Brussels, 20 November 2013
State aid: Commission refers Germany to Court for failure to recover incompatible aid from Deutsche Post
The European Commission has referred Germany to the EU's Court of Justice for failing to comply with a Commission decision of January 2012 ordering the recovery of incompatible state aid from Deutsche Post (see IP/12/45 and MEMO/12/37). The Commission's decision had found that a combination of high regulated prices and pension subsidies granted by Germany gave Deutsche Post AG an undue economic advantage over competitors and was therefore incompatible with EU State aid rules. The Commission ordered Germany to recover the incompatible aid from Deutsche Post and abolish the relevant provisions for the future. Almost two years after the Commission's decision, this has still not been done.
In its 2012 decision, the Commission ordered Germany to recover state aid granted since 2003 to Deutsche Post by way of subsidies to pension costs arising for civil servants in non-price regulated postal services. The Commission found that Deutsche Post was overcompensated for the 'legacy' pension costs that resulted from the take-over of civil servants from the former postal administrations. Indeed, Deutsche Post was getting not only a pension subsidy from the State but also an increase in regulated letter prices to cover pension costs. As a result, Deutsche Post effectively benefited from social contribution rates that were below the rates which other non-price regulated postal services providers had to pay, and was thereby granted an undue advantage over its competitors.
The exact aid amount to be recovered was to be calculated by Germany on the basis of a method determined in the decision. On its basis, Germany was to recover aid granted to Deutsche Post's non price-regulated services, which are services where Deutsche Post held no dominant position during the investigation period. Within the deadline of four months set in the decision, Germany provisionally recovered an aid amount significantly lower than that estimated by the Commission services. While Germany only identified commercial post related services (e.g. sale of stamps and envelops or advertising mail) as non-regulated, the Commission services consider that the business-to-business parcel services are also non-price regulated. The Commission therefore asked Germany to recover the aid corresponding to these services. Germany repeatedly refused to do so.
The Commission's January 2012 decision concluded long and complex investigations started in 1999 and resulting in a first negative decision in 2002 (see IP/02/890). This decision was finally annulled by the Court of Justice in 2010 (cases T-266/02 and C-399/08 P). Following complaints from competitors, in 2007 the Commission extended its investigations to determine whether there was any overcompensation for Deutsche Post's universal service obligation above and beyond that identified in the 2002 decision (see IP/07/1312) and again in 2011 to look more closely into subsidies relieving Deutsche Post from pension costs for its civil servants (see IP/11/554).
The beneficiaries and Germany have appealed the Commission's 2012 decision before the EU General Court (cases T-143/12 and T-152/12). These appeals are pending, but they have no suspensive effect on the recovery of the aid.
Companies that have received incompatible state aid have had an economic advantage over their competitors, who had to operate without state funding. This distorts competition in the internal market. To remedy the effects of this distortion, it is therefore important that the beneficiaries of incompatible aid pay this undue advantage back as soon as possible.
That is why Article 14 of Regulation n° 659/99 and the Notice on the implementation of decisions ordering the recovery of unlawful or incompatible aid (see IP/07/1609) provide that Member States should effectively recover the aid from the beneficiary without delay.
If a Member State does not implement a recovery decision, the Commission may refer the matter to the Court of Justice under Article 108(2) of the Treaty on the Functioning of the EU (TFEU) that allows the Commission to directly refer cases to the Court for violations of EU state aid rules.
If a Member State does not comply with the judgment, the Commission may ask the Court to impose penalty payments under Article 260 of the TFEU.