Belgium, German post ordered to pay back state aid: EU

[TrueBlueTerrier]

http://www.expatica.com/de/news/german- ... 03620.html" onclick="window.open(this.href);return false;

Although technically its a competitors story I have moved it into the Privatisation Forum because ......

The postal services of Belgium and Germany, Bpost and Deutsche Post, were ordered by the European Commission on Wednesday to pay back hundreds of millions of euros of state subsidies deemed unfair.

The decisions by the Commission's anti-trust officials follow moves to fully open up the postal market to competition by the end of this year.

After investigating whether state subsidies distorted the market in Belgium, France, Germany and Greece, the Commission ordered the German government to recover "incompatible aid" in the range of 500 million to one billion euros.

This resulted from what it said was a combination of highly regulated prices and pension relief subsidies. "The aid placed Deutsche Post in a better position than its competitors," a statement said.

Belgium was ordered to recover 417 million euros of aid sent to Bpost between 1992 and 2010 for its public service mission.

"Our ultimate aim is to prevent distortion of competition which would hinder citizens and businesses from enjoying the benefits of full market opening," said Competition Commissioner Joaquin Almunia.

He said full liberalisation of the postal market across the European Union would be complete by year's end, with 11 nations yet to achieve the goal.

The Commission however approved state aid to France's La Poste as well as subsidies paid out to Hellenic Post (ELTA) by the Greek government.

[TrueBlueTerrier]

This resulted from what it said was a combination of highly regulated prices and pension relief subsidies. "The aid placed Deutsche Post in a better position than its competitors," a statement said.

- O dear doesn't bode well for Royal Mail then.

[TrueBlueTerrier]

Deutsche Post to Appeal EU Ruling on Repaying State Aid http://www.businessweek.com/news/2012-0 ... e-aid.html" onclick="window.open(this.href);return false;

Deutsche Post AG, Europe’s largest mail carrier, said it plans to appeal a ruling by European Union regulators requiring it to repay government subsidies on a breach of antitrust rules.

Deutsche Post must repay 500 million euros ($648 million) to 1 billion euros in pension subsidies, the European Commission said today. Belgium’s Bpost SA must repay 417 million euros after Belgian government payments to the company exceeded the cost of delivering newspapers and magazines.

Regulators last year expanded an investigation into payments from the German government to cover pension costs at Deutsche Post that may have hampered rivals that paid 10 percent to 15 percent more in contributions. The regulators have approved government aid to Hellenic Post SA and France’s La Poste.

“The commission is delving retrospectively into national price regulation, which the Federal Network Agency carried out in good trust according to German law,” Deutsche Post Chief Executive Officer Frank Appel said today in a conference call with journalists. Bpost also said it will consider an appeal.

The pension subsidies “conferred an economic advantage” on Deutsche Post, the commission said today. The company “has effectively borne significantly lower social contributions than its private competitors for services which were open to competition,” such as parcel services and retail banking, the regulator said.

Tariff Income

The EU probe broadened the scope of an investigation that started in 2007 into “all public measures, such as transfers of public money and tariff income” granted to Deutsche Post and its predecessor Postdienst since 1989. The prior probe was prompted by complaints from Atlanta-based United Parcel Service Inc., the world’s largest package-delivery company.

“We will fight against any possible appeal before the court of these decisions,” Joaquin Almunia, the EU’s antitrust commissioner, told reporters in Brussels today.

The commission is still waiting for details from the German government on how much needs to be repaid, Almunia said. All illegal aid will be recovered, he said.

In Belgium, the commission said annual state compensation granted to Bpost for the delivery of newspapers and magazines partly exceeded the net cost of the service. The subsidies totaled 5.2 billion euros from 1992 and 2010, the EU said.

Reimbursing Aid

Bpost, which is owned by CVC Capital Partners Ltd. and the Belgian government, will reimburse the aid before the end of June out of its cash reserves totaling more than 1 billion euros, the Brussels-based company said today in an e-mailed statement.

Deutsche Post’s liquidity will be “temporarily affected” by its payment, which it expects to be at the lower end of the range stipulated by the commission, the company said in a statement. It expects the ruling to be overturned and therefore for the payment only to be recorded in the 2012 balance sheet, according to the statement.

The fine will be paid from the excess liquidity of 3 billion euros that Deutsche Post had at the end of 2011, probably by the beginning of the third quarter, Chief Financial Officer Larry Rosen said in a conference call with journalists.

The Bonn-based postal company said an appeal could take between three and six years, CEO Appel said. There were “double standards” between today’s decision and a 2007 ruling which allowed France’s La Poste to receive state pension contributions, Appel said.

Deutsche Post declined as much as 3.3 percent, the most in two months, and was trading 2.7 percent lower at 12.45 euros at 3:22 p.m. in Frankfurt.

The investigation was triggered in part by Deutsche Post and its DHL express-delivery unit winning a 2009 court ruling overturning state-aid approval of some subsidies to the Belgian post.

[nataddick]

Just read about this on the BBC Business Site http://www.bbc.co.uk/news/business-16728202" onclick="window.open(this.href);return false;

It will certainly focus the minds of the Commission on the Government's submission for Royal Mail !

And the management were hoping to hear the outcome of the case by end of March 2012 - somehow don't think so.

[TrueBlueTerrier]

http://www.iewy.com/40642-technical-mem ... -elta.html" onclick="window.open(this.href);return false;

Technical MEMO on the Postal Sector accompanying the state aid decisions regarding Deutsche Post / Belgian Post (BPost)/ French La Poste / Hellenic Post (ELTA)

Extract

01/2012

C20/09 – Belgian Post – Belgian

Pension relief of € 3.8 billion in 1997 from excessive pension costs of civil servants

Pension relief is aid but compatible since Belgian Post was not placed in better conditions than competitors.

01/2012

– Deutsche Post – Germany

Pension subsidies of approx. €37 billion since 1995 as relief from excessive pension costs of civil servants

Pension relief is aid and is partially incompatible because Deutsche Post was placed at a comparative advantage with regard to its competitors since it has not only benefited from the pension relief but also from increased stamp prices to finance a further share of the civil servants’ pension costs. Therefore, Germany was ordered to recover an amount of incompatible aid in the range between €500 million to € 1 billion.