minimum size,


56. The TDs to be applied from 1 January 2002 to the end of
the Transitional Period have been modified as follows:
— no pre-sorting required.
2002: 73,3 %;

2003: 74,5 %; Remuneration

2004: 75,7 %; The remuneration for the delivery of the IDM product is
calculated as the lower of the domestic tariff for
comparable unsorted mail and non priority REIMS II
2005: 78,5 %;
TDs minus [. . .] %. If there is no unsorted bulk mail
rate, the sorted bulk mail rate plus a mark-up of [. . .] %
2006: 78,5 %. will be used.

(31) The Agreement has not been signed yet by La Poste/De Post (32) International Direct Mail (IDM) is the name the Parties have given
Belgium and An Post Ireland. to this cross-border mail product.
C 94/10 EN Official Journal of the European Union 23.4.2003

7.1.3. Other amendments 62. The Commission is therefore of the opinion that any new
exemption would have to require that each REIMS II Party
60. Other minor amendments introduced by the Fifth will provide to any third party postal operator competing
Supplementary Agreement at the initiative of the Parties with any other REIMS II Party for the provision of
are: outgoing cross-border mail services in any REIMS II
country, delivery of inbound cross-border mail in its
Application of Articles 43 of the UPU country at TDs and on conditions which are non-discrimi-
C o n v e n t i o n (33) natory as compared to those offered to the REIMS II Party
in the sender's country. The Parties have been informed of
According to Article 5 of the notified Agreement, after the this necessity.
end of the Transitional Period, Articles 25 and 49(4) of the
1994 UPU Convention will no longer be applied between
the Parties. This clause has been modified. The new 63. The Commission has elaborated the text of such a
version of Article 5 reads as follows: ‘Nothing in the requirement to be introduced in a future exemption
REIMS II Agreement shall keep a Party from applying decision which is available as an annex to this Notice.
Article 43 of the UPU Convention against another Party.’

Withdrawal from the Agreement 8. CONCLUSION


According to Article 11 of the notified Agreement, the
withdrawal from the Agreement takes effect at the end 64. On the basis of the above, the Commission intends to take
of the first full calendar year following the notice of the a favourable view in respect of the notified Agreement as
withdrawal. The new version of the provision states that amended by the Fifth Supplementary Agreement. Before
the Party may withdraw from the agreement by giving not adopting a favourable opinion, the Commission invites
less than six months written notice to the end of the third parties to send their observations within four
calendar month. weeks of the publication of this Notice by e-mail
(Rosario.Baratta@cec.eu.int), by fax ((+32-2) 296 70 81)
or by mail to the following address, quoting the
reference Case No COMP/C2/38.170-REIMS II:
7.2. Other requirements
61. As regards the third problem identified during the inves- European Commission,
tigative phase, the Commission considers that, further to Directorate-General for Competition,
the liberalisation of outgoing cross-border mail, the Anti-trust Registry,
mechanism contained in the REIMS II agreement for the J 70,
remuneration of the inbound delivery of cross-border mail Office 0/28,
leads to price discrimination in favour of the Parties and to B-1049 Brussels.
the detriment of third party operators carrying outbound
cross-border mail from one REIMS II country to another.
Pursuant to Article 2.3 of the Agreement, the REIMS II If a party considers that its observations contain business
Party in the country of delivery charges REIMS II TDs for secrets, it must indicate the passages which in its opinion
the delivery of mail items forwarded by any other REIMS II ought not to be disclosed on the ground that they contain
Party. Third party operators engaged in forwarding business secrets or other confidential material, and state
outgoing cross-border mail must, however, pay the full the reasons. If the Commission does not receive a request
domestic tariff for the delivery of the mail items in the with reasons it will assume that the observations do not
country of destination. contain any business secret.

(33) The notified agreement makes reference to Articles 25 and 49 of


the UPU Convention signed in 1994. The Fifth Supplementary
Agreement makes reference to the UPU Convention signed in
1999. In this new version of the UPU Convention Article 25
has changed its numeration in Article 43.
23.4.2003 EN Official Journal of the European Union C 94/11

ANNEX

ON TPA

General

Each REIMS II party shall provide to any third party postal operator competing with REIMS II parties for the provision
of outgoing cross-border mail services in any other REIMS II country, delivery of inbound cross-border mail in its
country at terminal dues and on conditions which are non discriminatory as compared to those that the REIMS II party
offers to the REIMS II party in the sender's country. This obligation is limited to mail from senders in REIMS II countries
and to requests from third party postal operators

(i) that are entitled to provide outgoing cross-border mail services under the domestic rules applicable in the sender's
country and provided that outbound cross-border mail has been liberalised for the mail items in question in the
country in which the mail was produced and those through which it may have transitted;

(ii) that are competitors of the REIMS II parties for the provision of these services; and

(iii) that enter into an agreement with the delivering REIMS II party, pursuant to which they agree

— to comply with REIMS operational conditions and requirements, including participation in the quality of service
measurement systems (1),

— to pay the terminal dues offered to the REIMS II party in the sender's country plus an appropriate share of the
cost of administering REIMS and the extra cost incurred by handling their mail as compared to mail from other
REIMS parties, if any,

— to pay the delivering REIMS II party's internal rates for mail items tendered under this obligation that fall under
the exception set out below,

— upon request to post adequate security for such payments,

— to endeavour to provide specimens of larger quantities of business mail items,

— and to respect the reserved area of the REIMS II party and provide all their incoming reserved mail to be
delivered by the REIMS II party.

Exceptions

This obligation does not apply to domestic mail. Further, this obligation shall not apply to mail items that senders
residing in the country of the delivering REIMS II party post or cause to be posted in a foreign country with the object
of benefiting from lower rates available through this obligation. Within the limits of the present and future case law of
the Court of Justice, the latter exception to the obligation shall apply both to mail items made up in the sender's country
of residence and then carried across the frontier and to mail items made up in a foreign country.

Interface with Article 5 of the consolidated REIMS II Agreement

When Article 5 of the consolidated REIMS II agreement as notified takes effect, the REIMS II parties will no longer be
entitled to invoke the above exceptions to the obligation imposed by this Decision.

(1) Currently UNEX and Diagnostic.