HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN"L 143/16
EN
Official Journal of the European Union
31.5.2011
DECISIONS
COMMISSION DECISION
of 26 January 2011
on State aid C 50/07 (ex N 894/06) which France plans to implement to promote the development
of sickness insurance policies (contrats solidaires et responsables) and supplementary group
insurance policies providing cover for death, incapacity and invalidity
(notified under document C(2011) 267)
(Only the French text is authentic)
(Text with EEA relevance)
(2011/319/EU)
THE EUROPEAN COMMISSION,
(2) By
letter
dated
13
November
2007,
the
Commission
informed France of its decision to initiate the formal
investigation procedure laid down in Article 108(2) of
the Treaty (TFEU) concerning this aid.
Having regard to the Treaty on the Functioning of the European
Union, and in particular the first subparagraph of Article 108(2)
thereof ( 1 ),
(3) The
Commission
decision
to
initiate
the
formal
investi
gation procedure was published in the Official Journal of
the European Union ( 4 ). The Commission invited interested
parties to submit their comments on the aid measures in
Having called on interested parties to submit their comments
question.
pursuant to the Article cited above ( 2 ) and having regard to their
comments,
(4) France transmitted its comments on the decision to
initiate the formal investigation procedure by letter of
21 December 2007.
Whereas:
(5) The
Commission
received
comments
on
this
subject
I.
from several interested third parties. It communicated
PROCEDURE
them to France, giving it the opportunity to
(1) By
letter
of
28
December
2006,
France
notified
to
the
comment on them, and received its comments by letter
Commission aid schemes to promote the development of
of 8 May 2008.
sickness insurance policies (contrats solidaires et
responsables) as planned in a Finance (Amendment) Act
for 2006. The provisions governing these schemes are set
out in Article 88 of the Finance (Amendment) Act for
(6) France
communicated
additional
information
to
the
2006 (Law No 2006-1771 of 30 December 2006) ( 3 ).
Commission by letter of 31 October 2008.
France communicated additional information to the
Commission by letters of 26 February, 11 May and
18 September 2007.
(7) Certain interested third parties sent additional
( 1 ) From 1 December 2009, Articles 87 and 88 of the EC Treaty have
information to the Commission during February 2009.
become Articles 107 and 108 respectively of the Treaty on the
Functioning of the European Union (TFEU). In both cases, the
provisions are identical in substance. For the purposes of this
Decision, the references made to Articles 107 and 108 of the
(8) Following
a
meeting
between
the
Commission
and
the
TFEU are to be understood, where appropriate, as made to
Articles 87 and 88 respectively of the EC Treaty. A number of
French authorities on 2 June 2009, the latter undertook
changes in terminology have also been made by the TFEU, such
to examine the possibility of making certain amendments
as the change of ‘Community’ to ‘Union’ and ‘common market’ to
to the schemes notified and to forward their analysis to
‘internal market’.
the Commission as soon as possible.
( 2 ) OJ C 38, 12.2.2008, p. 10.
( 3 ) Official Gazette of the French Republic No 303 of 31 December
2006, p. 20228, text No 2 (source: http://www.legifrance.gouv.fr).
( 4 ) See footnote 2.

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EN
31.5.2011 Official
Journal
of
the
European
Union L
143/17
(9) By
letter
dated
22
September
2009,
the
Commission (16) The
main
objective
of
this
measure
is,
by
developing
this
granted a time limit of 20 working days to France to
type of policy, to extend the supplementary sickness
communicate its analysis.
insurance cover of the French population. In this
capacity, the measure would complement the tax-
exemption scheme for insurance conventions which
applies to the same type of policy and which the
Commission authorised by its Decisions of 2 June
(10) By
letter
dated
3
November
2009,
the
French
authorities
2004 ( 7 ) and 29 October 2010 ( 8 ).
requested a suspension of the formal investigation
procedure until 1 April 2010.
(17) The sickness insurance policies concerned by
this exemption scheme were introduced in France in
2001 ( 9 ). They are, firstly, policies covering group
operations with compulsory affiliation and, secondly,
(11) On
17 November
2009, the
Commission agreed
to
suspend the formal investigation procedure until
policies relating to individual and group operations
1 April 2010, under the Code of Best Practice for the
with optional affiliation.
conduct of State aid control procedures ( 5 ), in order to
enable France to adapt its draft legislation and to
undertake the necessary consultations.
(18) More
specifically,
to
be
eligible,
these
policies
must
meet
the following conditions:
— no medical information on the insured person will be
(12) By
letter
dated
26
April
2010,
the
French
authorities
required from the insurer for affiliation to optional
informed the Commission that any amended draft
policies,
scheme would reach it on 17 May 2010.
— the amount of the contributions or premiums will
not be established according to the state of health
of the insured person,
(13) By
letter
dated
27
May
2010,
the
French
authorities
forwarded the information to the Commission,
although without planning amendments to the schemes
— the cover granted will compulsorily include benefits
notified.
linked to prevention and to consultations of the
treating doctor and his prescriptions,
— the cover granted will not have to include the
II. DETAILED DESCRIPTION OF THE AID
contributions to medical costs which the insured
(14) Two
separate
tax measures were the subject of the
person may incur either on account of fees
decision to open the formal investigation procedure:
exceeding the rate for certain treatments or certain
consultations, or on account of the lack of desig
nation of a treating doctor.
Exemption from corporation tax and local business tax for
(19) To qualify for the preferential scheme, insurers will also
management operations connected with certain sickness
have to respect thresholds relating to the number of
insurance policies (contrats solidaires et responsables)
sickness insurance policies (contrats solidaires et
responsables) in their portfolio of sickness insurance
(15) The
first
measure
notified
consists
of
exemptions
from
policies as a whole. These thresholds vary according to
corporation tax, introduced by Article 207-2 of the
the type of policy:
General Tax Code (CGI), and from local business tax ( 6 )
(Article 1461-1 of the CGI) for management operations
connected with certain sickness insurance policies
— policies relating to individual and group operations
(contrats solidaires et responsables). These exemptions
with optional affiliation:
would benefit all institutions issuing such policies:
mutual societies and unions subject to the Mutual
( 7 ) See Commission Decision of 2 June 2004, France, State aid
Society Code, provident societies subject to Title III of
E 46/2001, Exemption from tax on sickness insurance policies,
Book IX of the Social Security Code or to Book VII of
http://ec.europa.eu/competition/state_aid/register/ii/by_case_nr_e
the Rural Code, and all insurance undertakings subject to
2001_0030.html#46
the Insurance Code.
( 8 ) See Commission Decision of 29 October 2010, France, State aid
N 401/2010, amendment to the scheme for exemption from the
special tax on insurance conventions of sickness insurance policies
( 5 ) OJ C 136, 16.6.2009, p. 13, point 41.
(contrats solidaires et responsables).
( 6 ) The notification refers to the exemption from business tax. This tax
( 9 ) The provisions relating to the characteristic of responsibility of the
has in the meantime been superseded by the local business tax
policy (no cover of excess on fees for certain treatments and
(contribution économique territoriale), comprising a levy on the real
financing of certain benefits linked to prevention) were introduced
estate of businesses and a levy on the added value of businesses.
in 2006.

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L 143/18
EN
Official Journal of the European Union
31.5.2011
Their share must represent 150 000 persons or a
— persons under 25 years of age represent between
minimum proportion (fixed by decree) of between
28 % and 35 % at least of beneficiaries of sickness
80 % and 90 % of all subscribers and affiliated
insurance policies taken out with the insurer ( 15 ).
members under policies relating to individual and
group operations with optional affiliation subscribed
to with the insurer ( 10 ).
(21) According
to
the
French
authorities,
these
last
conditions
impose mutualisation in terms of premiums or
generations and the achievement of a minimum level
of effective solidarity. They aim to encourage the dissemi
— policies relating to group operations with compulsory
nation of contrats solidaires et responsables and cover for
affiliation:
the entire population, especially by accepting a significant
proportion of young or elderly people, two categories
encountering the greatest difficulties in obtaining (supple
mentary) sickness insurance on account of their low
resources (the young) or the potential cost they
Their share must represent 120 000 persons or a
represent (the elderly).
minimum proportion (fixed by decree) of between
90 % and 95 % of all subscribers and affiliated
members under policies relating to individual and
group operations with compulsory affiliation
(22) The
scheme
also
requires
these
conditions
to
be
assessed
subscribed to with the insurer (
at group level, in respect of their activities which are

11 ).
taxable in France. The object of this provision is
apparently to avoid circumvention of the scheme or
set-ups leading to concentration of this type of risk in
a few ad hoc structures, in contradiction with the
objective of mutualisation.
(20) Finally,
beneficiary
insurers
will
also
have
to
fulfil
at
least
one of the following conditions:
(23) According to the French authorities, the aim of all these
conditions is to encourage insurers to develop the
dissemination of these policies, to participate in the
— implement gradation of premium rates or meet the
implementation of basic and supplementary universal
costs of contributions depending on the social
sickness cover and to offer supplementary sickness
situation of subscribers and affiliated members,
cover to the entire population under controlled
premium conditions. Persons who are targeted in
particular are those whose state of health or financial
situation does not allow them to take out individual
cover.
— affiliated members and subscribers in receipt of
aid for the acquisition of supplementary health
insurance ( 12 ) represent between 3 % and 6 % at
least of members or subscribers to sickness
(24) The
entry
into
force
of
this
tax
measure,
initially
planned
insurance policies relating to individual and group
for 1 January 2008 as regards the exemption from
operations with optional affiliation taken out with
corporation tax and the financial year 2010 with
the insurer ( 13 ),
regard to the exemption from local business tax, has
been postponed until 1 January 2012 and the financial
year 2013 respectively, pending Commission approval of
the relevant schemes.
— persons at least 65 years of age represent between
15 % and 20 % at least of affiliated members or
subscribers to sickness insurance policies taken out
Tax deduction for equalisation provisions relating to certain
with the insurer ( 14 ),
supplementary group insurance policies
(25) This
second
tax
measure
aims
to
enable
insurers
to
( 10 ) A draft decree sets this proportion at 85 %.
benefit from the tax deduction for equalisation provisions
( 11 ) A draft decree sets this proportion at 93 %.
relating to certain supplementary group insurance
( 12 ) Aid granted by the State in the form of reduction in insurance
premiums for persons with financial resources below a ceiling
policies (Article 39 quinquies GD of the General Tax
determined by the family situation. The amount of aid varies
Code (CGI)) beyond that which is permitted under
from EUR 100 to EUR 500 depending on the age of the bene
ordinary law (Article 39 quinquies GB) for such
ficiary.
provisions.
( 13 ) The minimum proportion would be 3 % according to the draft
decree.
( 14 ) The minimum proportion for this age group would be 16 %
( 15 ) The minimum proportion for this age group would be 31 %
according to the draft decree.
according to the draft decree.

