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29.6.2012 Official
Journal
of
the
European
Union L
170/1
II
(Non-legislative acts)
DECISIONS
COMMISSION DECISION
of 25 January 2012
on the measure SA.14588 (C 20/09) implemented by Belgium in favour of De Post-La Poste (now
bpost)
(notified under document C(2012) 178)
(Only the Dutch and French texts are authentic)
(Text with EEA relevance)
(2012/321/EU)
THE EUROPEAN COMMISSION,
the notified measure. The Commission found in its
decision that the capital injection, together with other
measures in favour of DPLP identified in the preliminary
Having regard to the Treaty on the Functioning of the European
investigation, had not overcompensated DPLP for the net
Union, and in particular the first subparagraph of
costs incurred in discharging its public service missions
Article 108(2) ( 1 ) thereof,
from 1992 to 2002.
Having regard to the Agreement on the European Economic
(2) The
Commission’s
decision
was
challenged
before
the
Area, and in particular Article 62(1)(a) thereof,
Court of First Instance (CFI) on 27 November 2003 by
Deutsche Post AG and its Belgian subsidiary, DHL Inter
national ( 6 ). On 10 February 2009, the CFI annulled the
Having called on interested parties to submit their comments
Commission’s decision. The CFI concluded that the
pursuant to the provisions cited above ( 2 ) and having regard to
Commission had decided not to raise objections despite
their comments,
serious difficulties that should have led it to initiate a
formal investigation procedure.
Whereas:
(3) In
April
2009,
Belgium
lodged
an
appeal
( 7 ) (C-148/09)
with the Court of Justice (ECJ) against the CFI’s
1. PROCEDURE
annulment of the Commission’s decision of 23 July
2003.
1.1. COMMISSION DECISION OF 2003 ANNULLED BY THE
COURT OF FIRST INSTANCE
(1) On
3
December
2002,
the
Belgian
authorities
notified
( 3 )
(4) On
22
September
2011,
the
ECJ
dismissed
Belgium’s
to the Commission an increase in the capital of De Post-
appeal and found that the CFI was right to annul the
La Poste (hereinafter ‘DPLP’, now ‘bpost’ ( 4 )), the Belgian
2003 Commission decision.
postal operator. Following a preliminary examination, the
Commission decided on 23 July 2003 ( 5 ) not to object to
1.2. COMPLAINT CONCERNING AID TO PRESS
( 1 ) With effect from 1 December 2009, Articles 87 and 88 of the EC
DISTRIBUTION
Treaty have become Articles 107 and 108, respectively, of the Treaty
on the Functioning of the European Union (TFEU). The two sets of
(5) In
2005,
a
number
of
Belgian
private
press
distribution
provisions are identical in substance. For the purposes of this
companies filed a complaint ( 8 ) under antitrust and State
Decision, references to Articles 107 and 108 TFEU should be
aid rules against a press distribution agreement concluded
understood as references to Articles 87 and 88 of the EC Treaty
where appropriate.
( 2 ) OJ C 176, 29.7.2009, p. 17.
( 6 ) Case T-388/03 Deutsche Post and DHL International v Commission
( 3 ) Case N 763/02.
[2009] ECR II-199.
( 4 ) From 1 September 2010 (http://www.bpost.be/site/fr/postgroup/
( 7 ) Judgment of 22 September 2011 in Case C-148/09 P Belgium v
bpost/intro/index.html).
Deutsche Post AG and DHL International, not yet reported.
( 5 ) C(2003) 2508 final, OJ C 241, 8.10.2003, p. 13.
( 8 ) Case No CP 218/2005.

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L 170/2
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Official Journal of the European Union
29.6.2012
between the Belgian authorities and DPLP. The agreement
1.5. COMMENTS BY THE BELGIAN AUTHORITIES ON THE
entrusts DPLP with the public service mission of press
DECISION TO INITIATE THE PROCEDURE
distribution throughout Belgium, and fixes tariffs for this
service and the compensation DPLP is entitled to receive
(12) The Belgian authorities submitted comments on
for the extra costs incurred in fulfilling this mission. The
13 August 2009 and made further submissions on
complaint centres on the tariffs for DPLP’s services,
10 September 2009, 12 October 2009, 23 April
which the complainants claim are so low as to effectively
2010, 26 April 2010, 19 October 2010, 19 November
exclude any possibility of competition.
2010, 21 December 2010, 18 January 2011, 17 February
2011, 2 March 2011, 29 March 2011, 11 April 2011,
10 May 2011, 27 May 2011, 14 June 2011, 10 August
(6) In
respect
of
State
aid
rules,
the
Commission
rejected
the
2011, 26 August 2011, 7 October 2011, 14 December
complaint, since the preliminary assessment showed that
2011, 19 December 2011, 20 December 2011 and
the net additional costs of the public service had not
26 December 2011. They pointed out that they had
been overcompensated. However, in May 2009 the
lodged an appeal on 22 April 2009 against the CFI
complainants contested this preliminary position,
judgment of 10 February 2009 and provided clarifi
submitted additional information and asked the
cations regarding the compensation for the public
Commission to carry out an in-depth investigation.
services and other ad hoc measures in favour of DPLP.
1.3. FOURTH MANAGEMENT CONTRACT (2005-2010)
1.6. COMMENTS BY THIRD PARTIES ON THE DECISION TO
INITIATE THE PROCEDURE AND COMMENTS FROM THE
(7) When
examining
the
complaint
concerning
the
compen
BELGIAN AUTHORITIES ON THE COMMENTS BY THIRD
sation for press distribution, the Commission learned that
PARTIES
Belgium had entered into a management contract
(‘contrat de gestion’) with DPLP in 2005, which had
(13) Deutsche Post AG and DHL International NV/SA
not been notified and provided for the payment of
submitted comments on 28 August 2009.
compensation for services of general economic interest
(SGEIs). The Commission therefore opened an ex-officio
case ( 1 ) and sent a request for information to Belgium in
April 2007.
(14) The
Vlaamse
Federatie
van
Persverspreiders
(a
Dutch-

language association of press distributors, hereinafter
‘VFP’) and Prodipresse (Union des professionnels de la
diffusion de la presse, a French-language association of
(8) In
December
2007,
the
Belgian
authorities
replied
that
press distributors) submitted comments on 28 August
they did not regard the SGEI compensation as State aid,
2009.
since it fulfilled all four conditions set out in the Altmark
judgment ( 2 ). They subsequently provided information on
the fourth management contract, particularly with regard
to the cost accounting system used to calculate the
(15) Belgische
Distributiedienst
NV/Belgique
Diffusion
SA
(a
compensation paid by the State.
competitor of DPLP in the press distribution market,
hereinafter ‘BD’) submitted comments on 28 August
2009.
(9) Subsequently,
the
measures
covered
by
the ex-officio case
and the complaints were included in formal investigation
procedure C20/09 opened on 23 July 2009.
(16) The
Association
Belge
des
Editeurs
de
Journaux/Belgische
Vereniging van Dagbladuitgevers (Belgian association of
newspaper publishers) submitted comments on
1.4. DECISION TO INITIATE THE PROCEDURE
28 August 2009.
(10) Having
regard
to
the
Court
of
First
Instance’s
annulment
of the Commission’s decision of 23 July 2003 and
having examined the information supplied by the
2. DETAILED DESCRIPTION OF THE AID
Belgian authorities on the measures in question, the
2.1.
Commission decided on 13 July 2009 to initiate the
LEGAL STATUS AND OPERATIONS OF DPLP
formal investigation procedure laid down in
(17) The Belgian Post Office was a State agency (‘Régie des
Article 108(2) TFEU ( 3 ).
Postes’) until 1992, when it was incorporated as a
separate legal entity (‘enterprise publique autonome’,
autonomous public undertaking). In 2000, its legal
(11) The
Commission
decision
initiating
the
procedure
was
status changed to ‘société anonyme de droit public’
published in the Official Journal of the European Union
(State-owned public limited company).
and the Commission invited interested parties to
submit their comments.
(18) DPLP’s operating income in 2010 was EUR
( 1 ) Case No CP 100/2007.
2 318 million and its operating profit was EUR
( 2 ) Case C-280/00 Altmark Trans GmbH and Regierungsprsidium
319 million. At the end of 2010, DPLP employed
Magdeburg v Nahverkehrsgesellschaft Altmark GmbH [2003] ECR I-
07747.
33 616 people. In comparison, in 2002, it had 42 000
( 3 ) OJ C 176, 29.7.2009, p. 17.
staff. Staff costs represent 65 % of total operating costs.

