Friday 28th Oct 2016 - Logistics Manager

EU investigates state aid to Deutsche Post

The European Commission has opened a formal investigation against Germany to assess whether compensation received by Deutsche Post is compatible with EC Treaty state aid rules.

The investigation will focus on whether Deutsche Post was overcompensated for carrying out its universal service obligation, in addition to the aid already found to be incompatible in a 2002 Commission decision.

In 2002, the Commission investigated the public financing of Deutsche Post and found that Deutsche Post used public funds – which were intended to compensate for universal service costs – to finance a rebate pricing policy in its door-to-door parcel business. The Commission ordered Germany to recover incompatible state aid of 572 million euros from Deutsche Post.

Following the 2002 decision, private competitors have filed complaints alleging that Deutsche Post had gained significantly higher financial benefits from the public compensation received than what it had had to repay as incompatible state aid. In addition they brought new allegations that Deutsche Post had used the public service compensation to expand its commercial activities and to sell services too cheaply to its subsidiaries DHL and Postbank.

According to EU state aid rules, public compensation for the provision of universal services can only be compatible with the EC Treaty if it is both necessary and proportional to the objective. No universal service provider may earn excessive profits or use the compensation to cross-subsidise commercial activities. These rules are to ensure that consumers benefit from favourable prices for universal services, that the burden on the public budget is kept as low as possible while safeguarding universal service provision, and that companies competing in areas outside the universal service are not driven out of the market and remain able to compete to deliver the best services to businesses and consumers.

The Commission will investigate all public measures, such as transfers of public money and tariff income, which were granted since 1989 in favour of Deutsche Post, and its predecessor POSTDIENST, and determine whether Deutsche Post was overcompensated beyond the incompatible aid previously recovered. This Commission investigation will therefore complement and extend its 2002 decision to determine whether there is any overcompensation for Deutsche Post’s universal service obligation above and beyond that identified in the 2002 decision.