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In Hofner, The Court claimed that as regards the manner in which a public employment agency enjoying an exclusive right of employment procurement conducts itself in relation to executive recruitment undertaken by private recruitment consultancy companies, it must be stated that the application of Article 86 of the Treaty cannot obstruct the performance of the particular task assigned to that agency in so far as the latter is manifestly not in a position to satisfy demand in that area of the market and in fact allows its exclusive rights to be encroached on by those companies.
Furthermore, the Court stated that the public employment agency is manifestly incapable of satisfying demand prevailing on the market for such activities to the extent that the following conditions must be satisfied:
- ‘The exclusive right extends to executive recruitment activities;
- The public employment agency is manifestly incapable of satisfying demand prevailing on the market for such activities;
- The actual pursuit of those activities by private recruitment consultants is rendered impossible by the maintenance in force of a statutory provision under which such activities are prohibited and non-observance of that prohibition renders the contracts concerned void;
- The activities in question may extend to the nationals or to the territory of other Member States.’
Hereinto the Court took the suitability approach to deal with the activities of undertakings in question. If the capacity of undertakings under concern could not manifestly fulfill the demand in the Common Market, because of its inefficiency there is of course no room for the exclusivity of them to exist under the primary objective of the Treaty aiming to improve every citizen’s interest. Although in Hofner, Bundesanstalt, the Federal Office for Employment, was entrusted with tasks of services of general economic interest, it is its dissatisfaction with the suitability test, especially its manifestly dissatisfaction of market demands , that lead it impossible to being justified according to Article 86(2). And this principle was reiterated in a recent case Ambulanz Glöckner by the Court.
4.2 Universal Service Obligations and the ‘Basic’ SGEI: Corbeau Case
Universal service obligations refer to a set of general interest requirements ensuring that certain services are made available at a specified quality to all consumers and users throughout the territory of a Member State, independently of geographical location, and, in the light of specific national conditions, at an affordable price. The concept of universal service obligations itself implies the activity of cross-subsidization. And because of cherry-picking problem such cross-subsidization would be difficult to sustain in a fully competitive market.
The cherry-picking problem could have not been a proportionate reason to justify the exclusivity related because public authorities could achieve the same objective by using less restrictive instruments than a monopoly, for instance, by directly subsidizing the provision of the service to high-cost customers . However as a result of the appearance of universal service obligations the Court cannot help but flexibly tolerate cherry-picking as one of justifications of exclusivity. Giving up the former very strict or rigid approach to apply Article 86(2) , nowadays the Court preferred to a tolerant approach to deal with traditional state measure, such as statutory monopoly in basic mail service, prohibiting competition.
In Corbeau the Court not only adopted the ‘the cherry-picking’ approach to satisfy the proportionality test, but also protested that ‘the obligation on the part of the undertaking entrusted with that task to perform its services in conditions of economic equilibrium presupposes that it will be possible to offset less profitable sectors against the profitable sectors and hence justifies a restriction of competition from individual undertakings where the economically profitable sectors are concerned.’ Then the Court seemed to endow a primary value with avoiding cherry-picking problem when operating universal service obligations. That is to say, universal service obligations can be a justification to exclude competition. Nonetheless this judgment raised another issue to the extent to which universal service obligations can be accepted by the Court as a justification against cross-subsidization. Being a derogation article it goes without saying that Article 86(2) would not like to admit any kind of universal service obligations as an excuse to exclude competition.
Through dissociating value-added services from basic postal service and according to compare express courier service with basic postal service, in Corbeau the Court stated that ‘however, the exclusion of competition is not justified as regards specific services dissociable from the service of general interest which meet special needs of economic operators and which call for certain additional services not offered by the traditional postal service, such as collection from the senders'' address, greater speed or reliability of distribution or the possibility of changing the destination in the course of transit, in so far as such specific services, by their nature and the conditions in which they are offered, such as the geographical area in which they are provided, do not compromise the economic equilibrium of the service of general economic interest performed by the holder of the exclusive right’ .
Thus the Court provided us some signs to approach this issue. In this case the Court presupposed that (1) maintaining monopoly in basic postal service can definitely justified by Article 86(2); and (2) other services, like express courier service, dissociable from basic postal service are not justified for monopoly in so far as such specific services, by their nature and the conditions in which they are offered, do not compromise the economic equilibrium of the service of general economic interest performed by the holder of exclusive rights.
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