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EN
29.6.2012 Official
Journal
of
the
European
Union L
170/3
(19) A minority share of 50 % minus one share is held by the
(viii) International parcels
private investor CVC Capital Partners. The Belgian State is
the majority shareholder.
Financial services
2.2. OVERVIEW OF THE RELEVANT PUBLIC MEASURES
(ix) Cash deposits on post-office current accounts
2.2.1. Public service missions during the period
1992-2010
(x) Issuance of postal orders
(20) DPLP
was
entrusted
with
public
service
missions
by
the
Postal Law (
(xi) Home payment of retirement and survivors’

1 ) and four successive management contracts
during the whole period under investigation, i.e. from
pensions and disabled persons’ allowances
1992 to 2010.
(xii) Payments of attendance fees at elections
2.2.1.1. Public service obligations set out in the management
contracts
(xiii) Accounting of funds and documents of title for
traffic penalties
(21) The management contracts stipulate the rules and
conditions for carrying out the tasks undertaken by
DPLP as part of its public interest activities and fix the
(xiv) Fishing licenses
financial intervention of the Belgian State.
Sale of stamps
(22) Since
its
incorporation
in
1992,
DPLP
has
signed
four
management contracts with the Belgian State, covering
(xv) Sale of stamps
the following periods ( 2 ):
Other public services
(1) first contract: 14.9.1992-31.12.1996;
(xvi) Social role of the postman
(2) second contract: 1.1.1997-23.9.2002;
(3) third contract: 24.9.2002-23.9.2005;
(xvii) Appropriate information to the public
(4) fourth contract: 24.9.2005-23.9.2010, prolonged
(xviii) Printing and delivery of electronic mail
pending a new contract.
(xix) Message certification services
(23) The
management
contracts
lay
down
the
public
service
missions. The public service missions defined by the
(xx) Services carried out for State accountants
Belgian State in the current management contract are
as follows ( 3 ):
(xxi) Sale of revenue and penalty stamps
Postal services
(xxii) Cooperation in the distribution of voting packages
(i) Universal postal service
and ballot papers
(ii) Distribution of daily newspapers
2.2.2. Public measures under investigation
(iii) Distribution of periodicals
(24) DPLP
was
granted
public
support
in
the
form
of
several
different measures from 1992 to 2010:
(iv) Distribution of electoral material
(1) pension relief: after the 1997 pension reform, the
(v) Special tariffs for non-profit associations
State released DPLP from EUR 3,8
billion in
accumulated pension liabilities;
(vi) Mail exempt from postal charges (royal and other
special correspondence)
(2) annual compensation for the cost of discharging the
public service obligation ( 4 ), amounting to EUR
(vii) International postal services
5,2 billion over the period 1992-2010;
( 1 ) Law of 21 March 1991 on the reform of certain public commercial
(3) capital injections: two in 1997 (EUR 62 million), one
undertakings.
in 2003 (EUR 297,5 million) and one in 2006 (EUR
( 2 ) For the purposes of this Decision, the Commission’s assessment
40 million);
covers all four management contracts, unless otherwise indicated.
( 3 ) Chapter 2 (‘public service tasks’) of the fourth management contract,
Articles 2-8. Available at the following address: http://www.bpost.be/
(4) tax exemptions: exemption from corporate tax,
site/fr/docs/corporate_governance/4e_contratgestion_fr.pdf. In the
property tax and other indirect and local taxes;
three previous management contracts, the public service tasks
entrusted to DPLP were essentially the same, despite minor
differences in the description and grouping of tasks.
( 4 ) See recital 33.

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L 170/4
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Official Journal of the European Union
29.6.2012
(5) transfer of buildings: 63 buildings worth EUR
Postes had been managed by and under the
112,2 million were transferred to DPLP in 1992;
authority and direction of the relevant minister ( 1 );
(6) State guarantee provided in 2004 at a premium of
(2) in principle DPLP was responsible for balancing its
0,25 % for a EUR 100 million loan.
own books, whereas previously the Régie des Poste’s
annual budget had been drawn up by the relevant
minister, who submitted it to Parliament for approval
2.2.2.1. Pension relief
as an annex to his own department’s budget.
(25) In
1992
the
Régie
des
Postes
was
transformed
by
law
into an autonomous public undertaking (EPA) called ‘De
(26) Thus,
in
1992
DPLP
took
over
responsibility
for
43
747
Post-La Poste’. DPLP, as the legal successor of the Régie
civil servants and the associated legal protection they
des Postes, took over its assets and personnel. The trans
enjoyed with regard to job security, remuneration and
formation led to a major change in the business model:
pension entitlements (Article 33 of the Law of
21 March 1991).
(1) DPLP was henceforth managed by its own board of
directors and management committee, with the
(27) In
2008
DPLP
still
employed
some
23
500
statutory
Government retaining only supervisory powers
agents (with a status similar to that of civil servants),
linked to compliance with the law and the
representing about two thirds of its total workforce, as
management contract. In contrast, the Régie des
set out below.
Figure 1
Employment regimes in DPLP
Source: Belgian authorities.
(28) Between 1972 and 1996 pensions were paid under a pay-as-you-go scheme. Under this scheme,
DPLP reimbursed the State for pensions that the State paid to retired former civil servant
employees ( 2 ) for pension rights they had accumulated since 1972, when the Belgian Post Office
had become a separate accounting entity within the State (Régie des Postes).
(29) The
system
of
financing
pensions
remained
unchanged
until
the
1997
pension
reform.
This
reform
aligned the first-pillar pension system for DPLP statutory personnel with the private sector system:
from 1997 onwards DPLP had to pay a contribution towards pensions to the ONSS (Belgian national
social security office) amounting to 8,86 % of salaries.
( 1 ) Article 7(1) of the Law of 6 July 1971 on the creation of the Régie des Postes: ‘the Régie is represented and managed
by the minister who has postal and cheque services in his portfolio. The minister has the authority to perform all
management tasks.’
( 2 ) Within the meaning of Article 21 of the Law of 6 July 1971 on the creation of the Régie des Postes, already referred
to in the previous footnote.

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EN
29.6.2012 Official
Journal
of
the
European
Union L
170/5
(30) In parallel, the State agreed to take over DPLP’s
Other public services
accumulated pension liabilities amounting to EUR
3,8 billion.
(xvi) Social role of the postman
2.2.2.2. Annual compensation for the cost of discharging
public service obligations
(xx) Services carried out for State accountants
(31) Each
contract
provided
for
the
payment
by
the
State
of
annual compensation for discharging the public service
(xxi) Sale of revenue and penalty stamps
missions set out in that contract.
P r e s s d i s t r i b u t i o n a s a m i s s i o n d i s t i n c t
(32) Under
the
first
three
contracts,
the
compensation
was
f r o m t h e u n i v e r s a l s e r v i c e
calculated on the basis of the actual difference between
(34) It
should
be
noted
that
the
universal
postal
service
was
the expenditure on public service missions and revenue
excluded from compensation under the last three
from them. Under the fourth management contract a
management contracts (
fixed amount of compensation is paid, based on the

3 ). Although press distribution
can generally be part of the universal service in
projected difference between the cost borne by DPLP
accordance with Directive 97/67/EC of the European
and revenue generated from the use of the public
Parliament and the Council of 15 December 1997 on
services. This compensation is subject to a ceiling laid
common rules for the development of the internal
down in the management contracts ( 1 ).
market of Community postal services and the
improvement of quality of service
( 4 ), the specific
(33) Under
the current management contract
( 2 ), DPLP is
missions (distribution of newspapers and periodicals) to
entitled to receive compensation from the State for the
be compensated under the management contracts have
following public services:
been defined by the Belgian authorities according to
criteria that distinguish them from the universal postal
Postal services
service. These criteria are: (1) the objectives of the
mission, which go beyond universal service objectives,
(2) the specific conditions set out in the contracts and
(ii) Distribution of daily newspapers
(3) the specific provisions on pricing, which differ from
those pertaining to universal service pricing.
(iii) Distribution of periodicals
(35) Objectives of the mission: the Belgian authorities
(iv) Distribution of electoral material
consider it particularly important to ensure a wide
distribution of the written press throughout Belgium in
order to enhance the level of information and diversity of
(v) Special tariffs for non-profit associations
opinion, and to foster public participation in the political
debate.
(vi) Mail exempt from postal charges (royal and other
special correspondence)
(36) Specific operational conditions are set out in the
contract: the specific press distribution service giving
Financial services
rise to compensation imposed on DPLP goes beyond
the conventional distribution service included in the
universal service. It is subject to a set of stringent
(ix) Cash deposits on post-office current accounts
quality and performance requirements in terms of time
of delivery (e.g. before 07:30), frequency, delivery options
(x) Issuance of postal orders
for publishers, flexibility for publishers as regards
volume, and continuity of service (including a narrow
(xi) Home payment of retirement and survivors’
definition of force majeure).
pensions and disabled persons’ allowances
(37) Specific
pricing: the tariffs of the press distribution
(xiii) Accounting of funds and documents of title for
mission giving rise to compensation are fixed in tripartite
traffic penalties
negotiations (Belgian State/DPLP/press sector) and, unlike
the universal public service tariffs, do not require the
approval of the regulator. While the universal public
(xiv) Fishing licenses
service tariffs are geared to costs, the tariffs of the
specific press distribution mission giving rise to compen
Sale of stamps
sation are much lower, so that the specific objectives of
the mission can be attained.
(xv) Sale of stamps
( 3 ) The first management contract predates Directive 97/67/EC and the
introduction of the concept of universal service.
( 1 ) Article 13(1) of the fourth management contract.
( 4 ) OJ L 15, 21.1.1998, p. 14. See in particular Article 2: newspapers
( 2 ) Chapter 3, Section 4 (‘State contribution to the cost of public service
and periodicals are included in the list of postal items that are to be
tasks’) of the fourth management contract, Articles 12 and 13.
carried by the universal service provider.

