European Commission opens in-depth investigation into financing of Post Danmark’s universal service obligation

The European Commission has opened an in-depth investigation to assess whether the compensation granted by Denmark to Post Danmark to fulfil its public service mission for the year 2020 is in line with EU State aid rules.

Post Danmark is the main postal operator in Denmark and is – via PostNord Group AB and PostNord AB – jointly owned by Denmark (40%) and Sweden (60%).

In March 2021, Denmark notified the Commission of its plan to compensate Post Danmark for a maximum amount of approximately €30 million (DKK 225 million) for carrying out its universal postal service obligation during 2020. This includes the provision of basic postal services throughout the country at affordable prices and at certain minimum quality requirements.

Under EU state aid rules on public service compensation, adopted in 2011, companies can be compensated for the extra cost of providing a public service subject to certain criteria. 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.

In December 2019, the Commission received a complaint from a Danish association with members active in the road transport and logistics sector alleging that the compensation to be granted to Post Danmark for its universal service obligation for 2020 constitutes incompatible State aid.

At this stage, following a report from the Danish national auditor (‘Rigsrevisionen’), the Commission has doubts on Post Danmark’s allocation of costs between the universal postal services and non-universal postal services it carries out, and consequently on the calculation of the net cost of the universal service obligation by Denmark based on this cost allocation. Following a preliminary assessment, the Commission has therefore decided to open an in-depth investigation, in particular as it has concerns regarding the verification of the absence of overcompensation.

The Commission will now investigate further to determine whether its initial concerns are confirmed. The opening of an in-depth investigation gives Denmark, the complainant and other interested third parties an opportunity to submit comments. It does not prejudge the outcome of the investigation.

 

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