EU Closes Anti-Trust Probe of France's La Poste

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Planned transformation into limited liability company moots issue

European Union competition regulators Jan. 26 dropped a probe into government guarantees provided to La Poste, France's postal service.

The EU's executive commission said the planned transformation of state-controlled La Poste into a limited liability company would effectively put an end to the guarantees.

The commission launched an investigation into La Poste in October 2007 after the French government didn't respond to its recommendation to withdraw the guarantees for the mail carrier's liabilities.

The commission said the guarantees had enabled La Poste to get financing on more favorable terms than its rivals, distorting competition at a time when the EU's postal market is being liberalized.

The French Parliament approved a plan to transform La Poste into a limited liability company two weeks ago in the face of protests by labor unions and the opposition Socialists.

La Poste's new status, which will take effect on March 1, is aimed at preparing the company for the opening of the European postal market to full competition in 2011.

The change will enable La Poste to get a $3.9 billion capital injection from the government and a state-owned bank, Caisse des Depots et Consignations.

La Poste has fallen behind German and Dutch rivals Deutsche Post and TNT which have built large logistics and express operations and are poised to enter its domestic mail market.