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Official Journal of the European Union
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A m o u n t o f p u b l i c s e r v i c e c o m p e n s a t i o n
that these funds in fact constituted delayed public service
p a i d
compensation, which had not been paid to DPLP on
time.
(38) The
public
services
mentioned
in
recital
33
are
covered
by public service compensation. The public service
compensation actually paid in each financial year is as
(40) Injection
in
2003:
the
Belgian
authorities
injected
into
follows:
DPLP capital of EUR 297,5 million. They claim that
this injection was made on market economy investor
terms and, therefore, according to the market economy
investor principle (MEIP), does not constitute State aid.
First management contract
Year Amount
(EUR)
(41) Injection
in
2006:
the
Belgian
authorities
made
a
new
capital injection of EUR 40 million. They claim that this
1992 (*) 91
720
000
injection was in line with the MEIP, having been made
on terms identical to those applying to a private investor
1993 351
327
000
(pari passu).
1994 322
138
000
2.2.2.4. Tax exemptions
1995 368
308
000
(42) Until 31 December 2005, DPLP was exempt from
1996 314
205
000
corporate tax.
(*) last quarter only.
(43) Throughout
the
period
under
investigation,
DPLP
was
Second management contract
exempt from property tax on the buildings used for
public services tasks. The annual advantage varied
Year Amount
(EUR)
between EUR […] (*) and EUR […]. If this tax had
been paid the cost of the products (both public service
1997 208
934
000
and commercial) supplied in these buildings would have
been proportionally higher.
1998 228
629
000
1999 213
788
000
(44) DPLP is also exempt from other indirect and local taxes.
The Belgian authorities are not able to estimate the exact
2000 216
282
000
value of the advantage but they claim that the measure
2001 224
269
000
falls under the de minimis rules.
2002 194
559
000
(45) The
tax
exemptions
predate
the
entry
into
force
of
the
EEC Treaty in 1958 and have continued to exist without
Third management contract
material alteration. While the corporate tax exemption
was brought to an end on 31 December 2005, the
Year Amount
(EUR)
two other measures still apply.
2003 175
554
000
2.2.2.5. Transfer of buildings
2004 247
606
000
(46) In
1992
the
Belgian
State
transferred
63
buildings
( 1 ) to
2005 254
825
000
DPLP free of charge. The buildings were already being
used by DPLP although legally they belonged to the State.
The total value of the buildings was estimated at EUR
Fourth management contract
112,2 million ( 2 ). These buildings were distinct from and
additional to the original assets, which had been
Year Amount
(EUR)
separated from the State property when the Post Office
2006 299
729
000
became a separate State agency (Régie des Postes) in
1971. The Régie des Postes was already the legal
2007 306
396
000
owner of the assets that had been included in its
balance sheet. By contrast the additional buildings trans
2008 315
683
000
ferred in 1992 were supposed to compensate for the
remaining pension burden on DPLP when it changed
2009 321
244
000
its status from a State agency to an autonomous public
2010 325
735
000
undertaking.
2.2.2.3. Capital injections
(*) Business secret.
( 1 ) In 1992 the Belgian Post Office was transformed from a State
agency (‘Régie des Postes’) into a legal entity (‘entreprise publique
(39) Injections in 1997: DPLP received
two non-notified
autonome’).
capital injections amounting to EUR 62
million.
( 2 ) 27 buildings totalling BEF 4 138 million (1992 estimate) + 36
However, the Belgian authorities subsequently stated
buildings totalling BEF 388,5 million (1997 estimate).

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29.6.2012 Official
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European
Union L
170/7
(47) The Belgian authorities claim that the transfer of
determine the costs attributable to the SGEIs, and taking
buildings was merely part of an internal reorganisation
into account all net costs of the public service, as well as
of State property and did not constitute an advantage.
additional aid granted in any form whatsoever.
They argue that the buildings had already been used by
the Belgian Post Office before the incorporation of DPLP
in 1992 (i.e. they had been already used by the State
(54) In respect of the public financing of civil servants’
agency).
pensions, the Commission expressed doubts regarding
the extent to which the release from pension obligations
placed DPLP in a comparable situation to its competitors
2.2.2.6. State guarantee
as regards social security contributions.
(48) DPLP was given the option of requesting a State
guarantee for its loans at a premium of 0,25 %.
(55) In line with the approach taken in the Commission
Decision on the public financing of pension costs for
(49) In the period under investigation, the guarantee was used
civil servants working for the French Post Office ( 2 ), it
only once for a loan of EUR 100 million from the
was appropriate to examine whether the measure was
European Investment Bank (EIB). The agreement signed
compatible with Article 107(3)(c) TFEU and, to this
between DPLP and the EIB on 22 December 2004
effect, to establish the extent to which the social
enabled DPLP to use the EIB credit facility until
security costs paid by DPLP after it was released from
10 June 2008. Making use of this facility, DPLP
its liabilities were comparable to those of its competitors.
requested EUR 100 million on 8 November 2007,
which it received on 5 December 2007. DPLP
undertook to reimburse the loan in 11 equal annual
4. COMMENTS BY INTERESTED PARTIES
instalments of approximately EUR 9,09 million. The
first instalment is due on 5 December 2012 and the
4.1. COMMENTS BY VFP AND PRODIPRESSE
last on 5 December 2022. Interest is payable quarterly
(5 December, 5 March, 5 June, 5 September). The interest
(56) On
28
August
2009
VFP
and
Prodipresse
submitted
their
rate is calculated on the basis of the three-month Euribor
comments concerning the press distribution scheme
minus 37 basis points.
operated by DPLP.
3. GROUNDS FOR INITIATING THE PROCEDURE IN
(57) In
line
with
their
previous
complaint,
VFP
and
Prodi
2009
presse highlighted the distortion of competition arising
from the low tariffs offered by DPLP for press
(50) On the basis of the Altmark judgment
( 1 ), the
distribution, which made it impossible for other
Commission took the view that the public service
operators to compete in the market.
compensation paid since 1992, as well as the tax exemp
tions, capital injections, State guarantee and transfer of
buildings referred to above, may have constituted aid
(58) According
to
their
submission,
DPLP’s
prices
were
fixed
within the meaning of Article 107(1) TFEU.
in tripartite negotiations between DPLP, publishers and
the State. The losses incurred by DPLP as a result of these
below-market prices are, they claim, covered by the State
(51) State
aid
in
the
form
of
compensation
for
costs
linked
to
as part of the SGEI compensation. While DPLP is the
universal service obligations may be declared compatible
direct beneficiary of this aid, the newspaper publishers
under Article 106(2) TFEU if it is necessary to the
also benefit from it indirectly.
operation of the services and does not affect the devel
opment of trade to an extent that would be contrary to
the interests of the European Union.
(59) VFP
and
Prodipresse
suspect
that
DPLP
may
be
overcom
pensated for the press distribution scheme and may be
using the excess compensation to finance its other activ
(52) In the 2009 decision initiating the procedure, the
ities.
Commission expressed doubts about whether the aid
measures granted to DPLP were necessary for the
fulfilment of the public service missions and proportional
to that end.
4.2. COMMENTS BY THE ASSOCIATION BELGE DES
EDITEURS DE JOURNAUX/BELGISCHE VERENIGING VAN
DAGBLADUITGEVERS
(53) As
regards
the
calculation
of
overcompensation
pursuant
to Article 106(2) TFEU, the Commission took the view
(60) On
28
August
2009,
the
Association
Belge
des
Editeurs
de Journaux/Belgische Vereniging van Dagbladuitgevers
that all revenue and costs linked to the public service
submitted comments, in which it underlined the
obligations had be taken into account in verifying the
importance, in terms of democracy and equality,
absence of overcompensation for the public service
missions. This calculation would include verifying the
soundness of the accounting methodology used to
( 2 ) Commission Decision 2008/204/EC of 10 October 2007 on the
State aid implemented by France in connection with the reform of
the arrangements for financing the retirement pensions of civil
( 1 ) Case C 280/00 Altmark Trans GmbH, cited above.
servants working for La Poste, OJ L 63, 7.3.2008, p. 6.

