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Saturday, May 18, 2024 | Back issues
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Aid to Postal Service in France Deemed Illegal

(CN) - Though now a publicly traded company, France's postal service received illegal state aid when the country gave its creditors an unlimited guarantee, Europe's highest court ruled.

Prior to its conversion to a public limited company in 2010, the French government treated La Poste as a separate legal and financial entity from the state - albeit one that could not become insolvent.

That same year, the European Commission determined that France's unlimited guarantee of La Poste's debt - which France said dated back to 1958 - illegally skewed the market in the postal service's favor. Although the guarantee vanished when La Poste officially went public years ago, the EU's General Court backed the commission decision in 2012.

On appeal to the European Court of Justice, the French government said the lower court had ignored its own rules that a transfer of government assets must happen before the commission can bring a claim of illegal state aid. The state's lawyers also argued that the normal burden of proof had been reversed during the General Court proceedings, forcing France to prove its innocence.

But the Luxembourg-based high court dismissed France's appeal Thursday, finding that regulators proved that the implied guarantee of a quasi-public company with state money gave La Poste an economic advantage its competitors did not enjoy - even if money never changed hands.

"Such a guarantee is, as a rule, liable to confer an advantage as it is granted without something in return and enables its recipient to obtain more favorable credit terms than what it would have obtained on its own merits alone, thereby easing the pressure on its budget," the court concluded.

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