Chronopost v. Ufex: The Paradoc of the Competing Monopolist Symposium on European Competition Law

Fratini, Alessandra, Carta, Andrea | January 1, 2004

On July 3, 2003, in the Chronopost judgment, the European Court of Justice (“ECJ” or “the Court”) defined the conditions under which a public undertaking, enjoying a legal monopoly for the provision of services of general interest, can provide services to its subsidiaries without infringing Article 87(1) of the EC Treaty. The impact of this judgment on European Community (“EC”) state aid policy and public services is potentially large, in both legal and practical terms. The ruling casts light on the real dilemma underlying the application of state aid rules to the circumstances of the case: how to allow public companies, entrusted with a network enabling them to provide a given service to all users, to operate in competitive markets while, at the same time, preventing these public operators from unduly exploiting the specific advantages of their position as network operators, in terms of economies of scale/scope, on the downstream competitive markets. This article deals with the principles defined by the ECJ in the Chronopost ruling.