German Deutsche Post may have to pay back state subsidies

Deutsche Post AG, the German postal service, may have to pay back subsidies granted by the German government for its pension schemes. The German government had provided the company’s pension funds with considerable financial support during the 1990s; this was necessary as Deutsche Post had retired 25 per cent of its officials early, with the aid of expensive settlements, when the company was privatised.

The competition authorities in Brussels are now planning to pass a ruling that the transfer of pension costs to the state will constitute subsidies which must be repaid. Mario Monti, the EU commissioner for competition, had demanded in 2002 that Deutsche Post repay EUR572m, due to the illegal cross-subsidising of its parcel service, which was operating at a loss. Deutsche Post lodged a complaint with the European court of first instance; if the case is referred back to Brussels, the transfer of pensions is to be included in the investigation.