Legal Alerts / 5 Nov 2013

Legal Alert – Market Entrant Wins the Postal Licence Case

The ruling promotes competition in the Finnish addressed delivery markets which have so far been dominated by the state-owned incumbent Itella Oyj. The strict licensing policy has effectively prevented market entry as new licensed postal operators have not been able to start offering services.

The Supreme Administrative Court has issued a ruling on a postal licence granted to a new market entrant. The market entrant aims to offer services only on a contractual basis mainly to business customers and had applied the licence accordingly. The Government issued a general licence which obliged the market entrant to offer services also to the general public. The Court noted that the Government cannot issue a licence that differs from the application. The licence was remitted to the Government and it needs to take a new decision within three months.

During 2012 and 2013, the Government issued postal licences for addressed delivery services to two new market entrants. The licences were issued under several strict conditions, including obligations for non-discriminatory pricing, 3-day delivery, and maintaining at least one postal office in each community. Under national law, the Government can impose licence terms that are essential for ensuring the quality, availability or efficiency of services.

One of the market entrants, Ilves Jakelu Oy, had applied a licence to operate on a contractual basis only. The draft licence prepared by ministry officials reflected the application. At the Government plenary session, the Minister responsible for postal affairs presented a new draft and the Government adopted this version. The final licence was granted for general postal operations and included an obligation to receive and convey an item of correspondence from anyone who so wishes. In practice, the licence decision prevented the development of the business segment of the postal market and created a significant barrier of market entry.

In its decision on 1 November 2013, the Supreme Administrative Court stated that the Government’s decision was illegal. The Government should not have issued the licence contrary to the application. The Government also failed to hear the applicant on the new licence draft. The Court ordered the State to compensate for the appellant’s legal costs.

During the process the market entrant had claimed that the national postal act must be interpreted in light of Article 9(1) of the EU Postal Directive. The contractual services do not fall within the scope of universal services. Therefore, the licences should only include terms to guarantee compliance with the essential requirements, as defined in the Postal Directive. The Supreme Administrative Court did not take stand on these issues.

The Court remitted the licence to the Government for a new assessment. The new licence should be issued within a three-month time limit.

Attorneys at Law Borenius represented the appellant, Ilves Jakelu Oy, in the matter.

For additional information

Ilkka Aalto-Setälä
Henriikka Piekkala

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