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EN
31.5.2011 Official
Journal
of
the
European
Union L
143/19
(26) The
constitution
of
a
technical
equalisation
provision
( 16 )
dependants (whatever their state of health and age), and
is provided for in the accounting and prudential regu
their employers are obliged to subscribe to them and join
lations governing insurers. Article 30 of Council
the designated insurer ( 19 ).
Directive 91/674/EEC of 19 December 1991 on the
annual accounts and consolidated accounts of insurance
undertakings ( 17 ) defines the equalisation provision as
follows: ‘The equalisation provision shall comprise any
(29) According to the French authorities, designation
amounts set aside in compliance with legal or adminis
makes it possible to obtain a more advantageous
trative requirements to equalise fluctuations in loss ratios
contribution/cover ratio from the designated insurer
in future years or to provide for special risks.’.
and to obtain access for all employees of an economic
sector to the same cover, whatever the size of the under
taking to which they belong. It also implies a periodical
review of the terms and conditions of organisation and
mutualisation of the risks and the designation of the
insurer considered.
(27) In
this particular case, the equalisation provision is
intended to cushion fluctuations in loss relating to the
group operations providing cover for death or physical
(30) This
measure
also
allows
improvement,
to
the
benefit
of
injury (incapacity and invalidity). These fluctuations in
the individual consumer, of the control of rates and the
results (from 1 financial year to another) would be
quality of the benefits provided on the occurrence of
linked to the actual calls on the cover provided by the
serious events such as invalidity, incapacity or death,
insurance policies taken out in relation to the hypotheses
which have significant social and financial consequences
regarding pay-outs under the cover used to draw up the
for the insured person or his family (additional expenses,
insurance premium rates. The provision allows the
loss of income, exclusion, etc.).
technical results relating to the operations concerned to
be smoothed, with a view to cushioning significant fluc
tuations in loss likely to be recorded subsequently.
(31) More precisely, the mechanism of the provision of cover
for death, invalidity and incapacity subscribed to under a
designation procedure aims to enable designated insurers:
(28) According
to
the
French
authorities,
the
new
equalisation
provision referred to in Article 39 quinquies GD
— to defray shortfalls from this type of policy, in
contributes to the general objective to develop and
relation to the average provided for originally,
improve the supply, by insurers, of personal protection
which could result from risks of loss (amounts and
cover subscribed to under a so-called ‘designation’
numbers) or shift in the risk (changes in data on
procedure. This refers to the supplementary group
which the original rates were based),
cover resulting from occupational or inter-occupational
conventions or collective agreements, company
agreements or employer decisions taken, under which
the insurer is designated by the social partners (desig
— to improve the capital and the solvency margin of the
nation procedure). This designation entails the obligation
insurers which offer these operations through the
for the designated insurer to respect the contractual
constitution of the special provision.
conditions negotiated by the social partners
( 18 )
(including the clauses concerning the readjustment of
rates). The designation is assumed for a maximum
period of 5 years, at the end of which a compulsory
(32) In practice, the annual allocation to the provision is
review of the designated insurer must be carried out.
eligible for deduction within the limit of the technical
The policies with designation clause introduced at the
profit ( 20 ) from the operations concerned. The total
level of occupational groups by agreement between the
amount of the provision may not exceed 130 % of the
social partners are always the subject of an extension
total amount of the contributions relating to these
decree by the Minister for Social Security. They are
operations as a whole carried out during the financial
consequently automatically applicable to all employees
year. The provision is assigned to offsetting technical
and former employees of the group and to their
losses for the financial year in the order of seniority of
the annual allocations.
( 16 ) A provision ‘for risks and charges’ is an amount recorded on the
liabilities side of the balance sheet to cover charges with a maturity
( 19 ) Under the designation scheme, the insurer designated cannot decide
date or amount which is not fixed precisely. Constitution of a
unilaterally on a change to the cover scheme, such as for example
provision implies on the one hand the entry into the accounts of
an increase in contributions. It is the social partners who decide on
allocations to the provisions (charge account) and on the other
changes to the scheme (improvement of the benefits, adjustment of
hand a provision under the liabilities (balance sheet account). The
the contribution rates, etc.).
technical equalisation provision is a type of provision for risks and
( 20 ) Difference between the amount of premiums or contributions,
charges.
minus allocations to the provisions legally constituted, and the
( 17 ) OJ L 374, 31.12.1991, p. 7.
amount of charges for losses, plus costs attributable to the
( 18 ) See Article L912-1 of the French Social Security Code.
policies concerned.

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L 143/20
EN
Official Journal of the European Union
31.5.2011
(33) The
annual
allocations
not used
within
a
period
of
of thresholds relating to the number (120 000/150 000)
10 years are transferred to a special tax-exempt reserve.
or proportion (80
%/90
%) of contrats solidaires et
The amount of this special reserve may not exceed 70 %
responsables in the sickness insurance policy portfolio of
of the total amount of the contributions relating to the
the insurers concerned.
operations concerned as a whole carried out during the
financial year. The surplus from these allocations is
carried forward to the taxable profit after a period of
10 years from their entry in the accounts.
(38) As
regards
the
second
measure
(tax
deduction
for
equal
isation provisions), the Commission was of the opinion
that none of the three conditions for the application of
Article 107(2)(a) TFEU seemed to be met.
(34) Under
ordinary
law,
insurance
and
reinsurance
under
takings (Article 39 quinquies GB) may currently
constitute tax-free equalisation provisions relating to the
group insurance operations covering death, incapacity or
(39) Firstly,
in
the
Commission’s
opinion,
the
social
character
invalidity subject to the following limits:
of the measure at the time the insurance policies are
taken out, namely before the serious events they cover
actually occur, did not seem to be established clearly.
— the annual allocation to the provision is limited to
75 % of the technical profit from the policies
concerned,
(40) Secondly, passing on the aid in full to the
consumer/insured person seemed even more hypothetical
and uncertain than for the first measure. Passing on the
advantage also seemed to be potentially beneficial to
— in relation to the amount of the contributions
employers in so far as they too contribute to financing
relating to the policies concerned acquired during
the policy.
the financial year, the total amount of the provision
may not exceed a proportion of between 23 % and
100 % depending on the number of insured persons.
(41) Thirdly, the high degree of concentration of the market
for designation policies in the hands of provident
societies in the present context seemed to have the
Each provision is allocated to offsetting technical losses
potential to amount to de facto discrimination in their
of the financial year in the order of seniority of the
favour.
annual allocations. Moreover, the allocations which
could not be used within a period of 10 years are
carried forward to the taxable profit.
IV. COMMENTS BY INTERESTED PARTIES
(42) Following
publication
of the decision
to initiate
the
III.
procedure, comments were received from the Fédération
REASONS HAVING TRIGGERED THE INITIATION
Nationale de la Mutualité Franaise (FNMF), the
OF THE FORMAL INVESTIGATION PROCEDURE
Fédération franaise des Sociétés d’Assurance (FFSA), the
(35) In its decision to initiate the formal investigation
Centre technique des Institutions de prévoyance (CTIP),
procedure of 13 November 2007, the Commission
the Union Nationale Interfédérale des uvres et
expressed doubts about the application of
Organismes Privés Sanitaires et Sociaux (UNIOPSS), the
Article 107(2)(a) TFEU concerning the two tax
Fédération nationale des Comités féminins pour le
measures concerned (
Dépistage des Cancers, the Union Fédérale des Consom

21 ).
mateurs — Que choisir (UFC — Que choisir) and an
anonymous third party.
(36) As regards the first measure (exemptions from
corporation tax and local business tax for management
operations connected with contrats solidaires et
(43) The majority of the interested parties view the two tax
responsables), the Commission considered that France
measures in question in a positive light and their
had not provided evidence of the advantage being
comments largely tie in with the arguments advanced
passed on in full to consumers.
by the French authorities. They stress the existence of
strong competition in the market for supplementary
health insurance and the excellent liquidity of the
market. They also emphasise that the cover concerned
(37) The
Commission
also
questioned
whether
the
condition
by the two measures compensates for the deficiencies
of absence of discrimination related to the origin of the
of social security. By creating tax incentives which are
product was complied with on account of the existence
easily accessible by all supplementary health insurance
operators, the French authorities are creating the
conditions to transform the segment of persons of little
( 21 ) Since France accepted classification of the notified measures as State
aid at the notification stage, the Commission has confined itself to a
interest a priori in terms of risk profile or solvency into a
brief analysis of this classification.
segment with new economic appeal.

