EU Won't Allow Compromise over Deutsche Post's Subsidy-Repayment Order

Deutsche Post AG will not be allowed to make a compromise solution to the repayment of 572 million euros in what the European Union Commission has judged to be illegal subsidies, people close to the German postal-services and logistics giant said on Tuesday.

These people cited top-ranking Commission officials. EU Competition Commissioner Mario Monti ordered the repayment in mid-June, when he ruled that Deutsche Post has been using receipts from letter post, over which it has a monopoly, to cross subsidize cut-throat pricing in areas that have been opened up to competition. According to Monti, the German government’s decision to secure Deutsche Post a monopoly that can be used in this way is tantamount to the provision of illegal subsidies.

A few days before Monti issued his order, Deutsche Post had offered to repay the subsidies by cutting the rates it charges for letter delivery in several stages. Commission insiders said this proposal had initially been received in a friendly spirit, but the decisive factor in bringing about a more negative attitude was a ruling, in early July, by Germany’s posts regulator that cuts in postal rates were in order on the grounds of increased efficiency. “That changed the situation completely,” said one Commission insider. “According to the regulator, the consumer has a right to a cut in postal charges. That rules out the possibility of at the same time using the cuts to offset subsidy repayments.”

According to Commission insiders, Deutsche Post and the German government took differing views over the idea of using cuts in the postal rates to offset subsidy repayments. These people said the Finance Ministry had insisted that the money flow into its coffers. But Deutsche Post has made no provisions for the repayments, so it now faces the prospect of a major erosion ofits profits this year.

Relevant Directory Listings

Listing image

Escher

Escher powers the world’s first and last mile deliveries, helping Posts connect nearly 1 billion consumers with global ecommerce networks. Postal operators rely on Escher to deliver an enhanced retail and digital customer experience, to activate new revenue streams, and to realize new delivery economics. […]

Find out more

Other Directory Listings

Advertisement

Advertisement

Advertisement

P&P Poll

Loading

What’s the future of the postal USO?

Thank you for voting
You have already voted on this poll!
Please select an option!



MER Magazine


The Mail & Express Review (MER) Magazine is our quarterly print publication. Packed with original content and thought-provoking features, MER is a must-read for those who want the inside track on the industry.

 

News Archive

Pin It on Pinterest

Share This