EC opens investigation into Correos

The European Commission (EC) has opened an investigation to examine whether State measures designed to support the publicly owned Spanish postal operator were in line with EU state aid rules.

In an official statement issued yesterday (11 February), the EC said that it will assess in particular, whether the public funding that Spain granted to Correos has “overcompensated the company for carrying out its postal public service obligation, as well as whether a number of other measures have given Correos an undue advantage in breach of EU state aid rules”.

Under EU law on public service compensation, adopted in 2011, state owned companies can be compensated for the extra cost of providing a public service, subject to certain criteria that are designed to stop any anti competitive tendencies through that state aid.

According to the EC: “This enables Member States to grant state aid for the provision of public services whilst at the same time making sure that companies entrusted with such services are not overcompensated, which minimises distortions of competition and guarantees an efficient use of public resources.”

The EC has said that it has received two complaints from outside sources alleging that Correos had benefitted from several illegal and incompatible State aid measures.

The EC commented: “At this stage, the Commission has concerns that Correos may have been overcompensated between 2004 and 2010 for the delivery of the universal postal service. Indeed, in the Commission’s preliminary view the profitability levels achieved by Correos with the public funding seem to exceed the level of reasonable profit allowed under EU state aid rules on public service compensation, and the levels approved by the Commission in previous comparable decisions regarding postal operators.”

The Commission will also look at other measures granted by Spain to Correos since 2004, namely capital increases, tax exemptions and compensation for the distribution of electoral material.