Charges of Cross-Subsidy Plague Deutsche Post

Sept. 19, 2007
When it operated a postal monopoly in Germany, Deutsche Post AG was forced to pay back 572 million ($793 million) it received from the German government

When it operated a postal monopoly in Germany, Deutsche Post AG was forced to pay back €572 million ($793 million) it received from the German government because it used the money to cross-subsidize other commercial activities.

A new inquiry, says Transport Intelligence, is in response to Deutsche Post World Net (DPWN) competitors who say Deutsche Post benefited from the state subsidy by more than the €572 million previously dealt with. The allegations claim the Deutsche Post AG unit used public service compensation to expand its commercial activities and to sell services too cheaply to its subsidiaries (DHL and Postbank).

Though opponents were vocal about cross-subsidization as Deutsche Post expanded into a broader logistics provider, the current investigation is part of a series of projects by the EU Competition Commission, says Transport Intelligence. The Commission is examining state postal monopolies across Europe, including France, Poland, and the UK.

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