EC initiated legal proceedings against Deutsche Post

The original complaint was raised by U.S. Parcel delivery firm UPS.
Deutsche Post allegedly used public money to cover losses resulting from below-cost pricing in
its parcel delivery services, thereby undercutting rivals. The subsidies were intended to go
towards Deutsche Post’s public service functions including letter delivery in Germany. At the
time, the EC competition commissioner told reporters, “Beneficiaries of state support for public
interest services must not use this support to finance sectors open to competition.” The subsidies
under question were provided since 2003 to cover the pension liabilities of civil servants taken
on by Deutsche Post from the previous government-owned postal administration during the
company’s partial privatization in the mid-1990s.

The EC said Deutsche Post was
“overcompensated” for these legacy pension costs since it was getting both a subsidy from the
government as well as an increase in regulated letter prices, which was specifically intended to
cover pension costs.