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Brussels, 4 October 2006

State aid : Commission recommends that France withdraw the unlimited state guarantee for the French Post Office

The Commission today sent France a recommendation that it end the unlimited guarantee enjoyed by the French Post Office (La Poste) in its capacity as a public body by the end of 2008. As part of its monitoring of existing state aid schemes under the EC Treaty, the Commission examined the guarantee under which the state has responsibility for liabilities entered into by the La Poste. The fact that the guarantee is unlimited allows La Poste to obtain finance on more favourable terms, giving it an advantage over its competitors and thus distorting competition on a market which is in the process of being liberalised. France has one month to respond to the Commission's recommendation.

The proposed appropriate measures follow on from the Commission’s decision of 21 December 2005 on the transfer of the banking and financial business of La Poste to its subsidiary, La Banque Postale (see IP/05/1654). The Commission stated at the time that the decision did not cover a number of issues associated with the transfer of La Poste's financial business to a subsidiary, including the question of the unlimited state guarantee granted to La Poste.

La Poste’s unlimited guarantee stems from its status as a legal entity governed by public law. This status means that La Poste is not subject to the insolvency and bankruptcy procedures provided for under ordinary law. In addition, in the event of financial failure of the post office, the state could be held responsible in last resort for its rights and obligations. This situation is tantamount to a state guarantee that is unlimited in amount and in duration and covering all of the liabilities of La Poste.

The Commission’s action does not call into question the status of La Poste as a legal entity governed by public law or its public ownership.

The proposal is in line with the Commission’s previous practice, which in December 2003 resulted in the withdrawal of the unlimited guarantee granted to EDF because of its public enterprise status (IP/03/1737).

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