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State aid: Commission endorses €1.1 billion public service compensation for ‘Poste Italiane’ for 2006-2008

The European Commission has decided not to raise objections under EC Treaty state aid rules to €1.1 billion compensation Italy granted to ‘Poste Italiane’ from 2006 to 2008 to meet the costs of fulfilling its universal postal service obligations. The state support is in line with EU rules on public service compensation because it does not over-compensate ‘Poste Italiane’ for providing these services, and so does not allow for cross-subsidies for other activities.
Competition Commissioner Neelie Kroes said: “I am satisfied that the compensation for ‘Poste Italiane’ is sufficient to allow It to fulfil its public service obligations without unduly distorting competition.”
Poste Italiane is the universal postal service provider in Italy. Over the period 2006-2008 Poste Italiane received €1.1 billion compensation for discharging the universal postal service obligations entrusted to it.
The European Court of Justice in its judgment in the Altmark case (C-208/00) of 24 July 2003 established four criteria for assessing whether compensation for public service obligations constitutes state aid:
(i) explicit entrustment of the public service obligation
(ii) objective, transparent and pre-defined conditions for compensation
(iii) no over-compensation and
(iv) choice of the least costly provider through an open tender or a level of compensation based on the costs of a typical, well run company.
As ‘Poste Italiane’ was not chosen pursuant to a public procurement procedure, the state intervention does constitute state aid.
In line with the EU framework on state aid in the form of public service compensation, such aid may be declared compatible where it does not exceed the costs incurred for providing the public service. The Commission's investigation revealed that Poste Italiane’s net costs for delivering the universal postal service obligations from 2006 to 2008 exceeded the financial support granted by Italy over this period. Thus, the state support under-compensated the net public service cost of providing the universal postal service and is therefore compatible with EC Treaty state aid rules.
The non-confidential version of the decision will be made available under the case number NN 24/2008 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.