Deutsche Post, Bpost Told by EU Regulator to Repay Up to $1.3 Billion Aid

Deutsche Post AG (DPW), Europe’s largest mail carrier, and Belgium’s Bpost SA were ordered to repay government subsidies after European Union regulators said they broke antitrust rules.

Deutsche Post must repay between 500 million euros ($648 million) and 1 billion euros in pension subsidies, the European Commission said today.

Bpost must repay 417 million euros after Belgian state payments to the company exceeded the cost of delivering newspapers and magazines. The operator said today it will consider appealing the decision.

Regulators last year expanded an investigation into payments from the German government to cover workers’ pension costs at Deutsche Post that may have hampered rivals that paid 10 percent to 15 percent more in contributions.

The pension subsidies “conferred an economic advantage” on Deutsche Post, the European Commission said today. The firm “has effectively borne significantly lower social contributions than its private competitors for services which were open to competition,” such as parcel services and retail banking, the regulator said.

A spokesman for Deutsche Post didn’t immediately return a call asking for comment.

EU regulators approved government aid to Hellenic Post SA and France’s La Poste.

Tariff Income

The EU probe broadened the scope of an investigation that started in 2007 into “all public measures, such as transfers of public money and tariff income” granted to Deutsche Post and its predecessor Postdienst since 1989. The prior probe was prompted by complaints from Atlanta-based United Parcel Service Inc. (UPS), the world’s largest package-delivery company.

In Belgium, the commission found that annual state compensation granted to Bpost for the delivery of newspapers and magazines “partly exceeded the net cost” of this service. The subsidies totaled 5.2 billion euros between 1992 and 2010, the EU said.

Bpost will reimburse the aid before the end of June out of its cash reserves totaling more than 1 billion euros, the Brussels-based company said today in an e-mailed statement.

The investigation was triggered in part by Deutsche Post (DPW) and its DHL express-delivery unit winning a 2009 court ruling overturning state-aid approval of some subsidies to the Belgian post.

Belgium in 2010 weighed an initial public offering for Bpost, which is owned by CVC Capital Partners Ltd. and the Belgian government.

To contact the reporter on this story: Aoife White in Brussels at awhite62@bloomberg.net.

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.

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