Deutsche Post faces Euros 570M aid
Deutsche Post faces repaying more than Euros 500m (Dollars 471m) to the German government after European competition regulators concluded the postal group unfairly subsidised some of its loss-making businesses.
The decision – which could come next week – could anger the German chancellor Gerhard Scroder, who has repeatedly accused the Brussels authorities of attacking German companies.
The size of the repayment – one of the largest ever ordered under European state aid rules – would also send a warning to postal groups in countries such as France, and the Netherlands, which have been accused of similar offences.
Some senior officials within the commission have questioned the method used by the competition department to calculate the repayment. However, Mario Monti, European competition commissioner, is expected to have a majority if, as expected, the issue is discussed at next week’s meeting of the 20 commissioners.
The commission declined to comment, while Deutsche Post was unavailable for comment yesterday.
However, people close to the case said a three-year probe by the European watchdog found that Deustche Post used profits from its mail monopoly to subsidise its loss-making business-parcel division.
This was considered a breach of state aid rules because the German group funded its commercial activities with money coming from public service business.
Under German law, Deutsche Post has an obligation to provide basic mail and parcel services throughout the country. In order to guarantee Deutsche Post enough funds to pay for the delivery of mail to areas where it is not profitable, the company has a monopoly on some services, whose prices are set by the state. Any profit from such a monopoly could fall foul of European rules on state aid.
The German government had argued that the use of the funds was a sensible investment to enable the company to restructure its parcel division.
But the commission’s competition department is understood to have ruled that Deutsche Post should pay about Euros 570m back to the German government.
The 20 commissioners usually follow the advice of the competition department. However, people close to the case said the objections raised by some other departments could lead to a change in the amount of the fine.
The commission’s decision could prove controversial because the Brussels authorities recently cleared Euros 9bn of state aid to the Italian post office, after concluding it was only used to fund the public service business. Deutsche Post can appeal against any decision.
The probe was triggered by a complaint from the US parcel delivery group UPS.
