Bruce Barnard | Sep 03, 2010 8:10AM EDT
Deutsche Post, the German postal and logistics group, does not have to repay state aid and interest of $1.5 billion, the European Union’s highest court ruled.
The decision is a major victory for the parent of global logistics and express operator DHL, which has long denied accusations from industry competitors that the business unfairly benefits from government subsidies.
The European Court of Justice rejected a claim by the European Commission that the German postal company misused $732 million of state aid to deliver parcels below cost between 1994 and 1998.
The case dates back to 1994 when UPS and a German company alleged state-owned Deutsche Post broke EU rules by using the aid to finance rebates on door-to-door deliveries and undercut private competitors.
The Commission found Deutsche Post guilty of the illegal use of state subsidies in 2002 but the EU’s Court of First Instance overturned that ruling on appeal in 2008.
The Court of Justice in Luxembourg has dismissed the European Commission’s appeal against that ruling and supported the lower court’s finding that the EC used a “defective” method to reach its decision that Deutsche Post had misused the state aid.
The final ruling means Deutsche Post can keep the original aid and the eight years of interest, totalling around $1.5 billion.
The Commission is still investigating other state aid granted to Deutsche Post in a probe launched in 2007.
