Annulment of Commission’s decision finding subsidy of Deutsche Post pension scheme to be State aid

Judgment
T-143/12
14.07.2016
PartiesJurisdictionFormationJudge RapporteurAdvocate GeneralSubject-matter
AppealPollmeier Massivholz GmbH & Co. KG
Federal Republic of Germany
v
European Commission
General Court8th Ch.M. Wetter/State aid
KeywordsPublic measures concerning the State aid – Postal sector - Funding the wages and social rights additional costs concerning part of Deutsche Post’s workers by means of subsidies and revenues by the remuneration of services at regulated rates – Commission’s decision finding an aid to be incompatible with the internal market - Concept of advantage - Judgement ‟Combusˮ– Burden and level of proof of the existence of an economic and selective advantage - Absence of advantage
Significant pointsFollowing the privatisation of Posdienst in Germany, Deutsche Post - a public limited company - was required to maintain the employment of Postdienst postal service workers and to contribute to a pension fund for them.

By a decision of 2011 the Commission held that the public financing of pensions constituted unlawful State aid and ordered Germany to recover the corresponding amounts from Deutsche Post.

Germany brought an action before the General Court seeking the annulment of the Commission’s decision, arguing that the Commission had incorrectly classified as State aid the public co-financing of pensions.

The General Court, when analysing whether the measure involved within the meaning of Article 107(1) TFEU, conferred a selective advantage to the beneficiary, emphasised that the measure must give the recipient a “selective economic advantage over its competitors” (para. 106).

In this respect, the Court stated that the mere fact that Germany partially covered the cost of pensions for former civil servant postal workers was not sufficient in itself to show that Deutsche Post had an advantage over its private competitors (para. 142). The GC deemed it is possible that, as a result of the public co-financing of pensions, Deutsche Post continued to be at a disadvantage in relation to its competitors or it was at parity with them, without therefore enjoying any advantage (para. 143). That is because the cost covered were not costs that its competitors face.

In relation to the Commission’s reasoning, the General Court held that merely stating the existence of an advantage was not enough (para. 154 - see judgement of the GC of 16 March 2004, Danske Busvognmænd v Commission, T-157/01, “Combus”).

Moreover, the Court held that the Commission wrongly assessed the existence of a selective economic advantage when analyzing whether the aid was compatible with the internal market. The General Court confirmed that the Commission should have established instead the existence of a selective economic advantage at the prior stage of the assessment of the very existence of State aid. (para. 150)

Finally, the General Court concluded that since the Commission did not show that Deutsche Post enjoyed such an advantage when analysing the existence of State aid in its decision, the Commission committed an error of law. Thus, the Court annulled the Commission’s decision insofar as it related to the pension-related subsidies.
NoteworthyAny decision of the EU Commission not to In this judgment, the GC confirmed that in order to classify state intervention as State aid, a real economic and selective advantage for the undertaking over its competitors has to be demonstrated.

The mere existence of financial support without a potential effect on competition in the beneficiary’s market was not considered enough to constitute a selective advantage and therefore State aid. This explicit reference to a competitive advantage is demonstrative of a quite demanding approach by the GC in the definition of a selective advantage and the notion of State aid. The specific circumstance of the case may have encouraged the GC to take this line and it must be seen whether the judgement will be followed on this point in a potential appeal or other cases. However, it can already be mentioned that this judgement is in line with another recent judgement of the General Court of 11 September 2014, Greece v Commission, T-425/11 (“Greek casinos”).

There is also a useful clarification from the General Court on the conceptual aspects of State aid, since the Court confirmed that the real economic advantage for the undertaking needs to be assessed while analysing the very existence of State aid, prior to the assessment.