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EN
31.5.2011 Official
Journal
of
the
European
Union L
143/21
(44) As
regards
the
first
measure
(exemption
for contrats soli
(49) An anonymous third party stresses the French
daires et responsables), the FFSA is nevertheless concerned
Government’s lack of knowledge and statistical data on
about the existence of excessively high thresholds which
the economic and financial situation of undertakings
constitute an obvious advantage for operators already
operating in the supplementary sickness insurance
having a strong presence in the market. Although the
market. This rendered any objective analysis of the
FFSA understands the principle of a threshold to avoid
situation impossible.
situations which are too complex to manage, it considers
on the other hand that it is essential for this threshold
not to constitute an obstacle to the granting of aid on
account of its level. It considers, too, that the criteria
(50) The
same
anonymous
third
party
also
refers
to
the
trend
associated with the structure of the population covered
between 2001 and 2007 in profit margins achieved by
(percentage of under-25s, pensioners, etc.) lead to
undertakings in the sector. Whereas the turnover of the
selecting the beneficiaries of the aid without real justifi
undertakings concerned apparently rose by 50 % during
cation in relation to the stated aim. These criteria benefit
that period, expenditure on benefits by the same insurers
homogeneous mutual associations access to which is
rose by only 35 %. Gross operating margins therefore
subject to status or occupational criteria, to the
increased by a further 15 % in the space of 6 years.
detriment of mutual associations open to all areas of
the public. These criteria also introduce a potential
difference in treatment between insured persons.
(51) Concerning
the
second
measure
(equalisation
provision),
the FFSA is of the opinion that there is nothing to justify
a more advantageous tax scheme for policies with a
(45) The CTIP, for its part, states that, to ensure their quality,
designation clause than for company group policies
the services proposed by insurers require significant
covering the same risks. The logic of constituting the
investments which it must be possible to amortise
provision and the risks are the same, with greater
among groups of sufficiently numerous insured
mutualisation which limits the intensity in the case of
persons. This objective explained the thresholds.
policies with a designation clause. In addition, the
measure is in fact reserved for provident societies.
Although the choice of insurer by the social partners is
legally open, almost all policies of this type in practice
(46) The
CTIP
also
refers
to
the
obligation
for
insurance
designate the provident society set up on the initiative of
undertakings within the European Union to set aside a
the social partners.
solvency margin. If all technical profits were to revert to
insured persons, solvency would not be met. It would
therefore be perfectly natural for at least part of the
advantage to serve to cover, in whole or in part, the
(52) The CTIP, for its part, considers that it is natural that the
increase each year in the solvency requirement.
social partners should prefer to opt for setting up a
provident society which they can then manage.
(47) The
CTIP
states,
moreover,
that,
according
to
Court
of
Justice case law, occupational schemes of a contractual
(53) Furthermore, the CTIP recalls the constraints which
nature, on account of their nature and their object, are
would be imposed on insurers in the event of desig
not covered by the provisions of European Union
nation:
competition law ( 22 ). Such schemes also cannot be
subject to business taxes since they provide cover
which remedies the deficiencies of social security and
— strict application of the provisions laid down in the
which is based on conventions and collective agreements.
agreement or collective agreement (cover, rates,
revaluation clauses, maintenance of rights in the
case of precarious situations, etc.),
(48) The
FNMF
also
invokes
the
compatibility
of
the
first
measure on the basis of Article 107(3)(c) TFEU. Firstly,
the aid is intended to facilitate the development of
— prohibition on suspending cover even in the event of
supplementary health cover which respects solidarity
non-payment,
and a sense of responsibility under conditions which
do not adversely affect trading conditions to an extent
contrary to the common interest. The measure aims to
remedy a market failure which tends to produce segmen
— obligation to provide insurance for all undertakings
tation of populations, since the market does not allow
covered by the scope of the agreement or convention,
the overall welfare of non-profitable populations to be
ensured efficiently. Secondly, the aid is necessary and
proportionate, since the measures put in place previously
did not enable the objective pursued to be attained.
— need to smooth the rate over the duration of the
cycle of the economic sector covered in order to
( 22 ) See judgment in Case C-67/96 Albany International BV v Stichting
correlate rate increases with economic crises
Bedrijfspensioenfonds Textielindustrie [1999] ECR I-5751.
affecting an occupational sector.

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L 143/22
EN
Official Journal of the European Union
31.5.2011
(54) The
CTIP
also
considers
that
contractual
schemes
for
way that the advantage benefits those categories of
supplementary social protection constitute remuneration
consumers who are excluded from supplementary
for employees and, in this capacity, cannot be subject to
health cover on account of their age or financial
business taxes. Consequently, the scheme for the supple
resources.
mentary deduction of equalisation provisions should not
be considered classifiable as State aid.
(60) As
regards
the
question
of
possible
discrimination
in
favour of certain undertakings, France states that the
(55) The CTIP, like the FNMF, also invokes the compatibility
thresholds create an incentive for insurers to mutualise
of the second measure on the basis of Article 107(3)(c)
the ‘bad risk’, characterised by the age or level of
TFEU, stating that it is intended to facilitate the devel
resources of the persons concerned, in their portfolio.
opment of the personal protection market without
adversely affecting trading conditions to an extent
contrary to the common interest.
(61) An
insufficient
proportion
or
number
of contrats solidaires
et responsables would not allow this objective of mutual
isation to be achieved and, in the absence of such
(56) In
addition,
the
CTIP
refers
to
the Albany judgment (
thresholds, the exemptions provided for would have

23 ),
stating that contractual social protection schemes with
the effect of a windfall for the undertakings concerned.
compulsory affiliation perform a task of general
Competition alone (without establishing a threshold)
economic interest. To subject the operations associated
would have the sole effect of the tax advantage being
with contractual social protection schemes implemented
passed on to the end consumer and of enabling the
by an insurer to business taxes would be in contradiction
insurers to retain their market shares, without ensuring
with performing the task of general economic interest
an increase in the rate of cover. The dual threshold
conferred on insurers.
mechanism (percentage or absolute value) is therefore
an essential element to increase the rate of cover of the
categories of the population not covered at present.
V. COMMENTS BY FRANCE
Exemption from corporation tax and local business tax for
(62) In a context of the steadily rising price of supplementary
management operations connected with contrats solidaires et
health insurance, proposing a tax incentive for these
responsables
categories of the population meets the real challenge of
achieving national solidarity.
(57) Concerning the passing on of the aid to individual
consumers, the French authorities maintain that this
will be ensured through the competitive nature of the
supplementary sickness insurance market and the very
Tax deduction for equalisation provisions relating to certain
structure of the measure.
supplementary group insurance policies
(63) The
French
authorities
firstly
point
out
that
the
tax
scheme should not be considered in its entirety as aid.
Classification as State aid should be reserved solely for
(58) Not
only
are
there
a
large
number
of
operators
in
the
market (
that part of the scheme which is not justified by the

24 ), but also the distribution channels are
numerous and varied (general insurance agents, brokers,
specific nature of the insurance activity concerned
employees of insurers, direct sales via the Internet, etc.).
having regard to prudential standards.
The competitive nature of this sector is also guaranteed
by the insurance and mutual society supervisory
authority (ACAM).
(64) The specific characteristics of designation policies,
deriving from the strong constraints in terms of rates,
risk selection and management, make these policies
particularly sensitive to the risk of claims experience
(59) Market
mechanisms
should
therefore
ensure
that
the
deviating from original estimates and therefore fully
advantage is passed on to consumers in the form of a
justify a particularly prudent allocation scheme.
reduction in the financial contribution of the insured
person, without it being necessary to introduce a
mechanism for the compulsory redistribution of the tax
saving. In addition, the measure is structured in such a
(65) Firstly, the risks covered by designation policies
concluded under sectoral collective agreements concern
( 23 ) Case C-67/96 Albany International BV v Stichting Bedrijfspensioenfonds,
a population specifically linked to an economic sector
cited in footnote 22 above.
and therefore particularly sensitive to cyclical reversals
( 24 ) According to a 2006 annual report of the insurance and mutual
affecting that sector. Anticipating these cycles over the
society supervisory authority, 263 insurance undertakings and 66
provident societies and 1 201 mutual societies operate in the
long term therefore requires smoothing the results of
supplementary health insurance market.
designation over the long term.

---

EN
31.5.2011 Official
Journal
of
the
European
Union L
143/23
(66) Secondly,
designation
policies
resulting
from
company
corresponds to a salary supplement for the
agreements concern a population which is necessarily
employee/insured person and therefore to an advantage
limited and therefore justifies higher provisioning rates
for the latter.
on account of significant fluctuations in loss.
(73) Concerning
the
existence
of
de
facto
discrimination
in
(67) The
tax
deduction
of
the
allocations
to
such
provisions
favour of provident societies, France states that the
under adapted and reinforced conditions, beyond the tax
measure deals in an egalitarian fashion with all operators,
regime under ordinary law provided for in Article 39
whatever their status. The personal protection market is
quinquies GB of the CGI, is therefore justified from a
not therefore in a monopoly situation in favour of
regulatory and prudential point of view.
provident societies and is already characterised by
strong competition between the principal operators.
(68) The
French
authorities
nevertheless
indicate
that
it
is
very
difficult to justify precisely the rates of allocations which
(74) France
also
recalls
that
the
choice
of
insurer
(designation
are acceptable for these operations on account of the
procedure) is the responsibility of the employer and the
technical difficulty of assessing a ‘normal’ level of provi
staff representatives. The transparency and tendering
sioning for such specific risks. The French authorities
procedure for this process is ensured under the usual
nevertheless specify that the ceilings for deductibility of
conditions of a market open to competition. The
the allocations to the provisions have been fixed in
tendering procedure is undertaken by invitation to
consultation with the profession.
tender to several insurers on the basis of specifications
drawn up by the social partners.
(69) As regards the compatibility of the aid in relation to
Article 107(2)(a) TFEU, France maintains that the three
conditions of this provision are duly met. As regards the
(75) France
considers,
moreover,
that
the
measure
assessed
social character of the aid, it states that the group policies
could in any case be considered aid to facilitate the devel
negotiated under sectoral agreements ensure a high
opment of certain economic activities which does not
degree of mutualisation of the risks and a lower level
adversely affect trading conditions to an extent contrary
of premiums than on the individual policies market,
to the common interest in accordance with
whilst enabling employed workers and their families to
Article 107(3)(c) TFEU. The proven social objective of
have access to a high level of cover.
the measure is indicative of the importance of the devel

opment of the personal protection market in the future.
(70) In
response
to
the
Commission’s
argument
that
the
social
character of the measure is not clearly established at the
(76) According to the French authorities, the development of
time insurance policies are taken out, France points out
personal protection policies including a designation
that the granting of aid before the insured event occurs is
procedure aims to develop the introduction of supple
the only means of attaining the social objective pursued.
mentary social protection schemes which are more
favourable and offer greater protection to employees,
while promoting social dialogue and worker partici
pation.
(71) Concerning passing the aid on to the end consumer,
France firstly draws a distinction between sectoral
collective agreements and company agreements.
Although the first group can in fact be characterised by
(77) Finally,
France
adds
that
the
supplementary
insurance
the predominance of provident societies, this market will
benefits in the personal protection field under the desig
be the subject of new dynamism and other insurance
nation procedure can be considered to constitute a
operators will henceforth take an interest in this
service of general economic interest within the meaning
market. Competition between provident societies will in
of Article 106(2) TFEU, in particular where affiliation to
any case be real and will already enable maximum
the benefit scheme is obligatory and it is managed under
passing on in favour of the insured person to be
a joint framework.
ensured. As for the second group (company agreements),
there is very strong competition between agreements and
no discernible monopoly situation in favour of provident
societies.
(78) The
collective
agreement
providing
for
cover
and
desig
nating the insurer can be made compulsory for all
employees, former employees and dependants according
to an extension procedure (Articles L 911-3 and 911-4
(72) According to the French authorities, the same reasoning
of the Social Security Code) by decree of the competent
can be applied when reduction or moderation of rates is
minister. It is this decree which should be considered the
undertaken in favour of the undertaking. The
act by which a Member State assigns public service obli
contribution of the employer to financing the cover
gations to an undertaking.

