EU probes La Poste
European Union regulators on Tuesday began an investigation into the French government’s unlimited guarantee for La Poste, that allows the state-run postal service to borrow money on better terms than privately held rivals.
If it uncovers evidence that France is unfairly subsidizing La Poste in a way that would damage rivals, it can order Paris to end the guarantee under threat of court action and daily fines.
La Poste’s special status as a publicly owned company means it is exempt from ordinary bankruptcy and insolvency procedures and the state could ultimately be held liable for its debts.
“Because its competitors do not enjoy the same advantage, the guarantee is likely to distort competition … at a time when the postal sector is being liberalized,” the European Commission said.
France failed to obey an EU order last year to end the guarantee, regulators said. Follow-up negotiations failed to convince the EU executive that France would terminate the guarantee, they said.
La Poste’s guarantee has limits on duration or amount and is provided free of charge. It covers the basic mail delivery La Poste provides in the public interest and – with state payment – the commercial business La Poste is supposed to run without government help.
The Commission said it was not calling into question La Poste’s position governed by public law or its public ownership.
After a similar EU demand, France withdrew an unlimited guarantee in December 2003 that had been granted to Electricite de France SA.
