According to the Court of First Instance the Commission should have checked that La Poste had not used its monopoly position on the ordinary postal service market to favour its subsidiary SFMI-Chronopost, enabling it to obtain services for less than their market value
By decision of 1 October 1997, the Commission found that logistical and commercial assistance provided by La Poste to its subsidiary SFMI-Chronopost did not constitute State aid. According to the Commission's method of calculation, the subsidiary did not derive any financial benefit from that assistance.
The Union Française de l'Express (UFEX), DHL International, Federal Express International and CRIE contested that decision before the Court of First Instance.
Those undertakings, all of which are in competition with SFMI Chronopost, submitted primarily that the assistance fell within the definition of State aid, maintaining that La Poste's commercial relations with its subsidiary amounted to a form of aid contrary to Community competition law. They argued that without any good reason the Commission omitted to take normal market conditions into account when examining La Poste's return on the assistance provided. They also criticised the Commission for refusing to regard as State aid certain other benefits enjoyed by SFMI-Chronopost (such as exemption from stamp duty, privileged access to Radio-France, and preferential customs clearance procedures).
The Court of First Instance pointed out, first, that in order to assess whether the measures at issue may constitute State aid, the situation must be examined from the point of view of the recipient undertaking. This presupposes an economic analysis which takes into account all the factors which an undertaking supplying services, operating in normal market conditions, ought to have taken into consideration when setting a price on services rendered.
The economic analysis undertaken by the Commission failed to demonstrate that the transaction in question was comparable to a transaction between undertakings operating in normal market conditions.
Accordingly, the Court criticised the Commission for merely verifying that internal prices for the services exchanged between parent company and subsidiary were calculated on the basis of full costs. It should have examined whether those full costs genuinely reflected the elements which go to make up the price paid by a subsidiary to its parent company in normal market conditions.
The Court observed that La Poste might, by virtue of its position as a public undertaking engaged in provision of a monopoly (reserved sector) service, have been able to provide some of the logistical and commercial assistance to its subsidiary at a cost lower than would have been charged by a company operating in normal market conditions.
By ruling out the existence of State aid without first checking those points, the Commission had based its decision on an incorrect interpretation of the concept of State aid.
The Court therefore annulled the Commission decision in that respect.
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