---

L 143/24
EN
Official Journal of the European Union
31.5.2011
(79) France
accepts
that
the
amount
of
compensation
(tax
(85) As regards the first measure (exemptions from
saving) for the service of general economic interest
corporation tax and local business tax for management
does not comply with the conditions laid down by the
operations connected with contrats solidaires et
Community framework for State aid in the form of
responsables), the following suggestions were made:
public service compensation
( 25 ). Nevertheless, it
considers that these conditions are not adapted to the
particularities of the operations concerned. According to
— in order to comply with the second criterion
France, the tax deductibility mechanism is better adapted
(effective passing on of the advantage), it was
and more flexible than a subsidy based on a precise
proposed to France that it should draw inspiration
assessment of the additional costs resulting from
from the subsidy scheme as previously approved by
operation of the service.
the Commission for supplementary health cover for
French civil servants (N 911/06), a tax credit scheme
in favour of individual consumers or any scheme
enabling effective passing on of the aid to be ensured,
VI. REACTION OF FRANCE TO THE COMMENTS BY
THIRD PARTIES
(80) The
French
authorities
note
the
comments
made
by
third
— in order to avoid any discrimination, the French
parties and respond more specifically to the comments of
authorities were invited to review the threshold
the Fédération Franaise des Sociétés d’Assurance (FFSA).
mechanism.
(86) In
its
letter
dated
27
May
2010,
France
nevertheless
(81) As
regards
the
tax
exemption
in
favour
of contrats soli
indicated that it had decided to maintain unchanged
daires et responsables, the French authorities point out that
the aid scheme it had notified and confirmed its
the composition of the insurers’ portfolios is homo
analysis that the schemes notified were compatible with
geneous so that the proportion of contrats solidaires et
the internal market within the meaning of
responsables in relation to the other types of sickness
Article 107(2)(a) TFEU.
insurance policies would now be equivalent in the
three main categories of insurers operating in this
market (undertakings coming under the Insurance
Code, mutual societies coming under the Mutual
(87) In
this
same
letter,
France
added
that
supplementary
Society Code and provident societies coming under the
health insurance policies constitute a product for
Social Security Code).
securing the loyalty of insured persons which then
enables subsequent offers of more remunerative
products to be made to the same insured persons, such
as life assurance policies. To secure customer loyalty,
(82) Concerning the new equalisation provision, France
market operators are therefore encouraged to practise
stresses that the possibility to conclude occupational
an attractive rates policy. Under these conditions, the
designation policies is open to all operators, both
tax advantage granted by an undertaking and passed
French and foreign, operating in the supplementary
on by it in the contributions of insured persons will
personal protection market.
have the direct effect of adaptation of the rates of its
competitors, thereby ensuring that the advantage is
passed on to all insured persons.
(83) Finally,
France adds that provident societies do not
benefit from a monopoly position and that,
(88) As
regards
the
second
measure
(additional
tax
deduction
consequently, there is no discriminatory advantage. The
for equalisation provisions), the Commission made the
fact that the opening of the market to competition is
following suggestions to France:
slow and gradual is attributable to a historical factor,
but does not call into question the competition existing
between provident societies. The fact that provident
societies are more specialised in this sector is insufficient
— in order to respect the second criterion (effective
to establish any form of discrimination.
passing on of the advantage), it was proposed to
France that it should draw inspiration from the
subsidy scheme as previously approved by the
Commission for supplementary health cover for
VII. SUPPLEMENTARY INFORMATION SUBMITTED BY
French civil servants (N 911/06), a tax credit
FRANCE FOLLOWING THE SUSPENSION OF THE
scheme in favour of individual consumers or any
PROCEDURE
scheme enabling effective passing on of the aid to
be ensured;
(84) During the investigation procedure, the Commission
suggested to France certain ways in which to make the
aid schemes compatible with the internal market on the
— in order to avoid any discrimination, the French
basis of Article 107(2) TFEU.
authorities were invited to consider introducing a
compulsory, transparent tendering mechanism for
( 25 ) OJ C 297, 29.11.2005, p. 4.
the award of designation policies.

---

EN
31.5.2011 Official
Journal
of
the
European
Union L
143/25
(89) As
with
the
first
measure,
France
nevertheless
decided
to
Description of the supplementary health insurance market in
maintain unchanged the aid scheme it had notified to
France
promote the development of group personal protection.
(95) The Social Security (compulsory sickness insurance)
scheme reimburses only part of the health care costs of
persons insured under the scheme. Supplementary health
(90) In
its
letter
dated
27
May
2010,
France
reaffirmed
the
insurance schemes therefore cover the part of the benefits
particularly restrictive nature of the designation which
that is not financed by the compulsory sickness
justified a particularly prudent allocation scheme. It was
insurance scheme.
only therefore to a very limited extent that the equal
isation provision could be considered State aid and that
its compatibility with the internal market should be
(96) The
market
for
supplementary
health
insurance
consists
examined.
mainly of the following three groups of operators:
— mutual societies and mutual unions subject to the
VIII. ASSESSMENT OF THE AID
Mutual Society Code,
VIII.1. Exemption from corporation tax and local
business tax for management operations connected
with contrats solidaires et responsables
— provident societies subject to the Social Security
Code,
Preliminary comment
(91) With
reference
to
the
Court
of
Justice’s
judgment
in
Albany ( 26 ), the CTIP maintains that, on account of
— insurance undertakings subject to the Insurance Code.
their nature and their object, occupational schemes of a
contractual nature are not subject to the competition
rules of Community law.
(97) According
to
a
letter
from
the
French
authorities
dated
21 December 2007, 263 insurance undertakings, 66
provident societies and 1 201 mutual societies operate
in the supplementary health insurance market. The
(92) The Commission notes, however, that the measure
French authorities also point out that in 2006, the 20
referred to by the above-mentioned judgment relates
leading market operators represented only 35 % of the
primarily to compulsory legal affiliation by industrial
market, without any of them exceeding 4 %, and, in
undertakings to a sectoral pension fund benefiting from
addition, that 65
% of the market consisted of
an exclusive right. In this respect, it should be pointed
operators with market shares of less than 1 % (
out that the exemption scheme relating to the first

28 ).
measure also refers to individual policies and group
policies with optional affiliation. In addition, the group
policies with compulsory affiliation referred to by the
(98) However,
according to official statistics published in
measure are subject to the free choice of the social
2009, the number of operators in this market never
partners as to whether or not to conclude such collective
theless came to only 876 at the end of 2008 and had
agreements and not to a statutory obligation to enter
been falling continually since 2001 (48 % reduction in
into such agreements or to affiliate to a sectoral or
2008 compared with 2001) ( 29 ). There were 748 mutual
inter-sectoral fund, as in the Albany case.
societies, 92 insurance undertakings and 36 provident
societies.
(93) The Court judgment then confirms that risk cover
(99) According
to
a
recent
analysis
by
the
French
competition
schemes supplementing the statutory social security
authority, the largest market shares in the individual
scheme, as notified in this case by the French authorities,
supplementary health insurance market were held by
are subject to the competition rules and the funds consti
Mutuelle Générale de l’Education Nationale — MGEN
tuting such schemes are in fact undertakings with the
(7,7 % market share), the mutual insurance company
meaning of Articles 101 et seq. TFEU ( 27 ).
Groupama ( 30 ) (6,7 % market share) and the insurance
company Swiss Life (4 % market share) ( 31 ).
( 28 ) 2006 Annual Report of Fonds CMU, http://www.cmu.fr/userdocs/
(94) The Commission therefore considers that the cover
Rapport%202006.pdf, Annex 13 – list of the 100 largest supple
scheme referred to in the first measure is not exempt
mentary insurers.
from the Treaty competition rules and in particular the
( 29 ) 2008 Annual Report of Fonds CMU of 13.5.2009, p. 33.
rules prohibiting State aid.
( 30 ) This is not a mutual society covered by the Mutual Society Code,
but a mutual insurance company coming under the Insurance Code.
( 31 ) See decision No 09-DCC-61 of 4 November 2009 of the French
( 26 ) Case C-67/96 Albany International BV v Stichting Bedrijfspensioenfonds
competition authority concerning acquisitions of exclusive control
Textielindustrie, cited in footnote 22 above.
of the mutual society Altéis and the mutual society Releya by the
( 27 ) See paragraphs 71 et seq. of the judgment cited in footnote 22.
mutual society Prévadiès, p. 4.

