State aid: Commission opens in-depth investigation into Greek support measures in favour of postal operator Hellenic Post (ELTA)

State aid: Commission opens in-depth investigation into Greek support measures in favour of postal operator Hellenic Post (ELTA)

The European Commission has opened an in-depth investigation to assess whether certain Greek support measures in favour of ELTA are in line with EU State aid rules.

ELTA is the largest provider of postal services in Greece and is the postal operator entrusted with the provision of the Universal Service Obligation (‘USO’), which is a public service mission.

The Commission’s investigation

In May 2020, the Commission received a complaint alleging that several measures benefitting ELTA amount to incompatible State aid in favour of the company. These measures include:

  • the payment by the Greek State of €149 million to ELTA in December 2020 as additional USO compensation for the period 2013 – 2018;
  • capital injection by Greece of €100 million into ELTA’s share capital, which took place in December 2020; and
  • the granting by the Greek VAT Code of a Value-Added-Tax (‘VAT’) exemption to all postal services of ELTA since 2000.

At this stage, based on its preliminary assessment, the Commission has doubts on whether certain measures in favour of ELTA are in line with EU State aid rules. For this reason, it has decided to open an in-depth investigation in relation to:

  • Doubts on whether ELTA was legally entitled to additional USO compensation for the 2013-2018 period, as it had already received an annual compensation of €15 million for the same period.
  • Doubts on whether the capital injection in favour of ELTA has been granted on market terms or has given the company an undue advantage over its competitors.
  • Insofar as the VAT exemption applies to all postal services provided by ELTA, concerns that the measure could qualify as aid. While the measure would be considered existing aid for the period before August 2010, it would constitute new aid for the period starting in August 2010. The Commission has doubts on the compatibility of such new aid.

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

Background

Under the 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. This minimises distortions of competition and guarantees an efficient use of public resources.

In addition, under EU State aid rules, public interventions in favour of companies can be considered free of State aid when they are made on terms that a private operator would have accepted under market conditions (the market economy operator principle – MEOP). If this principle is not respected, the public interventions involve State aid within the meaning of Article 107 of the Treaty on the Functioning of the European Union, because they confer an economic advantage on the beneficiary that its competitors do not have.

Source: Commission opens in-depth investigation (europa.eu)

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