Annulation of the Commission’s decision declaring the capital increase of La Poste to be compatible with the common market upheld by the Court of Justice

(i) Background

In 1992, La Poste, the Belgian public postal undertaking, became a share company governed by public law. It remains in charge of the universal postal service in Belgium, for which it receives compensation from the Belgian State in accordance with its management contract that was concluded with the Belgian authorities.

In 2002, the Belgian authorities notified the Commission of a proposed increase of approximately EUR 300 million in the capital of La Poste. Following the preliminary examination procedure under Article 88(3) EC, the Commission considered in July 2003 that this measure did not constitute State aid71.  

The Commission made the compatibility of this measure dependant on that of 6 other unnotified measures from which La Poste benefited after it became an autonomous public undertaking. Those measures consisted of exemption of taxes, transfer by the Belgian State of buildings, State guarantee for loans, overcompensation of financial services of general interest, and increases in capital.  

Even if some of these measures had contained elements of aid, they were considered to be compatible with the common market under Article 86(2) EC because they did not involve an overcompensation of the net costs of services of general interest provided by La Poste.  

As regards the increase of capital notified in 2002, the Commission stated that it was of a lower amount than the historical undercompensation of the net costs of services of general economic interest and therefore, it did not constitute State aid.  

However, Deutsche Post and DHL International, two competing undertakings of La Poste, appealed the Commission’s decision before the Court of First Instance, which annulled the contested decision.  

In its judgment of 10 February 200972, the Court identified evidence that the Commission had experienced serious difficulties – on the basis of which the Commission should have initiated the formal procedure – in the examination of the measures concerned. Those difficulties related to the long duration of the examination, the complexity of the case, the wide scope of the investigation, the Commission’s hesitations as to the choice of legal basis as well as the absence of evidence for its analysis. Furthermore, the Commission should have applied the test enshrined in the Altmark case73 and examined whether the services of general economic interest costs offset by the Belgian State were equivalent to or lower than those of a well-managed company. Since the Commission had not done such an analysis, and taking into account the evidence of serious difficulties encountered, its examination was considered to be incomplete. As a result, the Court annulled the contested decision.  

Belgium, supported by the European Commission, appealed to the Court of Justice, which handed down the judgment at issue.

(ii) Findings of the Court

In its judgment of 22 September 2011, the Court of Justice dismissed the appeal entirely and upheld the judgment of the Court of First Instance.

(iii) Incorrect classification of the circumstances of the case

Belgium and the Commission put forward four grounds of appeal.  

Most interestingly, Belgium claimed that the Court of First Instance incorrectly classified the circumstances of the case. It analysed each of the evidence of serious difficulties identified by the Court so as to demonstrate that there had been no serious difficulties which would have triggered the obligation to open the formal procedure under Article 88(2) TFEU.  

The Court of Justice firstly referred to the judgment in the case Kronoply and Kronotex⁷⁴ in which the Court stated that according to Article 4(4) of Regulation 659/1999, « if, following the preliminary examination, it finds that the contested measure raises doubts as to its compatibility with the common market, the Commission is required to adopt a decision initiating the formal investigation procedure under article 88(2) EC and article 6(1) of that Regulation.⁷⁵ »  

The Court then recalled that the concept of “doubts” was an objective one and affirmed that the Court of First Instance was right in considering that the elements identified could constitute a body of objective and consistent evidence which demonstrated that the Commission should have initiated the formal investigation procedure.  

Indeed, although the long duration of the examination does not in itself imply that the Commission should have opened the formal procedure, it does demonstrate that the Commission may have had doubts as to the compatibility of the measure at stake. Also, the content of the decision revealed that there had been an inadequate examination of the measures. In particular, in the absence of information needed for its examination, the Commission should have asked for clarification from the authorities.

The Court successively rejected the other grounds of appeal based on the inadmissibility of the action at first instance and on an infringement of Article 230(4) EC by the Court, respectively. It further stated that there was no need to examine the last ground of appeal based on an infringement of the principle of legal certainty.  

For the reasons highlighted above, the Court of Justice considered that there had been doubts as to the compatibility of the measure at stake, and thus the Commission should have initiated the formal investigation procedure.  

It therefore dismissed the appeal entirely and upheld the judgment of the Court of First Instance, which annulled the Commission’s decision.