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L 170/8
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Official Journal of the European Union
29.6.2012
of an efficient newspaper distribution system throughout
(67) Finally,
BD
suspects
that
the
costs
incurred
by
DPLP
that
Belgium, at uniform and affordable prices, so that
are borne by the State could include investment costs
subscribers can receive their newspapers early in the
that are not necessary for supplying the SGEI, since
morning.
DPLP may have used the infrastructure in place for
other services. The marketing campaigns for commercial
products may also have been financed through the State
4.3. COMMENTS BY DEUTSCHE POST AG AND DHL INTER
subsidy.
NATIONAL
(61) On
28
August
2009,
Deutsche
Post
AG
and
DHL
Inter
5. COMMENTS BY THE BELGIAN AUTHORITIES
national submitted their comments. The submission
highlighted the need to examine the pension relief
5.1. COMMENTS BY THE BELGIAN AUTHORITIES ON THE
granted to DPLP, in particular to ensure that it was in
PENSION RELIEF
line with previous practice, verify the market conformity
of the capital injections, check that the allocation of costs
(68) The Belgian authorities claim that, following the
complied with the Chronopost judgment, and examine the
approach adopted in the Combus judgment ( 2 ), the
transfer of buildings.
release from pension liabilities does not constitute State
aid since it relieves the Belgian Post Office of an
abnormal burden, which would not normally be borne
4.4. COMMENTS BY BELGISCHE DISTRIBUTIEDIENST
from an undertaking’s budget.
NV/BELGIQUE DIFFUSION SA
(69) Such
an
abnormal
burden
results
from
higher
payroll
(62) On 28 August 2009, Belgische Distributiedienst
NV/Belgique Diffusion SA (‘BD’), part of the TNT
costs associated with statutory personnel and operational
group, submitted its comments. BD competes against
rigidities, which prevent DPLP from reducing the share of
DPLP and particularly its press-distribution subsidiary,
civil servants in its workforce as much as it would like.
Deltamedia, in the market for the distribution of news
papers and periodicals. In line with its earlier complaint,
(70) The
Belgian
authorities
identify
three
sources
of
rigidity:
BD underlined DPLP’s below-cost pricing of newspaper
distribution. It claimed that the losses incurred by DPLP
were financed by public subsidies and that the low prices
(1) job security for civil servants;
made it difficult to compete against DPLP.
(2) no internal mobility;
(63) BD
alleged
that
DPLP
had
breached
Council
Directive
92/50/EEC of 18 June 1992 relating to the coordination
(3) no access to temporary lay-offs.
of procedures for the award of public service
contracts ( 1 ), and Article 7 of Directive 97/67/EC. It
(71) Job
security for civil servants: DPLP claims that its
also mooted the existence of aid within the meaning of
statutory personnel have de facto permanent
Article 107(1) TFEU and questioned the compatibility of
employment contracts. DPLP is unable to terminate the
compensation for costs linked to SGEIs pursuant to
employment of statutory personnel except for serious
Article 106(2) TFEU.
reasons or consistently poor performance. Even in
these circumstances, the dismissal procedure is subject
(64) BD
questioned
whether
the
distribution
of
newspapers
to particularly onerous requirements.
could be qualified as an SGEI, since in most Member
States this activity is open to competition and does not
(72) Moreover,
the
Belgian
Conseil
d’tat
(administrative
court
involve the postal operator.
which has jurisdiction over statutory personnel whereas
labour courts are competent for contractual personnel)
has shown a tendency to favour statutory personnel by
(65) BD also questioned whether a subsidy reserved
setting a strict standard for establishing ‘good cause’. As a
exclusively for the postal operator was the most appro
result, DPLP is unable to dismiss statutory personnel,
priate way to support the distribution of newspapers, as
whether individually or collectively, on economic or
opposed to granting aid to publishers, who could then
technical grounds.
purchase the distribution services on the open market,
thereby allowing competition between different
providers.
(73) Accordingly, termination of employment is not a
management tool for adjusting staffing to actual oper
ational needs. Also, the impossibility of dismissal for
(66) Even if approval were given for entrusting the
economic reasons significantly limits DPLP’s leverage to
distribution of newspapers to DPLP, BD questioned
address such issues as inadequate mobility and above-
whether the costs were necessary. According to BD,
market salaries and benefits of statutory personnel.
DPLP’s costs are significantly higher than those of other
Furthermore, statutory personnel are not entitled to
operators, which increases the level of subsidies required.
transfer automatically to the public administration, nor
In this regard, the subsidies were neither proportionate
can DPLP impose such a transfer.
nor justified.
( 2 ) Case T-157/01 Danske Busvognmaend v Commission [2004] ECR
( 1 ) OJ L 209, 24.7.1992, p. 1.
II-917, paragraph 57.

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Union L
170/9
(74) This
means
that
a
reduction
in
the
number
of
DPLP’s
(79) Higher
payroll
costs:
when
the
Régie
des
Postes
became
statutory personnel is essentially limited to voluntary
an autonomous public undertaking in 1992 and was
departures, which are insignificant in number, and to
renamed DPLP, the statutory personnel had significantly
natural wastage.
higher salaries and benefits than contractual personnel in
the private sector. Since 1992, automatic seniority-linked
salary increases and a strong union bargaining position
(75) No internal mobility: in addition to its inability to reduce
have helped to keep salaries and benefits at their
the number of statutory personnel in areas where the
comparatively higher levels.
demand for their services has diminished, DPLP’s ability
to reallocate statutory personnel within its organisation
according to business needs is subject to severe
(80) In
addition
to
higher
salaries
and
benefits
compared
with
constraints.
contractual personnel, statutory employees are entitled to
between 4 and 11 additional days of paid leave ( 1 ), giving
rise to an additional cost to DPLP. These features of
(76) On
account
of
factors
such
as
language
group,
qualifi
statutory personnel have made it difficult for DPLP to
cations, seniority level and functional classification, DPLP
manage its unit staff cost, which is substantially higher
is largely unable to move statutory personnel from areas
than that of contractual employees in the private sector.
in which staffing needs are diminishing, e.g. as a result of
the decline in the volume of the traditional mail business,
to areas which are understaffed, inter alia, because of
(81) Since taking over the statutory personnel of the Régie des
retirement or increased demand.
Postes in 1992, the DPLP management has recognised
that these staff, with their significantly higher payroll
costs and operational rigidities, represented a structural
(77) In other words, as a result of the rigidities of their status,
handicap that was increasingly difficult to bear as postal
DPLP is largely unable to reallocate statutory personnel
market liberalisation progressed. Accordingly, DPLP
according to its needs or to address a mismatch between
stopped hiring statutory workers in 1998. Attrition,
overstaffed and understaffed activity segments. Paradoxi
predominantly through retirement, then reduced these
cally, to meet needs in understaffed areas, DPLP needs to
staff in absolute numbers to 23 538 in 2008.
hire interim or contractual personnel, while keeping on
its payroll excess statutory personnel in overstaffed areas.
(82) As the reduction in the number of statutory personnel is
primarily dependent on the natural attrition rate in the
(78) No access
to temporary lay-offs: in addition, DPLP
context of the existing age pyramid, its progress has been
cannot temporarily lay off statutory personnel like
slow and is likely to remain so until 2030, long after full
private-sector operators can in case of shortage of work.
liberalisation of the postal market, as portrayed below.
( 1 ) Statutory personnel are entitled to annual leave of 24 days
compared with 20 days for contractual employees, and receive up
to 7 additional days of leave depending on age.

