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Brussels, 25 January 2012

Technical MEMO on the Postal Sector accompanying the state aid decisions regarding Deutsche Post / Belgian Post (BPost)/ French La Poste / Hellenic Post (ELTA)

I. Economic and social importance of the postal sector

A. Economic and social importance:

1. The postal sector is of significant economic importance: it is estimated that the overall EU postal sector, comprising letter post, parcel and express services, earned total revenues of about EUR 72 billion in 2009. This figure corresponds to approximately 0.62 % of EU-27 GDP. The letter post market represents the largest segment with 56% of the revenues, while the parcel and express market combined represents 44%. Despite increasing automation, postal services remain highly labour-intensive. In 2009, total sector employment in the EU was around 1.5m, representing 0.72% of total EU employment. The sector retains importance both for business (in particular to communicate with citizens) and socially. Approximately 88% of the total letter volume originates from business and public mailers, with two thirds sent to individuals, while only 12% originate from individuals and very small business customers.

B. Postal sector is composed of two main sub-sectors:

1. First, there is the letters activity (estimated 2007 market value, i.e. total turnover: €53bn), which was traditionally covered by monopolies. In spite of recent steps towards market liberalisation, it remains the preserve of incumbent national postal services (often holding more than 95% market share) who fulfil the universal service obligation. It is thus effectively fragmented at EU level but highly concentrated at Member State (MS) level. At the same time, this activity is the most vulnerable to substitution by other, electronic forms of communication and is in clear decline in the majority of MS.

2. Second, there are the parcels and commercial express activities (estimated 2007 market value, i.e. total turnover: €42bn), which have been liberalised in most MS for decades. These markets contain both international players, of which some are owned by MS postal incumbents such as DHL (Deutsche Post), TNT (NL), GLS (Royal Mail – UK), DPD (La Poste - France), and others are independent or non-EU (UPS, Fedex), and also local operators. This activity draws advantage from electronic commerce through delivery of goods ordered over the internet ('internet fulfilment').

II. Evolution of the regulatory framework and provision of public services in the postal sector

A. Universal postal service obligation

1. Historically, postal incumbents have been entrusted by public authorities with an obligation to provide a universal service consisting in the delivery of letters and parcels with equal regularity and at uniform tariffs throughout the territory of the state. In turn, many MS have reserved the provision of certain services (generally, the delivery of letters up to a certain weight or price) as exclusive right to their incumbents. This is the so-called "reserved area". The scope of the universal service obligation (USO) has always been broader than the scope of the reserved area, which has later been gradually reduced and meanwhile been fully abolished through a series of EU Directives (see below). In terms of EU competition law, the USO is a service of general economic interest (SGEI). Many national postal incumbents are, in addition to the USO, entrusted by their MS with other SGEI which are not strictly postal (basic financial services in post offices, territorial presence, and delivery of newspapers in specific conditions).

B. Progressive liberalisation of the postal market though EU Directives

1. Three EU Postal Directives have step-by-step opened postal markets up to full competition while taking account of general interest objectives.

  • The First Postal Directive (97/67/EC) was adopted in 1997. It defined the minimum characteristics of the universal service (delivery of letters and parcels up to 10kg in weight, at least 5 days per week throughout the national territory, and at affordable prices geared to costs); it limited the reserved area (i.e. the incumbent's monopoly) from 1999 onwards to items weighing less than 350g and costing less than five times the basic letter tariff, and it required the creation of national regulatory authorities (NRAs).

  • The Second Postal Directive (2002/39/EC) was adopted in 2002. It further limited the reserved area

  • as from 1 January 2003 to items weighing less than 100g and costing less than three times the basic tariff (an estimated 9 % market opening to competition) while opening (subject to possible exception) all outgoing cross-border mail to competition from the same date (an additional estimated 3 % market opening);

  • as from 1 January 2006 to items weighing less than 50g and costing less than two-and-a-half times the basic tariff (an estimated additional 7 % market opening).

  • Finally, the Third Postal Directive (2008/06/EC) adopted in 2008 established full market opening by requiring the abolition of any reserved area by end 2010 in 16 MS, and by end 2012 in the remaining 11 MS1.

1. The three Postal Directives were in both competition and regulatory senses minimal Directives: MS were free both to liberalise further and faster than the Directives required, and, subject to some limits, to extend and more tightly specify the obligations placed on USO providers.

