Royal Mail is declining to comment on the reported launch this week of an in-depth state-aidinvestigation by the European Commission that could potentially lead to a break-up of the
business.Sources in Brussels told the UK’s Sunday Times newspaper that the Commission will examinewhether the government’s plan to take over the company’s £8.4 billion pension deficit and forgiveup to £1 billion of debt, as part of a privatization process for the state-owned postal group,gives it an unfair advantage over competitors.
It reported that the Commission is confident it can complete its inquiry by March, when the UKgovernment hopes to take over the Royal Mail pension deficit and start preparations forprivatisation. Sources said that few comparisons could be drawn with a four-year inquiry into stateaid at Germany’s Deutsche Post that was extended in May.
A spokeswoman at the European Commission’s competition directorate told CEP-Research that theorganisation had been examining the plans submitted to it by the UK authorities under state-aidcontrol rules, and that it would be announcing a decision shortly on whether it felt an in-depthinvestigation was required. But she was unable to confirm whether a decision had already been made,or on whether an announcement was likely this week.
If Royal Mail is found to be in receipt of government aid, it could be ordered to sell assets tooffset the value of the support, the Sunday Times reported. Royal Mail’s most saleable asset isGeneral Logistics Systems (GLS), its mainland-European parcel delivery firm, which has been valuedat up to £2 billion. Rival logistics companies, including UPS and Fedex, have attempted to buy GLSin the past.
