Joaquín Almunia Vice President of the European Commission responsible for Competition Policy State aid policy in the postal sector: Commission adopts a package of four decisions concerning the incumbent postal operators in Germany, Belgium, France and Greece Introductory remarks at the Press conference Brussels, 25 January 2012

SPEECH/12/37

Joaquín Almunia

Vice President of the European Commission responsible for Competition Policy

State aid policy in the postal sector: Commission adopts a package of four decisions concerning the incumbent postal operators in Germany, Belgium, France and Greece

Introductory remarks at the Press conference

Brussels, 25 January 2012

We have adopted today a package of four decisions concerning state aid granted by Germany, Belgium, France and Greece to their respective incumbent postal operators. In the decisions concerning the Deustche Post and the Belgian Bpost we have concluded that part of the aid received is incompatible with the internal market and ordered its recovery. However, in the cases of the French La Poste and the Greek post ELTA we have approved the aid granted. All decisions were based on the same rules and principles and they further shape the Commission's state aid policy in the postal sector.

Before going into the details of each case, allow me first to put these decisions in the context of the European market of postal services.

The postal sector is of great economic importance and social significance in the EU. In 2009, it accounted for an annual turnover of €72 billion, representing about 0.6 % of the EU's GDP. 1.5 million people around the EU are employed in this sector.

Liberalisation in the postal sector is now fully effective in 16 Member States. It will be completed in the remaining 11 by the end of this year. The Commission must ensure that competition in terms of quality and price is not distorted by undue public support to the incumbents. Only in this way the liberalisation of postal services across the EU will create the scope for new operators and innovative services to appear, with a direct benefit for citizens and businesses.

At the same time, we also need efficient public services. The universal postal service ensures that postal items are delivered timely and at reasonable tariffs throughout the territory of each Member State. Indeed, Member States are free to define other public services obligations, such as press distribution, if the decide to do so.

In December the Commission adopted new rules on services of general economic interest (SGEI). These new rules aim to ensure access to high quality public services in an open, efficient and competitive internal market. The decisions taken today fully share this objective.

In order to achieve it, public authorities must be able to compensate the costs of public service missions. However, at the same time, overcompensation must be avoided, since it allows incumbents to cross-subsidise other activities than the public service itself, at the expense of competitors.

Similarly incumbents, which are often former state monopolies, may be compensated for the extra pension costs they incur because they still employ civil servants. However, this compensation should again merely cover the extra costs of such pensions. Otherwise, the incumbent will be put in an advantageous position compared to the new entrants.

Maintaining a level playing field is crucial in a sector that is just opening to competition. Let me now go through the decisions we have adopted today.

In the German case, the Commission approved aid measures of € 5.6 billion that Deutsche Post received between 1990 and 1995. Those measures were limited to the public service costs and –according to our analysis - did not lead to overcompensation.

However, the Commission concluded that the pension subsidies in favour of Deutsche Post violated EU State aid rules. Since 1995, Germany has granted approximately €37 billion of pension subsidies to relieve Deutsche Post from excessive pension costs of civil servants. In addition, Deutsche Post received part of stamp prices to finance a further share of civil servants' pension costs. As a result, Deutsche Post has effectively benefitted since 2003 from social contribution rates that have been significantly lower than those of its competitors. This has given Deutsche Post a competitive advantage exactly in those markets (like parcel delivery) where it faces strong competition.

Consequently, the Commission decided that Germany shall recover from Deutsche Post incompatible aid in the range between €500 million to €1 billion. Germany will have to calculate the final amount based on the most precise available data, applying the Commission's precise instructions. We are announcing a wide range today because Germany has not yet communicated the precise number of civil servants in the services in competition and their wage costs.

In the Belgian case, the Commission has approved a pension relief of €3.8 billion that De Post-La Poste (now Bpost) received in 1997. The Commission found that Bpost had just been relieved of its inherited pension burdens and has thus been placed on an equal footing with other companies. The Commission also found that the capital injections by the State into Bpost in 2003 and 2006, did not constitute State aid, because the public sector acted as a private investor.

By contrast, the Commission found that compensations for certain public service missions, notably press distribution, which amounted to €5.2 billion between 1992 and 2010, partly exceeded the cost of delivering these missions. The Commission therefore ordered Belgium to recover the incompatible aid up to €417 million plus interests.

In the French case, the Commission approved €1.9 billion aid paid by France to La Poste to partially finance the public service of delivering press items to citizens and the provision of postal services in remote areas for the period 2008-2012. This is because the compensations granted only partially covered the net costs of the public service missions.

In the Greek case, the Commission approved aid of €52 million granted by Greece to Greek Post (ELTA) to partially finance a modernisation of its public postal services until 2021. This will enlarge the range of services offered within the whole territory of Greece and in particular in the peripheral regions. The measure will be funded by the European Regional Development Fund and we have approved it since it will not overcompensate ELTA and since it is necessary to enable ELTA to catch up with other European postal operators. I consider it of key importance that Greek citizens and businesses can benefit from universal postal services of high quality.

In conclusion, I think with today's package of decisions we have delivered proof that the Commission continues to pursue an effective State aid control in the postal sector, in line with our balanced policy of market opening and public service provision in key areas of the economy.