III. Current level of competition in the postal sector and market position of postal operators

A. Current level of competition

1. National postal incumbents continue to hold significant market shares in different mail segments. Their market shares correspond to the level of competition in the segment. Until the end of 2010, the presence of a reserved area continued to be an important force shaping competition in the addressed items delivery market.

2. The part of the market that is open for competition and the degree of effective competition differs between the segments of the postal markets and among Member States, according to a study from Copenhagen Economics "Main developments in the postal sector (2008-2010)" commissioned by the DG Internal Market of the Commission (all figures and tables in this MEMO are from this study).

3. A widely expressed fear is that liberalisation will threaten the universal service. However studies show that there is no evidence of a decline in the quality of universal service in MS that have already liberalised. On the contrary, if the elimination of the reserved area has affected the level of service at all, if seems to have been to the benefit of users.

4. Another likely effect of liberalisation is that commercial practices, which can be subject to analysis under competition law, will become more widespread. The behaviour of incumbent postal operators may create severe risks for emerging competition and can only be met by the consistent application of competition rules and clearly defined responsibilities between regulatory and competition authorities.

B. Economic situation of postal operators

Legal Status


State ownership


Postal turnover (€)

19 Billion

Turnover to national GDP (%)


Employment ( FTE)

436 651

Share of civil servants (%)


Belgian Post

Legal Status

Public limited company

State ownership

50 % plus one share

Postal turnover (€)

2 Billion

Turnover to national GDP (%)


Employment ( FTE)

29 600

Share of civil servants (%)


French La Poste

Legal Status

Limited liability company

State ownership


Postal turnover (€)

15 Billion

Turnover to national GDP (%)


Employment ( FTE)

248 637

Share of civil servants (%)


Hellenic Post (ELTA)

Legal Status

Limited liability company

State ownership


Turnover (€)

600 million

Turnover to national GDP (%)


Employment ( FTE)


Share of civil servants (%)


IV. Issues of State aid control in the postal sector

A. Relevant principles

1. With the implementation of the Third Postal Directive (2008/06/EC), the EU has taken the essential step of full market opening while taking account of legitimate public interest objectives. Having thus created scope for competition through regulatory reform, competition policy now must ensure that competition in the open postal markets can actually develop for the benefit of citizens and businesses. Competition in terms of quality and price of postal services, which can be promoted through new operators and innovative services, may not be eliminated or distorted by other postal operators or government action. This is all the more important since due to the presence of incumbents, who are still heavily dominant on the markets, and high investment barriers, effective competition will not easily develop in postal markets. On the other hand, EU competition policy has to take account of the fact that incumbents may, in contrast to their new competitors, bear special burdens due to entrustments by the MS with services of general economic interest (SGEI) or due to their past as part of the State administration.

2. In the context of postal liberalisation, the Commission's State aid policy pursues a three-fold goal:

  • to ensure a level playing field for postal operators,

  • to promote competition between them, and

  • to ensure that high quality postal services can continue to be delivered at affordable prices2.

3. For a level playing field in the internal market, it is of key importance that postal operators, and in particular incumbents, neither obtain undue advantages nor suffer undue disadvantages in comparison with competitors. In this regard, the Commission's State aid decision practice and its Communications, as well as the case law of the ECJ, are tackling two key challenges:

  • SGEI (public service) compensation: To control that where postal operators (often the incumbent), who have been entrusted by the State with the provision of Services of General Economic Interest (SGEI), are compensated by the State for their public service missions, the compensation does not go beyond the net cost incurred by that operator in providing those missions. The rules applied by the Commission until 2012 for that control are described in the 2005 SGEI Framework (see OJ C 297, 29.11.2005, p.4).

  • Pension cost equalisation: To allow postal incumbents to be relieved of higher pension costs for civil servants inherited from their past as State administrations which disadvantage them since those costs are not incurred by their competitors. Member States can provide relief for such legacy pension costs to the extent that postal incumbents are thereby not put in a better position than their competitors, as established for the first time by the Commission in its 2007 decision in favour of French La Poste (IP/07/1465).

4. All four State aid decisions adopted by the Commission on 25.1.2012 (Deutsche Post MEMO/12/37, Belgian Post, see MEMO/12/38, French Post, see MEMO/12/36; Greek Post, see MEMO/12/39) concerned SGEI (public service) compensation, while in addition only Deutsche Post and Belgian Post also concerned pension cost equalisation.

V. Practice of State aid control in the Postal Sector

Assessment of compensation for public service obligations

1. The ECJ Altmark decision (case C-2080/00) of July 2003 establishes conditions which ensure, if fulfilled, that public service compensations do not constitute aid.

