Deutsche Post DHL ordered to repay up to 1bn euros of state aid

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The European commission has ruled that Deutsche Post DHL must pay back between 500 million and one billion euros of state aid paid by the German government.

Deutsche Post DHL now plans to appeal against the decision to the European Court of Justice. The group’s chief executive Frank Appel said the decision stood in clear contradiction to an earlier EU decision and the outcomes of similar proceedings. “If you examine the state aid rulings on other European postal service providers, it becomes quite clear that here the commission has applied double standards.”

The commission case is that pension subsidies granted since 1995 on account of the pension costs of civil servants have conferred an economic advantage to Deutsche Post.

“In addition to the subsidies, Deutsche Post benefited during the same period from increased stamp prices to finance a further share of the civil servants’ pension costs. Taking account of this extra relief, Deutsche Post has effectively borne significantly lower social contributions than its private competitors for services which were open to competition (e.g. parcel services or retail banking),” the commission said.

As a result, the commission has ordered the recovery of the incompatible aid in the range of 500m euros to 1bn euros for the period from 2003 onwards.

But Frank Appel rejected the findings saying: “We are absolutely confident that the decision will have no validity in court and are proceeding on the assumption that the amount plus interest will be repaid.”

And in a statement, Deutsche Post DHL said: “Since it is the company’s opinion that today’s state aid ruling cannot withstand legal review, the payment that is to be made in the next few months will be recorded only in the balance sheet for 2012. As a consequence, company earnings both in the past fiscal year and in the years to come as well as the basis of the dividend that is yet to be proposed for fiscal year 2011 remain unaffected by the decision. The liquidity of the Group will be temporarily affected by the payment, but will continue to remain solid.”

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