Brussels, 19/06/2002 (Agence Europe) - The European Commission has instructed Deutsche Post to repay EUR 572 million to the German government, funds it received from the state to illegally fund its commercial activity between 1994 and 1998. United Parcel Service (UPS), a private operator specialising in door-to-door parcel services for business customers lodged a complaint in 1994 about Deutsche Post's anti-competitive practices. According to the US company, Deutsche Post profited from state resources to fund its traditional post business and undercut prices in the parcel post sector, which was opened to competition in Germany in the 1970s. In 1997, the German association of private parcel undertakings, BIEK, joined in this complaint stating that without state support DPAG would not have been able to survive in the commercial parcels sector. Between 1994 and 1998, Deutsche Post engaged in an aggressive rebate policy with respect to commercial door-to-door parcel services. Throughout this period, certain business customers paid significantly less than the uniform tariff deemed affordable to all other users. This generated total losses of EUR 572 million between 1994 and 1998, which were covered by the state funding Deutsche Post received for the discharge of its public service mission. The Commission has therefore demanded that this sum be reimbursed since it amounts to illegal state aid. The German government has two months in which to inform the Commission of how it intends to recover the money. "Today's decision is a further reminder that beneficiaries of state support for public interest services must not use this support to finance sectors open to competition. A strict enforcement of this rule ensures that consumers get a healthy level of competition with a diversified offer and competitive prices and creates a level playing field of businesses which guarantees lasting jobs and economic growth", said Commissioner Mario Monti. Twice in the past, Deutsche Post has been found guilty by the Commission of anti-competitive practices (see Europe of 15 June, p.10).
Decision welcomed by FFPI
The FFPI (Free and Fair Trade Post Initiative), a European association of users and competitors of the public postal operators, welcomed the Commission's decision "as very good news for users of postal services in the EU. The decision sends a clear signal to postal monopolies that they cannot receive state aid that distorts competition", noted the FFPI in a press release.