---

L 143/26
EN
Official Journal of the European Union
31.5.2011
(100) Regarding the group supplementary insurance market,
Trend in turnover of supplementary insurers 2001-2007
the largest market shares were held by the insurance
undertaking Axa (17,51 % market share), the provident
(billion EUR)
society group Malakoff-Médéric (8,7 % market share) and
Mutual
Provident
Insurance
the group AG2R-La Mondiale-Prémalliance ( 32 ) (6,9 %
societies
societies
undertakings
Total
market share) ( 33 ).
2001 10,6 3,3 3,7 17,6
2007 16,0 4,7 6,7 27,4
(101) Despite requests to that effect to the French authorities,
the Commission is not in possession of more precise
2001-2007 +
50,5
% +
43,15
% +
82,13
% +
55,8
%
information on the structure of the supplementary
health insurance market, such as that relating to
groupings of mutual societies, mutual associations,
unions of mutual societies and provident societies.
Furthermore, despite being requested to do so by the
(103) According to the statistics forwarded by the French
Commission, the French authorities were unable to
authorities, the breakdown between individual and
forward statistics specific to contrats solidaires et
group policies is as follows (2004 figures):
responsables (either at aggregate level or at the level of
each category of market operator). The statistics in the
tables in recitals 102 and 103 therefore refer to the
entire supplementary health insurance market, including
Provident
Mutual
Insurance
policies which do not fulfil the conditions of eligibility
societies
societies
undertakings
for the measure notified. A report published by the
French Court of Auditors in 2008 ( 34 ) stresses the
Group policies 38
% 33
% 29
%
significant statistical deficiencies with regard to supple
mentary insurance, concerning the number of insured
persons, their distribution between the various categories
Individual policies 6
% 67
% 27
%
of insurer and the various types of policy (individual
policy, optional group policy and compulsory group
Group + individual
18 % 54
% 28
%
policy), and the amount of expenditure refunded by
policies
category of household and income. On the basis of
analyses carried out by the national competition
authority, this market nevertheless appears to be frag
mented, and even very fragmented, as regards individual
policies ( 35 ), which, however, is only one of the sub-
(104) Whereas mutual societies and mutual unions mainly
markets concerned by the first measure notified.
issue individual policies, provident societies essentially
issue group policies (company or sectoral policies). The
portfolio of insurance undertakings is more balanced.
(102) Between 2001 and 2007, this sector developed strongly,
as shown in the table at the end of this recital ( 36 ). The
(105) The population coverage rate has increased significantly,
aggregate turnover of these undertakings came to EUR
rising from 84 % in 1996 to 92,8 % in 2006. There are
27,4 billion in 2007, up 55,8 % compared with 2001,
between 32 million and 38 million beneficiaries under
i.e. average annual growth of 7.6 %. The turnover for
mutual schemes, 13 million with insurance undertakings
2008 is thought to exceed EUR 29 billion, up 6 % on
and 11 million in provident societies, to which must be
2007 (
added over 4 million beneficiaries of the CMU-C fund

37 ).
(universal sickness cover), which offers supplementary
health cover free of charge to the poorest. This means
( 32 ) This group comprises, among others, provident societies, mutual
that today, 7 % to 8 % of the French population do not
insurance companies, mutual societies and unions of mutual
societies.
have supplementary cover ( 38 ).
( 33 ) See the decision cited in footnote 31, p. 5.
( 34 ) Survey on the distribution of the funding of sickness expenditure
since 1996 and on the transfers made between compulsory sickness
insurance, supplementary insurance and households, Court of
Aid character of the measure
Auditors, April 2008.
( 35 ) See Bulletin officiel de la concurrence, de la consommation et de la
(106) Under Article 107 TFEU, ‘any aid granted by a Member
répression des fraudes n o 7bis of 15 September 2006, p. 2
State or through State resources in any form whatsoever
(publication of the letter from the Minister for the Economy,
which distorts or threatens to distort competition by
Finance and Industry of 9 August 2006 to the boards of
Mutuelle Préviade-Mutouest, concerning concerted action in the
favouring certain undertakings or the production of
supplementary health insurance sector.
certain goods shall, in so far as it affects trade between
( 36 ) See Senate information report No 385 of 8 June 2008 on the
Member States, be incompatible with the internal
distribution of financing of sickness insurance since 1996 and
market’.
the transfer of charges between compulsory sickness insurance,
supplementary insurance and households, p. 11.
( 37 ) 2008 annual report of Fonds CMU of 13.5.2009, p. 33.
( 38 ) idem, p. 13.

---

EN
31.5.2011 Official
Journal
of
the
European
Union L
143/27
(107) The classification of a measure as State aid therefore
(112) Finally, apart from the fact that the insurance sector is
presupposes that the following cumulative conditions
the subject of trade within the European Union, it should
are fulfilled, i.e.: 1) the measure in question confers an
be recalled that, where a Member State grants aid to an
advantage, 2) through state resources, 3) this advantage is
undertaking, domestic production may for that reason be
selective and 4) the measure in question distorts or
maintained or increased with the result that undertakings
threatens to distort competition and is liable to affect
established in other Member States have less chance of
trade between Member States.
penetrating the market in that Member State ( 41 ).
(113) The position of the undertakings concerned will
consequently be strengthened in trade within the
(108) There is no doubt that the exemptions from or
European Union. This measure is therefore liable to
reductions in corporation tax and local business tax
create distortions of competition and to affect trade
consisting in abolishing or reducing a charge which the
within the European Union.
undertakings concerned would normally have to bear
constitute an advantage for their beneficiary ( 39 ). In this
respect, these tax exemptions or reductions therefore
constitute economic advantages.
(114) It must therefore be concluded that the first measure
does in fact constitute State aid within the meaning of
Article 107(1) TFEU. France does not challenge this clas
sification.
(109) In the light of the references made by the CTIP to a
possible public service mission, the Commission notes
Analysis of the compatibility of the measure under
that the conditions identified in the Altmark ( 40 ) case (to
Article 107(2)(a) TFEU
exclude the classification as aid in certain cases of
services of general economic interest) are not fulfilled
(115) Since the measure notified constitutes State aid, an
in the present case (see in particular paragraph 144,
analysis must be carried out of its compatibility with
the third Altmark condition consisting in absence of
the internal market. The French authorities consider
overcompensation). One is therefore indeed in the
that the measure in question constitutes compatible
presence of an economic advantage.
State aid under Article 107(2)(a) TFEU.
(116) Article 107(2)(a) TFEU reads: ‘The following shall be
compatible with the internal market: (a) aid having a
(110) These advantages are granted by the French State, which,
social character, granted to individual consumers,
in so doing, waives the collection of tax revenue. It
provided that such aid is granted without discrimination
therefore confers this advantage through state resources.
related to the origin of the products concerned’.
(117) A State aid measure is compatible on the basis of this
provision where the following three conditions are met:
(111) The measure is also of a selective nature. The selec
tiveness results firstly from the restriction of the
measure in question to a single economic sector, i.e.
the insurance sector, and secondly from its restriction
1. the aid must have a social character;
within this sector to a particular type of policy (sub-
sector). In this respect, it should first be noted that
corporation tax is a tax whose scope covers all
2. it must be granted to individual consumers;
companies, whatever the sector in which they operate.
An exemption from this tax benefiting the insurance
sector exclusively therefore constitutes a derogation
3. it must be granted without discrimination related to
from the general corporation tax regime which thus
the origin of the product.
specifically favours certain undertakings. The same
applies to the exemption from local business tax.
Moreover, the exemption in question also favours the
(118) It should be pointed out firstly that Article 107(2) TFEU
production within the insurance sector of certain
derogates from the principle of the prohibition of State
sickness insurance policies, in this case contrats solidaires
aid, as set out in Article 107(1) TFEU, and must therefore
et responsables. The measure therefore favours operators
be interpreted restrictively ( 42 ).
entering into contrats solidaires, to the detriment of
operators issuing ‘traditional’ policies.
( 41 ) See in particular Court of Justice judgment in Case C-310/99 Italy v
Commission [2002] ECR I-2289, paragraph 84.
( 39 ) See Court of Justice judgment in Joined Cases C-182/03 and
( 42 ) As regards the restrictive interpretation of Article 107(2) TFEU, see
C-217/03 Forum 187 ASBL [2006] ECR I-5479, paragraph 86
Court of Justice judgment in Case C-278/00 Greece v Commission
and case law cited.
[2000] ECR I-3997, paragraphs 81-82, and Court of First Instance
( 40 ) Court of Justice judgment in Case C-280/00 Altmark Trans and
judgment in Case T-171/02 Regione autonoma della Sardegna v
Regierungsprsidium Magdeburg [2003] ECR I-7747.
Commission [2005] ECR II-2123, paragraphs 165-166.

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L 143/28
EN
Official Journal of the European Union
31.5.2011
(119) As regards more specifically the application of
constituted a component of the premium and the tax
Article 107(2)(a) TFEU, it must be pointed out,
exemption in favour of contrats solidaires reduced the
however, that the Commission’s decision-making
amount of the premium accordingly.
practice does not rule out the aid being granted to an
intermediary which undertakes to pass it on to individual
consumers ( 43 ), Nevertheless, in such a case, it is
necessary for the mechanism put in place to guarantee
(124) In the present case, the aid is granted, not through an
that the aid is effectively passed on to the end consumer.
indirect tax exemption proportional to the amount of the

