The European Commission has opened an in-depth investigation to assess whether the compensation granted by Czechia to Czech Post to fulfil its public service mission is in line with EU State aid rules.
Czech Post is the main postal operator in Czechia and is wholly owned by the State.
In January 2020, Czechia notified the Commission of its plan to compensate Czech Post for a maximum amount of CZK 7.5 billion (approximately €282.1 million) for carrying out its universal postal service obligation during the 2018-2022 period. This includes the provision of basic postal services throughout the country at affordable prices and at certain minimum quality requirements.
Under 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, which minimises distortions of competition and guarantees an efficient use of public resources.
In November 2019, the Commission received two complaints from competitors of Czech Post alleging that the compensation to be granted to Czech Post for its universal service obligation for the period 2018-2022 constitutes incompatible State aid.
At this stage, the Commission has concerns that Czech Post may have been overcompensated between 2018 and 2022 for the delivery of the universal postal service. Following a preliminary assessment, the Commission has decided to open an in-depth investigation, in particular as it has concerns regarding the correct calculation of the net avoided cost of the universal service obligation. As a result, the Commission was not able to exclude the risk of overcompensation.
The Commission will now investigate further to determine whether its initial concerns are confirmed. The opening of an in-depth investigation gives Czechia, the complainants and other interested third parties an opportunity to submit comments. It does not prejudge the outcome of the investigation.
Background
Czech Post is the main postal operator in Czechia.
The Czech postal market has been liberalised since 2013 in accordance with the Postal Directive, and Czech Post operates now in full competition with other relevant postal service providers.
In February 2018, the Commission concluded that the compensation granted by Czechia to Czech Post to fulfil its universal service obligation between 2013 and 2017 was in line with EU State aid rules. The Commission assessed the measure under EU State aid rules on public service compensation, which allow companies to be compensated for the extra cost of providing a public service under certain conditions. The rules 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, which minimises distortions of competition and guarantees an efficient use of public resources.