Deutsche Post triumphs in billion-euro Brussels row

2nd July 2008, Comments 0 comments

Deutsche Post wins epic case against the European Commission, following claims it had received unfair state aid from Germany

Luxembourg -- Germany's former postal monopoly, Deutsche Post (DP), won a six year legal battle with the European Commission on Tuesday, earning the right from the European Court to claim back up to 1 billion euros from the government.

In a statement, the European Court of First Instance ruled that the EU executive "had not proven sufficiently for legal purposes that the disputed (German government) payments had given DP an advantage in the meaning of the ban on state aid."

The case concerns DP's door-to-door parcel delivery service, which it operates in competition with commercial firms.

And Tuesday's ruling was expected to have implications on a separate EU probe, launched by the commission in September, over claims that Germany had supplied DP with illegal state aid for carrying out its universal service obligations.

"We will take due account of the court's ruling and apply any lessons to be learned from it to ongoing cases," said Jonathan Todd, spokesman for EU Competition Commissioner Neelie Kroes.

The ruling was welcomed by the German government, in spite of the fact that it posed a substantial additional burden on state the finances.

Noting that the EU court had backed Germany's legal position, a spokesman for the Finance Ministry said the return of the funds to DP would be carried out in the current budget.

Tuesday's ruling refers to a case first brought to the attention of the EU in 1994, when a number of competitors complained that DP was offering the service at below cost price.

The plaintiffs argued that DP was covering the loss generated by its door-to-door parcels service with the state support it was given for delivering letters, and was therefore effectively benefiting from unfair state aid.

In 2001, the commission ruled that DP had indeed broken EU competition rules, and ordered it to pay the German government 572 million euros, which the commission calculated it had received in aid.

Tuesday's judgement overturns that decision and means that DP is now free to claim the 572 million euros plus interest, bringing the total to close to 1 billion euros, back from the government.

The commission said it would study the verdict "carefully" before deciding whether to file an appeal to the European Court of Justice. It has two months to do so.


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