premium payable by insured persons, but through an
exemption from corporation tax which is calculated on
the basis of the profits made by the insurer from all
insured persons who have taken out contrats solidaires et
(120) The Commission considers that the social character (first
condition) of the measure is well established in so far as
responsables.
the objective is to open up access to supplementary
health insurance to people who have difficulties in
accessing such insurance owing to their age, state of
(125) The actual passing on of the exemption from corporation
health or resources. Article 207 of the CGI provides
tax to the end consumer is uncertain to say the least.
for criteria of a social nature to be respected by
Firstly, the Commission is not in possession of any
insurers to qualify for the measure ( 44 ), These criteria
information enabling it to establish that the corporation
introduce minimum proportions of certain vulnerable
tax (and the exemption from such tax) is in fact passed
populations, such as persons on low income or the
on to individual consumers in the market concerned.
elderly, in the insurance portfolio of the undertakings
Moreover, a recent report by the French Court of
concerned. The preliminary draft decree forwarded by
Auditors showed the existence of very significant
the French authorities, which specifies certain terms
increases in profit margins in the health insurance
and conditions for the gradation of rates according to
sector in recent years (from 12 % in 2003 to 23 % in
the social situation of insured persons ( 45 ), confirms the
2007) ( 47 ). In this context of a significant increase in
social character of the measure in favour of vulnerable
profit margins, it can hardly be concluded that a
populations.
market mechanism exists guaranteeing that the
exemption from corporation tax is in fact passed on to
end consumers.
(121) On the other hand, the Commission’s examination of the
measure did not allow the conclusion to be drawn that
the aid in fact benefits individual consumers (second
(126) The CTIP points out that part of profits must be allocated
condition).
to the constitution of reserves in order to comply with
solvency requirements and that it is therefore perfectly
natural for at least part of the advantage to serve to
cover, in whole or in part, the increase each year in
(122) According to the French authorities, the aid granted to
the solvency requirement. This argument tends to show
insurers will indirectly benefit individual consumers. The
that the measure will give rise to an increase in profits
strong competition in the supplementary health
for insurers rather than a reduction in the price of
insurance market ensures that the aid received is passed
covering the risks concerned for consumers.
on by insurers to consumers in the amount of premiums
set.
(127) Finally, the Commission’s assessment is by no means
called into question by France’s argument that supple
mentary health insurance policies are a product which
(123) In this respect, it should be noted that the tax exemption
secures loyalty for insurers, which are encouraged to
of sickness insurance policies (contrats solidaires) applied
practise an attractive rates policy. It should be recalled
by France has been considered by the Commission to be
that Article 107(2)(a) TFEU requires that the advantage
aid compatible under Article 107(2)(a) TFEU ( 46 ). There
be in fact passed on to individual consumers.
was in fact no doubt in this case that the tax exemption
Consequently, the existence of a mere incentive to pass
first and foremost benefited individual consumers who in
on part of the advantage to end consumers cannot satisfy
fact had to pay the tax. The amount of the tax
the requirement of an actual passing on of this
advantage.
( 43 ) See Commission Decision of 30 May 2007, France, Supplementary
social protection for civil servants, N 911/2006, recitals 34-36.
( 44 ) See description of these criteria in recital 20 of this Decision.
( 45 ) According to the draft Decree, at least 75 % of eligible policies must
(128) The Commission therefore considers that the measure
provide for: (1) either continuation free of charge and at least at the
does not guarantee that the advantage is in fact passed
rate of social security, of all the cover provided for by the policy for
on to individual consumers, as required by
the insured person and, where appropriate, for dependants, for 6
Article 107(2)(a) TFEU.
months from the time the insured person loses his job, the confir
mation of his invalidity or the date of his death; (2) or the payment
by the undertaking for 1 year of 30 % of the contributions of
( 47 ) Survey on the distribution of funding of sickness expenditure since
insured persons who lose their job, of apprentices under 26 years
1996 and on the transfers made between compulsory sickness
of age and persons in a situation of partial or total dependence.
insurance, supplementary insurance and households, Court of
( 46 ) See Commission Decision of 2 June 2004, cited in footnote 7.
Auditors, April 2008.

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(129) The Commission’s examination also concludes that there
percentage, whereas insurance undertakings with a
is non-compliance with the condition concerning the
limited presence in the market for contrats solidaires and
absence of discrimination related to the origin of the
wishing to invest in it could have difficulties in meeting
product (third condition). For this to be the case,
the threshold conditions (either in terms of proportion or
consumers would have to benefit from the aid irre
in absolute terms) and therefore in benefiting from the
spective of the economic operator supplying the
tax exemptions. This would be the case more specifically
product or service capable of fulfilling the social
for insurance undertakings with a large existing portfolio
objective referred to by the Member State concerned
of ‘traditional’ supplementary health policies which do
and there would have to be no barrier to entry for
not meet the conditions for being considered contrats
insurers established in the European Union
( 48 ).
solidaires.
However, besides the conditions relating to the type of
policy eligible, companies wishing to benefit from the
measure must respect the thresholds of a minimum
number (120 000/150 000) or proportion (80 %/90 %)
(132) In this context, the thresholds would not therefore lead
of contrats solidaires et responsables in their supplementary
to an equivalent effort, whoever the insurer, and would
health insurance policy portfolio.
not have the effect of an incentive for insurers already
meeting the threshold criteria (in particular mutual
societies, unions of mutual societies and provident
societies). Contrary to France’s assertions, the intro
duction of the thresholds is therefore unlikely to avoid
a possible windfall effect.
(130) The French authorities consider that these thresholds
constitute an incentive to develop this type of policy
on a massive scale through the mutualisation of the
‘bad risk’ characterised by the age or level of financial
(133) In the Commission’s view, these thresholds will quite
resources of the insured person in their portfolio and are
simply have the effect of causing discrimination related
also necessary to prevent the tax advantage from relating
to the origin of the product. In this way, the thresholds
to too low a fraction of the business of the undertakings
seem likely to exclude a number of insurers from bene
and in this way to attain the objectives of solidarity and
fiting from the exemption, even if they were to offer the
mutualisation. Pursuit of the social objective of the
contrats solidaires et responsables that the French authorities
measure can be ensured only by a mechanism
wish to promote. The existence of these thresholds could
requiring insurers to hold in their sickness insurance
also place at an advantage undertakings already present
policy portfolio a minimum number or a significant
in the market and constitute a barrier to entry to the
proportion of contrats solidaires et responsables. In the
relevant market for certain operators which could not or
absence of this threshold mechanism, no provision
which feared that they might not be able to meet them.
would have allowed an increase to be ensured in the
rate of cover of the populations currently not covered
and the tax exemptions would be reflected simply in a
(134) Finally, it is likely that the amount of aid will vary from
windfall for insurers. The threshold reflected as a
one insurer to another depending on the profits made
percentage allowed small undertakings operating almost
from the operations concerned, and this would not
exclusively in these policies to benefit from the measure
comply with the requirement that consumers must
without reaching a purely quantitative threshold, whereas
benefit from the aid in question irrespective of the
the thresholds in absolute terms allowed undertakings
economic operator supplying the product or service
offering a significant number of this type of policy
capable of fulfilling the social objective invoked by the
(without it being exclusive) to benefit from the measure.
Member State concerned ( 50 ).
(135) It therefore has to be concluded that the aid scheme
notified by France to promote the development of
(131) The Commission notes firstly that no precise information
contrats solidaires et responsables is not compatible with
could be supplied by the French authorities concerning
the internal market on the basis of Article 107(2)(a)
the current breakdown of contrats solidaires et responsables
TFEU.
among the various market operators or concerning the
number and proportion of these policies in their port
folios. According to the Commission’s analysis, it never
theless emerges that mutual societies and unions of
Analysis of the compatibility of the measure under other
mutual societies are legally bound to offer only contrats
provisions of Article 107 TFEU
solidaires ( 49 ). In practice, it also appears that provident
societies are subject to the same obligation. Mutual
(136) Although France does not explicitly invoke any other
societies and provident societies should therefore always
provision relating to the compatibility of the State aid,
fulfil the condition of the threshold expressed as a
it must be noted that none of the conditions for
compatibility provided for in Article 107(2) and (3)
TFEU apply to the case in point.
( 48 ) See the Commission guidelines on application of Articles 92 and
93 of the EC Treaty and Article 61 of the EEA Agreement to State
aids in the aviation sector, OJ C 350, 10.12.1994, p. 11.
( 50 ) See Court of First Instance judgment in Joined Cases T-116/01 and
( 49 ) Mutual Society Code, Article L112-1, second subparagraph.
T-118/01 P&O European Ferries [2003] ECR II-2957, paragraph 163.

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Official Journal of the European Union
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(137) As regards the provisions of Article 107(2) TFEU, other
(142) Article 106(2) TFEU provides that undertakings entrusted
than point (a), it must be noted that the conditions for
with the operation of services of general economic
compatibility provided for in points (b) and (c) obviously
interest or having the character of a revenue-producing
do not apply to the case in point.
monopoly are subject to the rules contained in the
Treaties, in particular to the rules on competition, in so
far as the application of such rules does not obstruct the
performance, in law or in fact, of the particular tasks
assigned to them. The development of trade must not
(138) Under Article 107(3)(c) TFEU, aid to facilitate the devel
be affected to such an extent as would be contrary to the
opment of certain economic activities or of certain
interests of the Union.
economic areas, where such aid does not adversely
affect trading conditions to an extent contrary to the
common interest, may be considered compatible.
(143) It follows from the case law of the Court of Justice that,
with the exception of the sectors in which this question
has already been regulated by the European Union,
Member States have a wide-ranging discretion regarding
(139) According to the FNMF, the aid is intended to facilitate
the nature of the services which may be classified as
the development of supplementary health cover which
being of general economic interest. However, even
respects the characteristics of solidarity and sense of
supposing that in the present case a service of general
responsibility under conditions which do not adversely
economic interest is concerned (which has not been
affect trading conditions to an extent contrary to the
argued by France), it has to be verified that, for the
common interest. Nevertheless, in spite of its requests,
purposes of Article 106(2) TFEU, the compensation
the Commission has not obtained any data from the
paid to the undertakings assigned a public service
French authorities allowing support to be given to the
mission does not exceed the costs of providing the
applicability of the condition for compatibility mentioned
public service, taking account of the income relating to
in the previous recital or concerning the effect of the
it and a reasonable profit for the performance of these
existing tax measures on the distribution of contrats soli
obligations.
daires et responsables, or concerning the relationship
between the additional advantage envisaged and the addi
tional costs or requirements associated with the
management of this type of policy. The Commission is
therefore unable to ascertain the necessity and propor
(144) In this respect, if suffices to point out that the tax
tionality of the new exemptions envisaged to achieve the
measure in question does not contain any mechanism
objective described. In any case, it must be noted that the
allowing overcompensation to be ruled out in relation
exemption from corporation tax is not linked to carrying
to the costs of the burden incurred by the operators
out investments or creating jobs or specific projects. It
concerned. It must be noted in fact that the amount of
therefore constitutes a continuous reduction in charges
aid in question (tax exemptions regarding the operations
which constitutes operating aid which, according to
concerned) is in no way linked to the additional costs
established practice, is not liable to be declared
borne by insurers. It is not linked either to the premiums
compatible under Article 107(3) TFEU.
paid by insured persons or to the number of policies.
(145) In this context, the Commission concludes that in any
(140) Finally, no other condition for compatibility provided for
case the measure concerned could not be declared
in Article 107(3) TFEU was invoked by France.
compatible with the internal market on the basis of
Article 106(2) TFEU.
Existence of a service of general economic interest compatible on
VIII.2. Tax deduction for equalisation provisions
the basis of Article 106(2) TFEU
relating to certain supplementary group insurance
policies
(141) According to the CTIP, measures based on conventions
and collective agreements, like the measure in question,
Description of the personal protection market in France
have the objective of remedying the deficiencies of social
security. The Commission observes that the CTIP does
(146) The ‘personal protection’ market groups together the
not explicitly invoke the existence of a service of general
operations designed to prevent and cover the risk of
economic interest and France, whose duty it would be to
death, risks relating to personal physical injury or
establish that the aid in question is compatible with the
associated with maternity or risks of incapacity for
Treaty, does not invoke Article 106(2) TFEU. Under these
work or invalidity or risk of unemployment ( 51 ), as a
circumstances, the Commission is unable to assess the
supplement to the statutory social security system.
compatibility of the aid in question in the light of
Article 106(2) TFEU. Furthermore, the Commission
( 51 ) Article 1 of Law No 89-1009 of 31 December 1989 enhancing the
makes the following comments.
cover offered to insured persons against certain risks.

