Deutsche Post will not have to pay back €377 million worth of pension contributions to the German government after a European court yesterday ruled against a European Commission decision.
Following restructuring and privatisation in 1995, the German postal operator continued to employ former civil servants and contributed to their pension scheme in a co-financing arrangement with the government.
Following a long-running and complex legal dispute, the European Commission ruled in 2012 that the government’s pension contributions had amounted to improper state aid and ordered the German government to recover subsidies paid since 2003 that amounted to between €500 million and €1 billion.
But the German government appealed against this ruling to the ECJ, arguing in particular that the Commission had incorrectly classified as state aid the public co-financing of pensions. In order to reach that conclusion, the Commission should first have demonstrated that the public co-financing of the pensions of postal workers whose employment was maintained by Deutsche Post was a real economic advantage for Deutsche Post over its competitors.
The EU’s General Court in Luxembourg yesterday upheld Germany’s appeal and thus annulled the Commission’s decision regarding pension-related subsidies.
“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,” the court said.
“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.”
Pending the ECJ verdict, Deutsche Post had paid the €377 million into a separate trust account in case it had to repay the pension contributions to the government. This will now be paid back to the company.