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L 170/10
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Official Journal of the European Union
29.6.2012
Figure 2
Evolution of DPLP’s statutory workforce
Source: Belgian authorities.
(83) The
Belgian
authorities
therefore
consider
that
DPLP’s
(87) The
Belgian
authorities
claim,
first
of
all,
that
the
annual
statutory personnel represents a serious operational and
public service compensation does not constitute aid since
cost handicap vis-à-vis private operators, and that the
it complies with the Altmark judgment.
State has relieved DPLP of an abnormal burden not
borne by its competitors.
(84) They
claim
that
the
measure
does
not
constitute
State
aid
and, therefore, the approach adopted by the Commission
(88) Secondly,
the
Belgian
authorities
argue
that,
if
the
public
in the decision initiating the procedure, in conformity
service compensation were aid, it would be compatible
with previous pension scheme cases (EDF ( 1 ), La Poste
since it does not overcompensate DPLP for the net costs
(France) ( 2 ), Royal Mail ( 3 )), is not necessary in the case
it incurs when discharging its public service missions.
of DPLP.
They claim that the calculations they have presented
show that DPLP is undercompensated for the costs it
(85) However,
the
Belgian
authorities
claim
that,
if
such
a
incurs.
method were applied to DPLP, it would lead to the

conclusion that the share of social security costs, as a
percentage of wage costs, borne by DPLP is the same as
that of its competitors.
5.2. COMMENTS BY THE BELGIAN AUTHORITIES ON THE
(89) Lastly, the Belgian authorities point out that some of the
ANNUAL COMPENSATION FOR PUBLIC SERVICE COSTS
measures constitute existing aid. See section on existing
aid (recitals 224 et seq.).
(86) The
Belgian authorities submitted DPLP’s accounting
data ( 4 ) and described the principles of its cost accounting
system.
( 1 ) Commission Decision 2005/145/EC of 16 December 2003 on the
5.3. COMMENTS BY THE BELGIAN AUTHORITIES ON THE
State aid granted by France to EDF and the electricity and gas
CAPITAL INJECTIONS
industries, OJ L 49, 22.2.2005, p. 9.
( 2 ) Decision 2008/204/EC, cited above.
5.3.1. Capital injections in 1997
( 3 ) Commission Decision 2009/613/EC of 8 April 2009 on the
measures C 7/07 (ex NN 82/06 and NN 83/06) implemented by
(90) In
a
letter
to
the
Commission
dated
12
August
2009,
the
the United Kingdom in favour of Royal Mail [notified under
Belgian authorities indicate that the 1997 capital
document C(2009) 2486], OJ L 210, 14.8.2009, p. 16. See in
particular recitals 108-113.
injections totalling EUR 62 million should be considered
( 4 ) See Section 6.1.
deferred compensation for public service obligations.

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EN
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Union L
170/11
5.3.2. Capital injections in 2003 and 2006
lation of receivables from the State in DPLP’s accounts.
The cancellation, which took place at a different time,
(91) According
to
the
Belgian
authorities,
the
2003
and
2006
was a normal accounting operation, since the State had
capital increases were both made on the basis of a
clearly indicated that those receivables were not going to
strategic plan ( 1 ) whose ultimate goal was to enhance
be paid to DPLP. The final amounts cancelled in the
the company’s competitiveness and profitability in the
2005 balance sheet clean-up were different from the
context of the progressive liberalisation of the postal
amounts of capital injection in 2003 and accumulated
market.
losses at the end of 2002.
(92) The
strategic
plan
had
two
main
objectives:
(98) 2006
capital
injection:
the
Belgian
authorities
claim
that
this injection complied with the MEIP because it was
made under the same terms as applied to a private
(1) improving productivity to ensure competitiveness
investor (pari passu), namely Post Invest Europe SA,
and profitability in a more liberalised market
which invested EUR 300 million. New shares were
environment;
issued to both the State and the private investor. As a
result, the new investor obtained 50 % minus one share,
while the State retained 50 % plus one share ( 2 ).
(2) moving DPLP towards market logic by opening up its
share capital to private investors, in other words
achieving and maintaining the requisite levels of
(99) In order to determine the price of the new shares issued,
return to attract private investors and unlocking the
the investment bank hired by the Belgian authorities
company’s potential in terms of profitability.
estimated DPLP’s total value at between EUR […] and
EUR […]. The State finally opted for a valuation of EUR
[…] for the entire company before the capital injections.
(93) 2003
capital
injection:
according
to
the
Belgian
auth
The Belgian authorities acknowledge that DPLP’s
orities, the 2003 capital increase was aimed at
subsequent performance has exceeded the assumptions
strengthening DPLP’s equity capital with regard to the
made at the time of the valuation.
major financing commitments it had undertaken, in
particular for the construction of four new sorting
centres and the upgrade of an existing one, the opti
misation of mail distribution routes and automation.
(100) According to the Belgian authorities, the implementation
of the strategic plan made DPLP one of the most efficient
operators in Europe. It achieved significant improvements
in profitability, efficiency ( 3 ) and quality, while main
(94) Moreover,
the
Belgian
authorities
argue
that
the
funds
taining prices to customers at an affordable level.
injected also covered personnel costs arising from a
reduction in the number of employees as a result of an
early retirement scheme, a reduction in working time and
an increase in the salaries of new postal workers.
5.4. COMMENTS BY THE BELGIAN AUTHORITIES ON THE
TAX EXEMPTIONS
C o r p o r a t e t a x e x e m p t i o n
(95) These measures offered a reasonable assurance of
increasing profitability over the period 2003-2007 to
(101) In their submission of 12 August 2009, the Belgian auth
the levels expected by private investors. Thus, when it
orities acknowledge that DPLP was not subject to a
decided to make an equity investment, the Belgian State
corporate tax regime, but to a tax on profits (i.e. a tax
as the sole shareholder in DPLP in 2003 was guided by
on legal persons) until 27 December 2005. They
the prospect of profitability, in full compliance with the
nonetheless claim that during the period 2003-2005,
MEIP.
DPLP did not benefit from this tax regime because, if it
had been subject to corporate tax, it would have been
able to carry over past losses, and would not have had to
(96) On
5
August
2009
the
Belgian
authorities
further
argued
pay corporate tax during that period.
that the profitability forecasts showed that the capital
injection was in line with the MEIP, because the
expected level of return was above what a private
(102) In addition it is claimed that DPLP had to pay taxes on
investor would have required. These forecasts were not
profits in the order of EUR 2 million during the period
unrealistic since actual profitability between 2003 and
2003-2005.
2008 had been consistently above predicted profitability.
( 2 ) DPLP’s subscribed share capital before the issuing of new shares was
EUR 443,8 million, held 100 % by the State. After the new issue of
(97) The
Belgian
authorities
have
clarified
that
there
is
no
link
shares, the capital increased by EUR 340
million to EUR
between the 2003 capital injection and the 2005 cancel
783,8 million. The price per share was EUR 2 500 for the existing
share capital, while the new shares were issued at EUR 1 464 each.
( 3 ) The Belgian authorities indicate that, during the period 2003-2009,
( 1 ) The strategic plan was set out in the notification to the Commission
DPLP managed to reduce its costs by an average of […]% per year
on 3 December 2002.
while maintaining revenue growth.