2. If a given public service compensation does not fulfil the Altmark conditions, it constitutes aid but can be compatible with EU state aid rules if it fulfils the SGEI Framework conditions.

3. In particular, the SGEI Framework is based on the principle that postal operators can be compensated for the net costs of their public service obligations but must not be overcompensated.

See below a few decisions taken by the Commission applying that principle


Compensation of public service costs



N166/05 Post Office Limited – Support for the financing of the rural network of post office counters

No overcompensation => Compatible aid


NN51/06 Poste Italiane – universal postal service compensation 2000-2005

No overcompensation => Compatible aid


N642/05 Posten AB – Sweden - Provision of a 'universal cashier service'.

No overcompensation => Compatible aid


N822/06 Post Office Limited - Support for the financing (07/08) of the rural network of post office counters

No overcompensation => Compatible aid


NN24/08 Poste Italiane – universal postal service compensation 2006-2008

No overcompensation => Compatible aid


C 49/06 Remuneration of Poste Italiane for distributing postal savings certificates (no aid decision).

Altmark fulfilled => No aid


C21/09 Poczta Polska – state compensation for universal postal service obligations 2006-2011.

Aid compatible, conditional on certain control measures to ensure no overcompensation of net costs of the public service obligation.


C20/09 – Belgian Post (BPost) – Belgium

Compensation for the distribution of newspapers and magazines over 1992-2010

Overcompensation => incompatible aid of €417 million to be recovered out of €5.2 billion compensation payments.

Assessment of pension relief

1. Before turning them into limited liability companies, several Member States have relieved former State administrations from huge pension liabilities vis-à-vis retired civil servants. Such a pension relief would normally qualify as state aid since it relieves the undertaking from charges that it normally assumes and that it used to assume before the relief.

2. However, if after the relief, the undertaking is placed on equal footing with competitors regarding social contribution payments, the aid can be declared compatible with the internal market.

See below a few decisions taken by the Commission applying that principle


Pension measures



C43/06 – La Poste – France

Pension relief of €70 of billion in 2006 from excessive pension costs of civil servants

Decision found that relief of pension costs was aid because it relieved these costs from La Poste which – albeit uniquely – it would otherwise have had to bear. But aid was compatible because it relieved a burden of the past and placed La Poste in same situation vis-à-vis pension costs as its competitors.


C7/07 – Royal Mail – UK

Measure enabling Royal Mail to pay lower pensions contributions

Measure is aid but compatible because Royal Mail was not placed in better conditions than competitors.


C20/09 – Belgian Post – Belgian

Pension relief of € 3.8 billion in 1997 from excessive pension costs of civil servants

Pension relief is aid but compatible since Belgian Post was not placed in better conditions than competitors.


– Deutsche Post – Germany

Pension subsidies of approx. €37 billion since 1995 as relief from excessive pension costs of civil servants

Pension relief is aid and is partially incompatible because Deutsche Post was placed at a comparative advantage with regard to its competitors since it has not only benefited from the pension relief but also from increased stamp prices to finance a further share of the civil servants' pension costs. Therefore, Germany was ordered to recover an amount of incompatible aid in the range between €500 million to € 1 billion.

Assessment of market based measures

1. Market-conform arrangements do not entail State aid. When it is proven that the State behaves as a normal investor in its relation with an undertaking, the measures it takes can be considered free of state aid.

See below a few non-aid decisions taken by the Commission relying upon that principle


Market based arrangements (no aid)



C3/96 – Chronopost – France

Business arrangements between La Poste and its subsidiary Chronopost

No aid. Remuneration paid by Chronopost to La Poste can be considered as market conform.


N 531/05 – Banque Postale – France

Business arrangements between La Poste and Banque Postale

No aid. Remuneration paid to La Poste for services provided at postal counters can be considered as market conform.


C20/09 – Belgian Post – Belgium

Capital injections into Belgian Post of 2003 and 2006

No aid. Capital injections by the State were made on conditions that would have been acceptable for a private investor.

1 :

Article 3 of the 3rd Postal Directive (2008/6/EC) allows the following 11 MS to postpone the implementation of that Directive until 31.12.2012: Czech Republic, Greece, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, Poland, Romania, Slovakia.

2 :

A further beneficial effect is that State aid discipline limits aid to the minimum necessary to achieve these goals, thus making a substantial contribution to the consolidation of public budgets and to the efficient operation of the economy. This, in turn, is vital for the success of the Economic and Monetary Union and its internal market.

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