EU Probes Belgian Post For Possibly Illegal State Support

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BRUSSELS (Dow Jones)--The European Commission Tuesday opened a probe into whether Belgian postal operator La Poste has illegally benefited from yearly state subsidies for its public service obligations.

The commission cleared the state funding of La Poste in 2003, but the decision was overturned in Europe's lower court in February following an appeal from two competitors to La Poste, Deutsche Post and DHL International.

The court found the commission hadn't given competitors a fair chance to voice their concerns on the state subsidies.

"The opening of a formal investigation gives all interested parties a chance to express their views and will help to provide legal certainty to all actors involved, including La Poste," said Competition Commissioner Neelie Kroes.

La Poste is entrusted with public service missions for which it is compensated by the government. The state compensation for carrying out services to remoter regions, where operations wouldn't be otherwise commercially viable is common practise in Europe, where many postal operators are still state owned.

Private equity company CVC capital partners recently bought a 50% stake in La Poste, ahead of wide-reaching market liberalization in the postal sector due to come into force in 2011.

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BRUSSELS, July 14 (Reuters) - The European Commission said on Tuesday it had opened an in-depth investigation into whether annual payments by Belgium to national postal operator La Poste were in line with EU rules on state aid.

The EU executive found in 2003 that Belgium had not overpaid La Poste for discharging its public service obligations, but the Court of First Instance overturned that initial approval in February this year.

Ruling on appeals brought by La Poste competitors Deutsche Post (DPWGn.DE) and its unit DHL International, the court had said a formal investigation was required in order to give competitors the possibility of submitting their views.

"The Commission's investigation aims to establish in a comprehensive way whether the totality of the measures in favour of La Poste since its incorporation can be considered compatible with the single market," the Commission said in a statement.

"This has the advantage of providing legal certainty to all actors involved, including La Poste," it continued.