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L 170/12
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(103) From the fiscal year 2006, DPLP paid corporate taxes
(112) The Belgian authorities consider a premium of 0,25 %
without being able to carry over past losses. The
appropriate given DPLP’s financial position and the
Belgian authorities estimate the foregone tax credit up
remote possibility of its failing to repay. Moreover, they
to that time at EUR 51,87 million.
estimate that the market rate for a similar loan without
the State guarantee would have been up to 40 basis
points higher.
(104) For these reasons, they conclude that DPLP did not
obtain a net benefit from the corporate tax exemption
before 2006.
5.7. COMMENTS BY THE BELGIAN AUTHORITIES ON THE
INTERESTED PARTIES’ COMMENTS
(113) In their submission of 12 October 2009, the Belgian
P r o p e r t y t a x e x e m p t i o n
authorities argue that only the comments by BD and
FVP/Prodipresse contain specific critical elements. These
(105) The Belgian authorities specify that DPLP is exempt from
elements mainly concern the early distribution of news
property tax on the revenue from property used to
papers and periodicals.
supply a public interest service.
C o m m e n t s
o n
t h e
a w a r d
o f
p r e s s
(106) The Belgian authorities have estimated the net advantage
d i s t r i b u t i o n
enjoyed by DPLP and argue that it is only a fraction of
the additional costs DPLP incurs as a result of its
(114) The Belgian authorities argue that, contrary to BD’s
obligation to maintain a postal network with a strictly
remarks, the award of non-reserved postal services
defined territorial density, which is not compensated in
(such as press distribution) does not fall within the
any other way.
scope of EU public procurement rules (Directive
2004/18/EC of the European Parliament and of the
Council ( 1 )).
E x e m p t i o n s f r o m o t h e r t a x e s
(107) The Belgian authorities explain that DPLP benefits from
(115) In addition, the Belgian authorities argue that the
certain exemptions from indirect and local taxes. They
distribution of newspapers and periodicals, which
argue that the net effect of these exemptions is de
constitutes an SGEI, does not violate EU provisions on
minimis.
the liberalisation of the postal market.
5.5.
(116) The Belgian authorities also point out that the award
COMMENTS BY THE BELGIAN AUTHORITIES ON THE
decision was not arbitrary. They claim that DPLP is the
TRANSFER OF BUILDINGS
only company that fulfils the conditions and obligations
(108) In their submission of 12 August 2009 the Belgian auth
imposed on the provider of such services.
orities confirm that a number of buildings were trans
ferred to DPLP when it was transformed into an
autonomous public undertaking. These were buildings
A b s e n c e o f o v e r c o m p e n s a t i o n f o r p r e s s
that DPLP had been using since 1971 and were
d i s t r i b u t i o n
necessary for discharging its postal service mission.
(117) The Belgian authorities argue that, contrary to BD’s
claims, during the period 2002-2008 DPLP did not
benefit from overcompensation for the costs linked to
(109) The Belgian authorities argue that the transfer of these
the supply of its newspaper and periodical distribution
buildings did not confer any advantage on DPLP since it
service.
was already using them for its public service mission. In
other words, it was merely a reorganisation of public
property.
(118) The Belgian authorities do not agree with the claim made
by FVP/Prodipresse that DPLP exaggerated the
investments and additional costs related to increasing
5.6. COMMENTS BY THE BELGIAN AUTHORITIES ON THE
national early morning coverage from 82 % to 100 %.
STATE GUARANTEE FOR LOANS
Since the 18 % concerned mainly remote areas, DPLP’s
personnel costs increased disproportionately and it had
(110) In their submission of 12 August 2009 the Belgian auth
to acquire long-haul vehicles with large depreciation
orities claim that DPLP does not automatically benefit
costs.
from a State guarantee for loans. If DPLP requested
such a guarantee, the Belgian authorities would have to
give their approval and DPLP would have to pay an
(119) Lastly, the Belgian authorities argue that the costs of the
annual premium of 0,25 % to the State Treasury.
publicity campaign have not been taken into account in
the calculation of the State compensation which DPLP
received for early morning press distribution.
(111) During the period under consideration, DPLP only once
resorted to a State guarantee.
( 1 ) OJ L 134, 30.4.2004, p. 114.

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C o s t e f f i c i e n c y
measures before December 1992 should be left outside
the scope of the investigation. This concerns the transfer
(120) BD claims that DPLP is manifestly cost inefficient. The
of buildings and the first annual subsidy paid in 1992.
Belgian authorities contest this argument by emphasising
that it does not fully take into account the considerable
additional costs related to early press delivery and
overlooks major efforts by DPLP to control its costs
6. ASSESSMENT
and increase its productivity.
6.1. PRELIMINARY REMARKS ON DPLP’S COST
ACCOUNTING SYSTEM
D e l t a m e d i a
(126) Article 14 of Directive 97/67/EC as amended by
(121) As BD affirms, Deltamedia’s costs are lower than those of
Directive 2008/6/EC of the European Parliament and of
DPLP. According to the Belgian authorities this is because
the Council of 20 February 2008 amending Directive
of the following factors:
97/67/EC with regard to the full accomplishment of
the internal market of Community postal services ( 1 )
(the third postal Directive) requires postal operators to
(a) Deltamedia does not provide national coverage;
have a cost accounting system which clearly distinguishes
between services and products that are part of the
universal service and those which are not. The
(b) Deltamedia works with independent distributors;
accounting system must assign direct costs directly to
the products and must allocate common costs directly
or indirectly, and in particular allocate appropriately
(c) the service provided by Deltamedia is simplified since
those common costs that are necessary for both
it only operates with a limited number of publishers
universal and non-universal services. DPLP’s cost
associated with one newspaper group;
accounting is an activity-based costing (ABC) method
ology, which allocates all operational costs, up to the
level of earnings before interest and tax (EBIT), to the
(d) the publishers deliver the newspapers immediately to
various products, in line with the fully distributed costing
the distribution points.
(FDC) method. The scope of the cost accounting includes
all operating costs and all organisational units of DPLP.
In 2009 commercial products made up […]% of DPLP’s
5.8. COMMENTS BY THE BELGIAN AUTHORITIES ON
turnover, while public service products accounted for
EXISTING AID
[…]%.
(122) In their submission of 21 December 2010, the Belgian
authorities claim that certain of the measures under
investigation constitute existing aid.
(127) The cost accounting methodology has three layers:
resources, activities and products. The aim is to
calculate the share of costs attributable to each product.
Tax exemptions
(123) Firstly, the Belgian authorities claim that the tax
exemptions enjoyed by DPLP predate Belgium’s
(128) Costs are divided into 398 different types and 3 954
accession to the European Union and therefore constitute
responsibility centres. For accounting purposes, these
existing aid.
are further grouped into 34 resource pools and 108
code groups. There are 986 different activities.
Liberalisation of the postal market
(124) Secondly, the Belgian authorities argue that the annual
(129) The costs of the resources are allocated to activities
subsidy paid to DPLP dates from before 1999, i.e. before
depending on their nature: ‘direct resources’ are directly
the liberalisation of the postal market and therefore
associated with a specific activity, while ‘indirect
constitutes existing aid. Similarly, the capital injections
resources’ contribute to several activities and need to be
made before 1999, if they constituted State aid, should
allocated using allocation keys that reflect the degree to
not be considered existing aid.
which the resource is used by each activity. Finally the
global contribution to the activity includes the overheads
that cannot be allocated to specific activities, so they are
The 10-year limitation period
attributed evenly to all products on a cost-plus basis.
(125) Thirdly, on account of the 10-year limitation period, the
Belgian authorities claim that all measures taken before
13 July 1999 (10 years before the opening of the current
(130) The 986 different activities constitute the building blocks
formal investigation) constitute existing aid because an
of each product’s value chain. A share of the costs of
earlier CFI annulment would have annulled also all
an activity is allocated to products in accordance
previous investigative acts of the Commission.
with the usage of the activity in each product. Costs of
However, they argue that, because the first investigative
act of the Commission took place in December 2002,
( 1 ) OJ L 52, 27.2.2008, p. 3.

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non-operational activities are first allocated to the oper
(136) While the Belgian authorities argue that the revised
ational activities which contribute directly to the
methodology is compatible with Directive 97/67/EC,
products.
the Chronopost judgment
( 1 ) and the Community
framework for State aid in the form of public service
compensation ( 2 ) (hereinafter ‘SGEI Framework’) because
it allocates to products both directly attributable costs
and a share of common costs, and better reflects the
(131) At the last stage of the procedure, the costs of the
real costs of the public service obligations, the
activities are finally allocated to each product in
Commission considers that there are formal, economic
accordance with an allocation key, which is typically
and legal grounds not to accept the new claims.
based on volume. In other words, all products that use
an activity bear a share of the costs of that activity
proportional to their volume of usage of that activity.
(137) From a formal point of view, the proposed methodology
is not actually being used in DPLP’s internal accounting,
(132) The Commission considers that the cost accounting
rather it is an ex-post modification of past data. The
method currently used by DPLP is sound as it correctly
revised method has not been approved by the regulator
allocates all costs with a sufficient level of adequacy. The
as a basis for tariff-setting, nor is it being used by the
Commission notes, however, that, as DPLP has developed
State to calculate the SGEI compensation. The revised
the methodology over time, it can be assumed that the
method therefore appears to be a theoretical depiction
accounting data from the early part of the period under
produced for the purposes of this State aid procedure.
investigation, although globally reliable, do not have the
From an economic point of view, it cannot be assumed,
same level of detail as the data from the current
in terms of internal transfer pricing, that the commercial
accounting system.
products would not need to bear any share of the costs
of the resources they use (e.g. under this method the
commercial products would not contribute to the costs
of delivery rounds by postmen even though those
postmen also deliver commercial products). Finally, in
R e t r o a c t i v e
m o d i f i c a t i o n
o f
c o s t
legal terms, such a change does not appear to comply
a c c o u n t i n g
with Article 14(3)(b)(iv) of Directive 97/67/EC, the Chro
nopost judgment ( 3 ) or the 2005 SGEI Framework ( 4 ),
(133) In March 2011 the Belgian authorities presented to the
which all require commercial activities to be charged
Commission a retroactive modification of DPLP’s cost
an appropriate share of common costs.
accounting methodology with a view to adjusting the
allocation of certain costs between commercial activities
and public service activities. The modification contem
plated by the Belgian authorities concerns the last stage
of cost allocation, when products are charged costs in
proportion to their volume of usage of each activity.
(138) Consequently, the Commission will not rely in its

assessment on the modified accounts, but will instead
use the cost accounting data validated, in accordance
with Directive 97/67/EC, by the Belgian institute of
postal and telecoms services (IBPT/BIPT, the Belgian
(134) The modification alters the method of allocating
postal regulator ( 5 )), which were submitted previously
operating costs to products that DPLP has used up to
and are based on the cost accounting method officially
now. Under such a revision, some costs linked to
used by DPLP.
commercial products would be shifted to the public
service sphere, thereby increasing the cost base of
( 1 ) Joined Cases C-83/01 P, C-93/01 P and C-94/01 P Chronopost and
public services. As a result, the public services would
Others v Union franaise de l’express (Ufex) and Others [2003] ECR-I
be allocated on average EUR […] per year of the costs
6993.
currently allocated to commercial products. The other
( 2 ) OJ C 297, 29.11.2005, p. 4.
( 3 ) Chronopost judgment, cited above, paragraph 40:‘…variable costs
parts of the cost accounting methodology would
incurred in providing the logistical and commercial assistance, an
remain unchanged.
appropriate contribution to the fixed costs arising from use of the
postal network and an adequate return on the capital investment in
so far as it is used for SFMI-Chronopost’s competitive activity and if,
second, there is nothing to suggest that those elements have been
underestimated or fixed in an arbitrary fashion.’
(
(135) The Belgian authorities claim that the costs of some

