Deutsche Post pensions decision by European Court

Deutsche Post has been given a decision in its favour by the European General Court over a pensions decision made against it by the European Commission in 2012.

In 2012 the EC decided that the public financing of pensions by the company constituted ‘unlawful state aid incompatible with the internal market’, and ordered Germany to recover those funds that were paid as subsidies from January 2003. The EC reckoned this to be between €500m to €1bn.

Germany challenged this decision in the European General Court, arguing that the European Commission has incorrectly classed the public co-financing of pensions as state aid. The EC has to demonstrate that co-financing the postal workers’ pensions was a real economic advantage for Deutsche Post over its competitors, in order to reach this decision.

The General Court found that, “The fact that Germany partially covered the cost of pensions for former civil servant postal workers is not sufficient in itself to show that Deutsche Post had an advantage over its private competitors. The pension costs of civil servants, who enjoy a privileged and costly status, are not part of the expenses which an undertaking normally incurs.

“Thus, it is perfectly possible that, as a result of the public co-financing of pensions, Deutsche Post, although less disadvantaged than previously, either continues to be at a disadvantage relative to its competitors or is at parity with them, without therefore enjoying any advantage.

“Only potential amounts exceeding what is necessary in order to align the pension costs imposed on Deutsche Post before 1995 with those of its competitors would have been such as to confer an advantage of that kind on it and, accordingly, constitute State aid.

“Since it has not shown, at the stage of its review concerning the existence of State aid, that Deutsche Post enjoyed such an advantage, the Commission committed an error of law which entails the annulment of the part of the decision concerning the disputed pensions-related subsidies.”

According to reports, Deutsche Post has already made payments to a trustee that up to €377m and it expects these funds to be returned soon.