Brussels, 10 May 2007
Freedom of establishment and freedom to provide services: the Commission calls on France to end special rights to distribute savings books ("livret A" and "livret bleu")
The European Commission has asked France to amend its legislation within nine months in order to eliminate the obstacles to the internal market rules represented by the special rights to distribute savings books ("livret A" and "livret bleu") granted to Banque Postale, Caisses d’Epargne and Crédit Mutuel. This request, based on Article 86(3) of the Treaty, follows its examination of the replies by France and all the interested parties to the letter of formal notice sent by the Commission in June 2006 (cf. IP/06/746). The Commission considers that the special distribution rights in question constitute a restriction which is incompatible with Community law and are not essential to ensure the satisfactory provision of the two services of general economic interest cited by the French authorities, namely the financing of social housing and the accessibility of basic banking services. The requested change to the method of distributing the savings books does not jeopardise the tasks of general interest with which they are associated and does not entail any deterioration in the way in which these savings books operate for individuals.
Competition Commlissioner Neelie Kroes said “With this decision, the Commission is opening up the distribution of "livrets A" and "livrets bleus" for the benefit of consumers without harming or undermining the role of attracting funds for financing social housing, which is accepted as a service of general economic interest.”
The "livret A" and the "livret bleu" are savings products to which the State has granted tax-exemption. They are distributed exclusively by three banking networks, which, in return for an intermediary’s fee, transfer the sums collected to the "Caisse des Dépôts et Consignations", which uses them to finance social housing. Some 50 million French citizens have such savings books, which represent a total value of €128 billion.
The reserved distribution of these products constitutes a restriction on freedom of establishment and freedom to provide services (Articles 43 and 49 of the Treaty) and creates an obstacle for French and foreign competitors wishing to enter and develop within the liquid banking saving market in France.
In the retail banking sector, the survival of special rights to distribute tax-exempt savings products granted to banking establishments whose range of activities has moreover been continually expanding is an anomaly which has a damaging effect on the development of fair conditions of competition.
The Commission has looked carefully at the arguments put forward by the French authorities regarding the general interest role of the "livret A" and "livret bleu". First of all, it takes the view that extending the right to distribute these savings books will not jeopardise the continuation of a sufficient collection level to finance social housing, since it notes that the distribution network will thus become much more extensive, making it easier for customers to gain access to these products, and that changing their means of distribution will not in any way alter the intrinsic qualities which have made them a success. The French authorities will also be able to impose the same obligation on all the banks distributing these products to channel all the funds collected through the "Caisse des dépôts".
Secondly, the Commission takes the view that, provided the conditions imposed by Article 86(2) of the Treaty are met, the banking accessibility function of the "livret A" can be performed in a more transparent way by granting ad hoc compensation rather than using a cross-subsidy system based on a special right. The operator or operators responsible for this task can be required to meet special public service obligations, in particular that of opening a savings book for anyone who requests one.
All in all, opening up the method of distribution of the "livret A" and "livret bleu" will make it possible, at no extra cost to the public purse, to put an end to the infringements observed while at the same time preserving the services of general economic interest concerned. The Commission’s decision does not affect the general interest tasks associated with these savings books but merely the way in which the tasks are carried out. The Commission considers that the granting of special rights to distribute such savings books is incompatible with the Member States’ obligation on the basis of Article 86 of the Treaty to ensure that the enterprises responsible for administering services of general economic interest observe all the rules of the Treaty (including single market rules) in sofar as the application of these rules does not stand in the way of performing these tasks.
Individuals will not see a deterioration in the way in which their savings books work but should on the contrary enjoy the benefits of competition in the form of greater freedom of choice and better quality of service.