4 ) Paragraph 16 of the SGEI Framework:‘…The costs allocated to the
service of general economic interest may cover all the variable costs
activities are by their nature fixed at a certain level,
incurred in providing the service of general economic interest, and
which is determined by public service needs. In other
appropriate contribution to fixed costs common to both the service
words, the costs of such activities used for public
of general economic interest and other activities and an adequate
service purposes would remain unchanged even if no
return on the own capital assigned to the service of general
commercial products used those activities. To the
economic interest.’
extent that a commercial product has not caused the
( 5 ) Directive 97/67/EC defines regulatory authority as ‘the body or
bodies, in each Member State, to which the Member State
activity, even if it uses the activity, the product should
entrusts, inter alia, the regulatory functions falling within the
not bear the operational cost of that activity.
scope of this Directive.’

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6.2. ASSESSMENT OF THE PENSION RELIEF
effects and not the causes or objectives of state inter
vention ( 2 ). It has also maintained that the concept of
6.2.1. Existence of aid within the meaning of
aid covers advantages granted by the public authorities
Article 107(1) TFEU
that, in various forms, mitigate the charges normally
included in the budget of an undertaking ( 3 ).
(139) Article 107(1) TFEU states: ‘Save as otherwise provided in
the Treaties, any aid granted by a Member State or
through State resources in any form whatsoever which
distorts or threatens to distort competition by favouring
(144) It has also indicated that the costs linked to employee
certain undertakings or the production of certain goods
pay naturally place a burden on the budgets of under
shall, in so far as it affects trade between Member States,
takings, irrespective of whether or not those costs stem
be incompatible with the internal market’.
from legal obligations or collective agreements ( 4 ). In this
connection, it has ruled that State measures aimed at
compensating for additional costs cannot exclude them
from being qualified as aid ( 5 ).
(140) In order to constitute State aid within the meaning of
Article 107(1) TFEU, four cumulative conditions must be
met. The measure must:
(145) In addition, it can be observed that the competitive back
ground in which Combus was operating differed from
that of DPLP. Combus had to conduct its transport
(i) confer an advantage on the beneficiary;
business on a commercial basis and operate under
market conditions of competition comparable to those
for private bus companies. After a tendering procedure,
public transport companies divest their bus transport
(ii) distort or threaten to distort competition by
operations to private and public undertakings. Under
favouring certain undertakings;
the tendering rules, the contracts are awarded to the
‘economically most advantageous bid’, irrespective of
the private or public nature of the tenderer. For the
whole period under assessment, DPLP had a wide-
(iii) be taken by the State or involve State resources;
ranging monopoly, in which economic constraints
operated completely differently. In addition, unlike in
Combus, in the present case Belgium has not adopted
any legislative provision aimed at abolishing or
(iv) be capable of affecting trade between Member States.
adapting the special employment arrangements for civil
servants working for DPLP or the way in which they
acquire pension rights.
6.2.1.1. Advantage and selectivity
(146) Therefore, the Commission considers that the factual
(141) Following the approach adopted in the Combus judg
ment (
differences between the Combus case and the case at

1 ), the Belgian authorities claim that the pension
liabilities constituted an abnormal burden, which
issue justify a different conclusion in the present case.
competitors were not required to finance and, therefore,
the relief from the State does not constitute aid.
(147) In order to ascertain whether the measures under
scrutiny contain elements of State aid, it needs to be
determined whether they confer an economic advantage
(142) Their main argument is that, because of the rigidities of
on DPLP in that they allow it to avoid costs that would
the status of statutory personnel, it was not possible for
normally have had to be borne by its own financial
DPLP to reduce the share of this category of personnel
resources and have thus prevented market forces from
among its workforce even though it was much more
producing their normal effect. Aid consists in the
costly than a hypothetical workforce consisting of
employees with less favourable contracts.
( 2 ) Case 173/73 Italy v Commission [1974] ECR 709, paragraph 13; Case
C-310/85 Deufil v Commission [1987] ECR 901, paragraph 8; Case
C-241/94 France v Commission [1996] ECR I-4551, paragraph 20.
( 3 ) Case C-387/92 Banco Exterior [1994] ECR I-877, paragraph 13; Case
(143) In general, it should first be recalled that the Combus
C-241/94, France v Commission referred to above, paragraph 34.
judgment has not been confirmed by the Court of
( 4 ) Case C-5/01 Belgium v Commission [2002] ECR I-1191,
paragraph 39.
Justice. On the contrary, the Court’s case law contradicts
( 5 ) Case 30/59 Gezamenlijke Steenkolenmijnen in Limburg v High Authority
the assumption that compensation for a structural
[1961] ECR 3, paragraphs 29 and 30; Case C-173/73, cited above,
disadvantage would rule out any classification as aid.
paragraphs 12 and 13; Case C-241/94, cited above, paragraphs 29
For instance, the Court has consistently ruled that the
and 35; Case C-251/97 France v Commission [1999] ECR I-6639,
existence of aid is to be assessed in relation to the
paragraphs 40, 46 and 47; and judgment of 9 June 2011 in
Joined Cases C-71/09 P, C-73/09 P and C-76/09 P Comitato
Venezia vuole vivere v Commissione, not yet reported, paragraphs
( 1 ) Case T-157/01 Danske Busvognmaend v Commission, cited above.
90-96.