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(147) Personal protection cover allows:
(152) According to the estimates communicated by the French
authorities for 2005, the personal protection market
accounted for annual turnover of EUR 20 billion
(group and individual policies). Insurance undertakings
— access to medical care to be facilitated by providing
accounted for the bulk of this market with 71 % of the
supplementary reimbursement of health expenses in
premium income, whilst provident societies and mutual
the case of illness, maternity, accident, etc.
societies accounted for 21 % and 8 % of the market
respectively. It must nevertheless be pointed out that
these last figures relate to all categories of policies in
— total or partial maintenance of salary in case of work
this sector: individual policy, group policy with
absence, invalidity or incapacity,
optional affiliation and group policy with compulsory
affiliation.
— guaranteeing of capital and annuities for the spouse
and children in the event of the death of the insured
person,
(153) Moreover, the French authorities consider that the occu
pational designation market ( 53 ) providing cover for
death, incapacity and invalidity exceeds EUR 4 billion
— a financial supplement to be provided for in case of
and covers almost all personal protection operations
dependence.
undertaken by provident societies (EUR 4,2 billion) and
part of the group policies of insurance undertakings and
mutual societies. However, no precise figures were
communicated concerning the share of the latter in the
(148) Three categories of undertaking are present in this
designation market.
market: companies subject to the Insurance Code
(insurance undertakings, mutual insurance companies
and subsidiaries of banks), mutual societies subject to
the Mutual Society Code, and provident societies
subject to the Social Security Code.
Aid character of the measure
(154) Although France accepted the classification as State aid of
(149) Personal protection insurance may be taken out either as
the measure in its notification, it subsequently pointed
a group policy, by subscribing to a group policy through
out that at least part of the scheme should not be
the employer, an occupational or inter-occupational
considered aid within the meaning of Article 107(1)
sector, or in an individual capacity by approaching an
TFEU on account of the specific characteristics of desig
insurance undertaking or mutual society directly.
nation policies (strong constraints in terms of rates, risk
selection and management) which made these policies
particularly sensitive to the risks of shifts in loss
expectancy compared with original estimates and
(150) Nowadays, a very large majority of employees are
therefore fully justified a particularly prudent allocation
covered by a group personal protection policy. Affiliation
scheme and therefore a higher tax deductibility of allo
can be either obligatory or optional.
cations to provisions without this giving rise to the
existence of an advantage.
(151) A group personal protection scheme involves a triangular
relationship:
(155) France therefore considers that part of the tax deduction
— the employer enters into a commitment to the
of the allocations under adapted and strengthened
employees and, in this capacity, takes out an
conditions, extending beyond the tax regime under
insurance policy (
ordinary law existing in Article 39 quinquies GB of the

52 ),
CGI, is justified at regulatory and prudential level and
does not constitute an advantage.
— the insurer covers the risk, in exchange for collection
of premiums,
(156) It is therefore appropriate to examine first of all whether
— the employees are the beneficiaries.
the measure gives rise to the existence of an advantage
for the insurers concerned.
( 52 ) From the time that the employer contributes to the premiums (in
whole or in part), all the employees concerned must be affiliated to
( 53 ) At the end of 2006, there were over 100 collective agreements
the personal protection policy put in place in the undertaking or
providing employees with cover for death, incapacity and invalidity
occupational sector.
and designating a provident society.

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L 143/32
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Official Journal of the European Union
31.5.2011
(157) Article 39(1)(5) of the above-mentioned Code provides
economic climate but also by greater mutualisation)
for the deductibility of ‘provisions constituted with a
would be of a greater order of magnitude than the
view to offsetting losses or clearly specified charges
same risks relating to company policies (policies char
which events in progress render probable, provided that
acterised by a specific risk and by lesser mutualisation).
they were in fact recorded in the accounts for the
financial year’. The Code provides in certain cases for
flat-rate deductibility for certain types of operation.
This is more particularly the case in the field of
(162) In addition, should the constraints of the designation
insurance and reinsurance for which Articles 39
invoked by France in fact have the effect of leading to
quinquies G to 39 quinquies GD of the Code lay down
supplementary pressure at the level of the premiums
specific rules for the deductibility of provisions in order
received by insurers, it has to be noted that this is a
to take account of the specific characteristics of the
circumstance which could affect income and not the
insurance sector, the principal activity of which consists
expenditure from losses. This type of risk (loss of
precisely in covering risks. To determine whether any
income) is not therefore covered by Article 39(1)(5) of
advantage exists, it is therefore appropriate to verify
the CGI and is not therefore eligible to benefit from
whether the operations covered by the measure do in
allocations to the deductible provisions.
fact entail loses or additional charges within the
meaning of Article 39(1)(5) of the above-mentioned
Code to the extent provided for by Article 39
quinquies GD.
(163) No difference in risk has therefore been established
between policies with designation clause and group
policies within companies covering the same risks.
Consequently, the supplementary tax deductibility
(158) First of all, it is appropriate to accept the principle that
provided for in Article 39 quinquies GD has the effect
the nature and intensity of the risks of loss in the supple
of reducing or abolishing a corporation tax charge which
mentary insurance sector providing cover for death, inca
the undertakings concerned should normally have to pay.
pacity and invalidity are liable to vary according to
In this capacity, the supplementary deduction therefore
the types of population covered and the terms and
constitutes an economic advantage.
conditions of cover (individual/group policies,
optional/compulsory).
(164) In the light of the references made by France and the
CTIP to a possible public service mission, the
(159) The policies arising from company agreements, including
Commission notes that the conditions identified in the
the designation policies arising from such agreements,
Altmark case (to exclude classification as aid in certain
relate to a limited population. They entail a ‘specific’
cases of services of general economic interest) are not
risk (risk of loss in the undertaking concerned) without
met in the present case (see in particular recital 189 —
always offering the possibility of mutualisation within a
the third condition of the Altmark case law is in fact the
large population. The group policies covering a sector
absence of overcompensation). This is therefore
(economic activity) concern a wider population and
undoubtedly an economic advantage.
therefore a priori entail greater mutualisation. For this
latter type of policy, there would nevertheless seem to
be a strong correlation between loss expectancy and the
periods of crisis which may affect an entire economic
(165) The advantages under the measure are granted by the
sector. According to the CTIP, the periods of crisis
French State, which, in so doing, waives the collection
would amplify the volatility of losses at sector level.
of tax revenue. It therefore grants this advantage through
state resources.
(160) As regards designation group policies resulting from a
company agreement, the Commission considers that
(166) For the reasons already set out with regard to the first
there is no reason to think that the nature and
measure, the second measure is also selective in
intensity (and consequently the fluctuation) of the risk
character. The selectiveness results firstly from the
of loss is significantly different from the situation in
restriction of the measure in question to a single
which this same type of policy is concluded outside
economic sector, i.e. the insurance sector, and secondly
joint negotiations between trade unions and employers
from its restriction within this sector to a specific type of
(and therefore outside the designation process).
policy (sub-sector). The measure benefits certain under
takings of the insurance sector which conclude group
policies covering the risks of death and physical injury
in the context of the procedure of designation by the
social partners. The measure does not therefore apply
(161) Moreover, in the absence of precise information on the
to policies covering the same risks outside the desig
frequency of losses in this sector, it cannot be concluded
nation procedure. It is also appropriate to note that the
that the fluctuations in risks specific to sector designation
measure does not apply to reinsurance undertakings
policies (policies characterised by greater sensitivity to the
exposed to the same type of risk.

