EU General Court sets aside EC decision on Deutsche Post subsidies

EU General Court sets aside EC decision on Deutsche Post subsidies

The European Union (EU) General Court has set aside a European Commission (EC) decision from 2012, which ordered Germany to recover from Deutsche Post part of the subsidies paid in respect of former civil servant postal workers’ pensions. In its 2012 decision, the EC had held that the public financing of pensions constituted unlawful State aid incompatible with the internal market – and it therefore ordered Germany to recover funds for the subsidies granted from 1 January 2003. The EC Commission calculated that the amount to be recovered was in the range of €500m to €1bn.

Germany brought an action against that decision before the General Court, arguing that the EC had incorrectly classified as State aid the public co-financing of pensions. In order to reach that conclusion, EC first had to demonstrate that the public cofinancing of the pensions of postal workers whose employment was maintained by Deutsche Post was a real economic advantage for Deutsche Post over its competitors.

In a statement issued yesterday (14 July) to explain why it has set aside the EC’s 2012 decision, the General Court said: “The fact that Germany partially covered the cost of pensions for former civil servant postal workers is not sufficient in itself to show that Deutsche Post had an advantage over its private competitors. The pension costs of civil servants, who enjoy a privileged and costly status, are not part of the expenses which an undertaking normally incurs.

“Thus, it is perfectly possible that, as a result of the public co-financing of pensions, Deutsche Post, although less disadvantaged than previously, either continues to be at a disadvantage relative to its competitors or is at parity with them, without therefore enjoying any advantage.

“Only potential amounts exceeding what is necessary in order to align the pension costs imposed on Deutsche Post before 1995 with those of its competitors would have been such as to confer an advantage of that kind on it and, accordingly, constitute State aid.

“Since it has not shown, at the stage of its review concerning the existence of State aid, that Deutsche Post enjoyed such an advantage, the Commission committed an error of law which entails the annulment of the part of the decision concerning the disputed pensions-related subsidies.”

According to reports, Deutsche Post has already made payments to a trustee that up to €377m and it expects these funds to be returned soon.

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