Wednesday, January 25, 2012

German Logistics Giant to Appeal 'Incompatible' State Aid Ruling

Deutsche Post DHL Align With German Government Against EU Commission
Shipping News Feature

GERMANY – Mail and logistics group Deutsche Post DHL, in an alliance with the German Federal Government, is to appeal at the European Court of Justice against the state aid ruling made today by the European Commission. The decision came after the Commission’s investigation begun in 2007 studying allegations of unlawful state support to Deutsche Post AG. This followed on from an earlier investigation started in 2002 which concluded in September 2010 after Deutsche Post successfully appealed a previous ruling.

The current proceedings focused on state grants like financial equalization and the funding of civil servant pensions at Deutsche Post. Despite finding no evidence of incompatible state aid with respect to financial equalization it did however reach the conclusion that the pension expenses of Deutsche Post were in part incorrectly assessed in the case of price approvals by the Federal Network Agency (Bundesnetzagentur) and thus in some cases involved incompatible state aid. This is the only state proceedings currently on record against the group but the EU Commission, according to its current ruling, is demanding that Deutsche Post repay this state aid to the Federal Republic of Germany in the amount of 500 million to one billion euros.

In a statement Deutsche Post DHL says it has no intention of writing this amount into the 2011 accounts and, as it feels the decision has no legal basis and will not withstand legal review, company earnings both in the past fiscal year and in the years to come as well as the basis of the dividend that is yet to be proposed for fiscal year 2011 remain unaffected by the decision. Payment made for the coming months will be included in the 2012 figures and the liquidity of the Group will be temporarily affected by the payment. Frank Appel, CEO of Deutsche Post DHL was appalled by the Commission’s decision saying:

"The EU Commission's ruling on a repayment is incomprehensible and has no basis in fact. It stands in clear contradiction to an earlier EU decision and the outcomes of similar proceedings. If you examine the state aid rulings on other European postal service providers, it becomes quite clear that here the Commission has applied double standards. We are absolutely confident that the decision will have no validity in court and are proceeding on the assumption that the amount plus interest will be repaid.

"I am very satisfied with our performance in the past year, a year in which we met the guidance that was repeatedly revised upwards. We have shown impressively that we are excellently positioned and that we have every reason to continue to look optimistically into the future."