EU tells France to withdraw unlimited guarantee from La Poste
The EU told France on Wednesday to end the unlimited guarantee it gives the country’s post office La Poste that allows it to borrow money on better terms than rivals.
The European Commission said La Poste’s special status as a publicly owned company meant it was exempt from ordinary bankruptcy and insolvency procedures and the state could ultimately be held liable for its debts.
“This situation is tantamount to a state guarantee that is unlimited in amount and in duration and covering all of the liabilities of La Poste,” it said.
“The fact that the guarantee is unlimited allows La Poste to obtain finance on more favorable terms, giving it an advantage over its competitors and thus distorting competition on a market which is in the process of being liberalized.”
EU regulators recommended that France withdraw the unlimited guarantee by the end of 2008 and gave Paris one month to respond.
The Commission said it was not calling into question La Poste’s position governed by public law or its public ownership.
Following a similar EU demand, France withdrew an unlimited guarantee in December 2003 that had been granted to Electricite de France SA.