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(167) It is nevertheless appropriate to verify whether this selec
that populations of employees on low incomes will opt
tiveness is not justified by the nature and logic of the
not to subscribe to cover for serious, but exceptional,
reference tax system. Although, in respect of the
risks.
deduction of provisions, the CGI provides for flat-rate
deductibility for certain types of provisions, it has to
be noted that, for the reasons set out above (see
recitals 156 to 163), deductibility exceeding the
amount provided for in Article 39 quinquies GB is not
(172) In its decision to initiate the procedure, the Commission
justified by the logic of the system which provides for
considered that the social character of the measure was
provisioning up to the losses or charges which events in
not clearly established at the time the insurance policies
progress render probable.
are taken out (before the occurrence of the serious events
referred to). It nevertheless has to be noted, as France
points out, that the allocation of aid before the risk
materialises, through an insurance covering the risks in
question, is in fact the only means of achieving the social
(168) Finally, apart from the fact that the insurance sector is
objective pursued.
the subject of trade within the European Union, it should
be recalled that, where a Member State grants aid to an
undertaking, domestic production may for that reason be
maintained or increased with the result that undertakings
established in other Member States have less chance of
(173) On the other hand, for the reasons already set out when
penetrating the market in that Member State. The
examining the first measure, the Commission’s exam
position of the undertakings concerned will be
ination of the measure has not allowed it to be estab
strengthened in trade within the European Union. It
lished that the aid would ensure that the advantage is
should also be added that the obligatory nature of desig
effectively passed on to individual consumers (second
nation policies reinforces the distortion of competition.
condition). The supplementary deductibility of the equal
This measure is therefore likely to create distortions of
isation provisions has the effect of reducing or abolishing
competition and to affect trade within the European
the corporation tax burden and therefore has an effect
Union.
equivalent to the exemption scheme specific to the first
measure.
(169) It must therefore be concluded that the second measure
does in fact constitute aid within the meaning of
(174) As regards the argument invoked by the Commission in
Article 107(1) TFEU, in so far as it provides for a level
its decision to initiate the procedure that the possible
of deductibility in excess of that provided for in
passing on of the advantage granted to insurers should
Article 39 quinquies GB of the CGI.
be able to benefit not only insured persons/employees,
but also employers (who contribute to the payment of
part of the premiums), France and the CTIP consider that
the employer’s contribution to financing contractual
Analysis of the compatibility of the measure under
supplementary social protection schemes constitutes
Article 107(2)(a) TFEU
remuneration for employees and an advantage for the
latter. The Commission is nevertheless of the opinion
(170) Since the measure constitutes State aid, an analysis must
that, even if the financing of a cover scheme in favour
be carried out of its compatibility with the internal
of employees by the employer is in fact an advantage for
market. The French authorities consider that the
the employees, it is undeniable that any reduction in
measure in question constitutes compatible State aid
premiums will also constitute a reduction in the
under Article 107(2)(a) TFEU.
charges payable by the employer and therefore an
advantage for him.
(171) The Commission considers first of all that the social
character (first condition) of the measure is established
(175) As regards the existence of possible discrimination
in so far as, as invoked by the French authorities, the
related to the origin of the products (third condition),
operations managed under a designation clause aim to
the Commission confirms its assessment that the high
promote the widest possible cover of employees against
degree of concentration between provident societies,
risks for which social security cover is weak (death, inca
which currently characterises activities relating to desig
pacity, invalidity). The social character is defined by the
nation policies, is reflected in de facto discrimination in
considerable mutualisation between generations and
favour of these institutions. Although France has not
between categories of employees, the single premium
been able to supply precise information concerning the
(no discrimination according to age, sex, state of
breakdown of the designation market between the
health), and the implementation of measures of a social
various market operators, the Commission observes
nature (rights free of charge in the case of unem
that, on the basis of the information in its possession,
ployment, for dependent children, etc.). In an optional
the vast majority of designation policies are currently
and purely individual framework, it is also to be expected
managed by provident societies.

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L 143/34
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Official Journal of the European Union
31.5.2011
(176) Although, as the French authorities state, the insurer
of an objective in favour of public health, combating
designated by the social partners is chosen solely by
insecurity, economic and social cohesion, the devel
the latter, it has to be noted that no legal provision
opment of social dialogue, and the protection of
obliges the social partners to invite competing bids
workers, which are European Union objectives in the
from all market operators when designating the under
common interest. The Commission nevertheless
taking. The FFSA maintains, without being contradicted
considers that the need for and proportionality of the
in this respect by the French authorities, that the social
measure have not been proven. As it has already stated
partners prefer to opt for the constitution of a provident
in its examination of the existence of an advantage, the
society which they can subsequently manage.
Commission is of the opinion that there is nothing to
justify the exclusion from the benefit of the measure for
group policies at company level covering the same risks
but not concluded under designation. The measure is
(177) Although it follows from the Albany judgment cited
therefore disproportionate in so far as it does not
above that agreements concluded under collective
include policies outside designation. Moreover, it should
bargaining between the social partners and pursuing
be noted, as the Commission has already done for the
social objectives do not come under Article 101(1)
first measure, that the measure constitutes a continuous
TFEU on the prohibition of agreements, decisions and
reduction in charges which constitutes operating aid
concerted practices, it has to be noted that this case
which is not, according to established practice, capable
law in no way implies, as indicated above, that aid
of being declared compatible under Article 107(3) TFEU.
granted to an insurer under a designation procedure is
compatible with Article 107(2)(a) TFEU.
(182) Finally, no other condition for compatibility provided for
(178) Insurers other than provident societies, and especially
Article 107(3) TFEU was invoked by France.
insurance undertakings operating in the market for
group personal protection at company level, are
therefore liable to be the subject of discrimination on
account of the absence of obligation for the social
Existence of a service of general economic interest compatible
partners to issue invitations to tender with the aim of
under Article 106(2) TFEU
allowing any market operator interested to submit a bid
to cover the benefits agreed between the social partners
(183) According to France and the CTIP, the supplementary
and to be chosen on account of the superior quality of
insurance benefits in the field of personal protection
its services and/or their lower price. By way of
under the designation procedure can be considered as
comparison, some French supplementary health
constituting a service of general economic interest
insurance schemes provide for a mechanism for the
within the meaning of Article 106(2) TFEU, in particular
selection of the insurer(s) on the basis of a transparent
where affiliation to the benefit scheme is compulsory and
tendering procedure ( 54 ).
its management is undertaken under a joint framework.
The CTIP also refers to the judgment of the Court of
Justice in Albany ( 55 ), stating that contractual social
protection schemes with compulsory affiliation fulfil a
(179) It must therefore be concluded that two of the three
mission of general economic interest.
conditions for compatibility are not met and that the
aid scheme notified by France to promote designation
policies in the field of personal protection are not
compatible with the internal market on the basis of
(184) Under this provision, undertakings entrusted with the
Article 107(2)(a) TFEU.
operation of services of general economic interest or
having the character of a revenue-producing monopoly
are subject to the rules contained in the Treaties, in
particular to the rules on competition, in so far as the
Analysis of the compatibility of the measure under other
application of such rules does not obstruct the
provisions of Article 107(2) and (3) TFEU
performance, in law or in fact, of the particular tasks
(180) The compatibility criteria provided for in
assigned to them. Furthermore, the development of
Article 107(2)(b) and (c) TFEU are obviously not
trade must not be affected to such an extent as would
applicable to the present case.
be contrary to the interests of the Union.
(181) Regarding the compatibility of the measure on the basis
(185) Therefore, as already pointed out in the context of the
of Article 107(3)(c) TFEU, France states that the estab
examination of the first measure ( 56 ), Member States have
lished social objective of the measure proves the
wide discretion regarding the nature of services capable
importance for the future of developing the personal
of being classified as being of general economic interest.
protection market. This development is said to be part
( 55 ) Case C-67/96 Albany International BV v Stichting Bedrijfspensioenfonds
( 54 ) See Commission Decision of 30 May 2007, N 911/2006, France,
Textielindustrie, cited in footnote 22 above.
Supplementary social protection for civil servants, recitals 39 et seq.
( 56 ) See recital 143 of this Decision.

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(186) The Commission also observes that, in the Albany case
interest and, on the other, the absence of development of
cited above, the Court concludes that the allocation of an
trade to an extent contrary to the interests of the
exclusive right to manage a supplementary pension
European Union.
scheme in a specific sector can be considered a service
of general economic interest, stressing the importance of
the social function allotted to supplementary pensions.
(192) The Commission is therefore of the opinion that the
conditions of Article 106(2) TFEU, as developed in the
Community framework, are not respected and that
(187) In this context, it is not ruled out that services provided
accordingly the measure cannot be declared compatible
by insurers in the context of designation by the social
with the internal market on the basis of that provision.
partners can be considered a service of general economic
interest in so far as the agreement between the social
IX. CONCLUSION
partners in the context of designation is made obligatory
for all undertakings in the sector concerned (or the
(193) The Commission notes that the aid schemes notified by
undertaking concerned) and covers risks which are not
France to promote the development of contrats solidaires et
covered or are insufficiently covered by the public social
responsables, as well as group personal protection policies,
security system. However, as already mentioned
constitute State aid within the meaning of Article 107(1)
in connection with the examination of the first
TFEU. It also finds that, despite the established social
measure ( 57 ), the financial measures supporting such a
objective of the aid schemes concerned, the terms and
mechanism must be limited to that which is necessary
conditions of their implementation prevent the fulfilment
to offset the additional costs for insurers arising from the
of all the conditions provided for in Article 107(2) and
public service obligations.
(3) or in Article 106(2) TFEU. The two aid schemes must
therefore be considered incompatible with the internal
market,
(188) The Community framework for State aid in the form of
public service compensation ( 58 ) defines the conditions
under which the Commission considers such compen
HAS ADOPTED THIS DECISION:
sation to be compatible under Article 106(2) TFEU. In
particular, the compensation paid may not exceed the
costs of providing the public service, taking into
Article 1
account the revenue relating to it and a reasonable
The aid schemes which France plans to implement to promote,
profit for performing these obligations.
firstly, the development of certain sickness insurance policies
(‘contrats solidaires et responsables’) and, secondly, the development
of supplementary group insurance policies providing cover for
(189) In this respect, it must nevertheless be noted that the tax
death, incapacity and invalidity, in application of Articles 207,
saving resulting from the supplementary deductibility of
paragraph 2, 1461, 1 o and 39 quinquies GD of the General Tax
allocations to the equalisation provisions does not fulfil
Code, constitute State aid which is incompatible with the
this condition. It is not possible to establish any link at
internal market.
all between the amount of the tax saving and the costs
relating to providing the public service.
For this reason, these aid schemes may not be implemented.
(190) In its letter dated 31 October 2008, France accepts that
the amount of compensation (tax saving) for the service
Article 2
of general economic interest does not comply with the
France shall inform the Commission, within 2 months of notifi
conditions laid down by the Community framework.
cation of this Decision, of the measures taken to comply with it.
Nevertheless, it considers that these conditions are not
suited to the particularities of the operations concerned.
According to France, the mechanism of tax deductibility
Article 3
is better suited and more flexible than a subsidy on the
basis of a precise evaluation of the supplementary costs
This Decision is addressed to the French Republic.
arising from management of the service.
Done at Brussels, 26 January 2011.
(191) The Commission is nevertheless of the opinion that the
criteria established by the Community framework must
For the Commission
be strictly complied with as they enable the necessary
equilibrium to be ensured between, on the one hand,
Joaquín ALMUNIA
the smooth operation of services of general economic
Vice-President
( 57 ) See recital 143 of this Decision.
( 58 ) OJ C 297, 29.11.2005, p. 4.

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