EU gives green light for €1.5bn in State Aid for La Poste

The European Union’s executive branch has given permission for French postal service La Poste to receive tax relief and grants from the French government worth nearly EUR 1.5bn. The EU Commission said this week that the support from the French government for La Poste’s universal postal service was in line with EU rules on State Aid.

The EU does not normally allow governments to help out individual companies — even state-owned companies — with funding windfalls because it would give them an unfair advantage against competitors. However, under certain circumstances State Aid is allowed, such as when it is required to support universal postal service provision.

La Poste has been cleared to receive local tax relief worth about EUR 170m a year between 2013 and 2017, worth a total of EUR 850m.

And, the company has been given the green light to receive grants totaling EUR 597m between 2013 and 2015 to support the delivery of periodicals “of acknowledged general interest”.

The Commission said it reviewed the two funding initiatives, and said it was satisfied they would not overcompensate La Poste for the public service obligations being supported.

Announcing the approvals, the EU Commission vice-president in charge of competition policy, Joaquin Almunia, said: “Today’s decision will enable La Poste to continue performing its fundamental social and economic role and important public service tasks, without unduly distorting competition.”

The Commission said the funding would support La Poste’s “high density” postal network of 9,000 retail outlets, although the company is gradually replacing some of its post offices with counters run by local shops or in town halls in order to cut costs.

The support grants approved for periodical delivery were agreed in a deal between the French State, La Poste and the publishing industry trade unions. It will allow La Poste to offer cheaper regulated postage rates for publications of acknowledged public interest.

The Commission said in particular the discounts would be provided for publications giving members of the public general and political information “to encourage and promote pluralism of opinion”.

La Poste Group had a turnover of EUR 22.1bn in 2013, 17% from its international operations, delivering 25bn items a year worldwide.