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L 170/16
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Official Journal of the European Union
29.6.2012
mitigation of charges normally included in an under
(155) Since the State pays the pension of DPLP retired
taking’s budget, taking account of the nature or general
personnel directly from the State budget, State
scheme of the system of charges in question. Conversely,
resources are clearly involved.
it could potentially be possible to define a concept of
‘special charge’, which would consist in an additional
charge over and above those normal charges. The with
6.2.1.3. Distortion of competition and effect on trade between
drawal of such a special charge by way of a legislative
Member States
provision would not grant any advantage to the bene
ficiary and would not, therefore, constitute State aid.
(156) The measures described above are capable of affecting
trade between Member States, given that DPLP operates
in markets that are open to competition, such as parcel
(148) In line with the Court’s case law on selectivity analysis,
services, and where there is significant cross-border
which involves a comparison with a reference framework
trading. In the parcel market DPLP faces competition
in order to determine whether or not differential
from undertakings with activities in other Member
treatment of certain undertakings and products is in
States, such as UPS, FedEx and TNT Express. DPLP also
conformity with the ‘nature or general scheme of the
operates in the press distribution market, a market in
system’, the question as to whether a charge is ‘normal’
which companies from other Member States are active
or ‘special’ in what is, from a structural viewpoint, a
or can become active. Parcel distribution has never been
normal market situation has to be based on a reference
entirely reserved for DPLP, and other undertakings
framework or comparator with a view to identifying
already provided some parcel delivery services ( 1 ) and
undertakings which would be in a legal and factual
other specific postal services at the beginning of the
situation that is comparable in the light of the
1990s ( 2 ). DPLP is also active in the financial services
objective pursued by the measures in question.
sector (post office current and savings accounts and
payment services), where it competes with operators
offering financial products, such as banks and financial
(149) However, it does not appear possible to identify an
operators. The post office current and savings accounts,
exogenous comparator that would make it possible to
which are used for both payment and savings purposes,
define a ‘normal’ contribution for undertakings in a
are in competition with bank current accounts and
legal and factual situation comparable to that of DPLP
savings products. The banking sector was already open
in the light of the objective pursued by the measure
to competition before 1992 and has been characterised
under review. In particular DPLP’s competitors are
by extensive trade between Member States. Banks from
private-law companies operating on competitive
different Member States were already operating in
markets, whereas DPLP benefited from a statutory
Belgium before 1992, when there were more than 70
monopoly during the period under assessment before
foreign financial institutions in the country ( 3 ).
full liberalisation in 2011.
(150) In determining the existence of an advantage within the
(157) In the light of the foregoing it is clear that any State
meaning of Article 107(1) of the Treaty, the Commission
measure conferring on DPLP an economic advantage
should, therefore, examine DPLP’s situation and compare
may affect trade between Member States.
social security contributions before and after the pension
relief.
(158) For the reasons explained in recitals 141 to 157, the
Commission considers that the pension relief constitutes
(151) Following the law of 6 July 1971 and until the pension
aid within the meaning of Article 107(1) TFEU.
reform of 1997, DPLP bore all pension costs and social
liabilities for its civil servant employees. In these circum
stances, the Commission takes the view that these costs
6.2.2. Assessment of the compatibility of pension
are part of the normal costs DPLP had to meet from its
relief with the internal market within the
own resources, taking into consideration its legal and
meaning of Article 107(3)(c)
factual position in the Belgian postal market.
(159) Under the 1997 pension reform DPLP’s refund to the
State of annual net pension costs was replaced by a
(152) Since the 1997 pension relief under review relieved DPLP
contribution in full discharge of liabilities aligning the
of costs that would normally have had to be financed
pension costs borne by DPLP with those of its
from its own financial resources, the measures in
competitors. Without this reform, the level of these
question confer on the operator an advantage within
pension costs would, in the subsequent years, have
the meaning of Article 107(1) of the Treaty.
continued to rise significantly, notably as a result of
the deterioration in the ratio of civil servants in work
(contributors) to those not in work (recipients) following
(153) The advantage in question is selective since it concerns
DPLP’s decision to halt recruitment of civil servants.
only DPLP.
( 1 ) DHL has been operating in Belgium since 1978, FedEx since 1984,
and UPS since 1988.
6.2.1.2. State resources
( 2 ) Case C-320/91 Corbeau [1993] ECR I-2533.
( 3 ) ‘The competitiveness of financial institutions and centres in Europe’, Donald
(154) The pension relief was financed by the State, which took
E. Fair, Robert Raymond, Société universitaire européenne de
over DPLP’s pension responsibilities.
recherches financières, 1994, Kluwer Economic Publishers.

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(160) As the derogations provided for in Articles 107(2) and
guaranteed an equal rate of social contributions by La
107(3)(a)(b) TFEU clearly do not apply and as Belgium
Poste and its competitors. The Commission intends to
has not invoked Article 106(2) TFEU as justification for
apply the same logic in the present case as it applied
the compatibility of the pension relief granted to DPLP,
in chapter 6.3 of that Decision, which must be
the Commission will examine whether the pension relief
considered applicable in the present case in so far as it
can be declared compatible pursuant to Article 107(3)(c)
is relevant.
TFEU, which states that aid to facilitate the development
of certain economic activities or of certain economic
areas may be declared compatible with the common
6.2.2.2. Necessity of pension relief
market where it does not adversely affect trading
conditions to an extent contrary to the common interest.
(165) The Commission considers that the 1992 transformation
of DPLP was necessary to promote competition in the
postal market because it put DPLP and its competitors on
(161) The Commission will first analyse the extent to which
an equal footing as regards legal form (and thereby elim
the relief of the full pension cost fulfils an objective of
inated the unlimited guarantee that DPLP had previously
common interest and is necessary to that end before
enjoyed as a public entity).
investigating its proportionality and carrying out a
balancing test of the positive and negative effects of
the measure.
(166) However, neither the Belgian State nor the Régie des
Postes had accumulated reserves matching the
accumulated pension liabilities. When DPLP was incor
6.2.2.1. Liberalisation of the postal sector as an objective of
porated in 1992, it continued to be responsible for
common interest
pension obligations, but no corresponding assets were
transferred to its accounts to cover those obligations.
(162) EU law has promoted even greater liberalisation of the
postal sector since 1992 with the adoption of the green
paper, which later led to the adoption of the three direc
(167) As a result, the payment of pensions would gradually
tives: (i) Directive 97/67/EC, (ii) Directive 2002/39/EC of
have become an unsustainable burden on DPLP, since
the European Parliament and of the Council of 10 June
the retirement age of many civil servants was
2002 amending Directive 97/67/EC with regard to the
approaching. Even though measures (improved produc
further opening to competition of Community postal
tivity, gradual personnel reduction as a result of natural
services ( 1 ), and (iii) Directive 2008/6/EC. It is also
wastage, pay indexation) would have been taken to
acknowledged that the liberalisation of postal markets
improve this situation, they would not have been
at EU level has an important role to play in the Lisbon
sufficient to balance DPLP’s finances in the long term
strategy for growth and employment.
(see Figure 3 below).
(163) Therefore, it is important, besides safeguarding the
(168) This is in particular because the transformation into a
provision of basic postal services as reflected in the
private-law company also meant that DPLP stopped
concept of the universal service obligation, to create a
employing civil servants and only hired contractual
level playing field between the incumbent, existing
employees (subject to a general employment contract
competitors and new entrants.
and labour law requirements). Consequently, after
1997, it would have had to finance from its revenues
both the pension expenses for retired civil servants and
(164) In the La Poste (France) Decision, the Commission
social contributions linked to pensions for its active
already recognised that creating a level playing field
workforce of contractual employees.
between the incumbent and its competitors with regard
to social contributions is a key condition for fair
competition in the postal sector. The Commission
(169) DPLP’s cash flow would have turned increasingly negative
declared the relief of the obligations imposed on La
year after year, as the increasing pension payments would
Poste to finance its civil servants’ pensions compatible
have exceeded revenues generated from its activities (see
with the internal market because the public subsidies
table below).
( 1 ) OJ L 176, 5.7.2002, p. 21.

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Official Journal of the European Union
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Figure 3
Simulations of DPLP’s cash flow conducted by the Belgian authorities in 1996
Source: Belgian authorities.
(170) It cannot be denied that DPLP would have faced signifi
6.2.2.3. Proportionality of pension relief
cantly higher costs if it had had to finance pensions for
all retired civil servants from its own resources after
1997. It is evident that, without any aid, the change of
(174) The La Poste Decision set out the Commission’s propor
legal form from public administration to private-law
tionality assessment of aid measures that provide relief
company would have been hampered.
from pension costs for incumbents in the postal sector
who continue to employ civil servants at terms which
were agreed during the monopoly period. The propor
tionality assessment must be carried out with regard to
the establishment of a level playing field on the markets
(171) Furthermore, complete refinancing of pension costs
which are open to competition (e.g. mail, parcels, and
through increased regulated letter revenues would have
financial services). The incumbent must be subject to the
led to very high letter prices and perhaps substantially
same rate of social security contributions as its
decreased the number of letters sent to an extent that
competitors.
would have endangered the provision of the universal
letter services.
(172) The Commission also takes the view that the measures in
(175) Given that DPLP’s contractual personnel is legally in the
question are tailored to the objective of common interest
same situation as employees of any private company,
pursued. No other instrument could have been more
while the statutory personnel has a status similar to
effective. In the sectors with an SGEI, public service
civil servants, a comparison of the social contributions
compensation could indeed have been granted, but
paid by DPLP for each category of employees makes it
such an approach would not be sustainable over the
possible to verify whether, following the implementation
long term because of the specific structural nature of
of the pension relief measure, DPLP meets the condition
the problem.
of being subject to the same rate of social security
contributions as its competitors.
(173) Considering the objectives of liberalisation of the postal
markets, notably safeguarding the provision of high
quality and affordable universal postal services, and
(176) A detailed comparison of the social security costs paid by
considering the objective of promoting fair competition,
DPLP for its statutory personnel and its contractual
the pension relief constituted a necessary measure.
personnel is summarised in the following table:

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Social security costs paid and incurred by DPLP Statutory
personnel Contractual
personnel
DPLP contributions to the social security system, including 8,86 % for
[…] % […]
%
pension contributions
Costs borne directly by DPLP […]
% […]
%
Sickness and disability […]
% […]
%
Family allowances […]
%
—
Compensation contribution ( 1 ) […]
%
Structural reduction ( 2 )
[…] %
Total EMPLOYER CONTRIBUTION […]
% […]
%
EMPLOYEE CONTRIBUTIONS […]
% […]
%
Employee contributions to the general social security system […]
% […]
%
( 1 ) Compensation contribution: only paid for contractual employees.
( 2 ) Structural reduction: reduction of employer social security contributions for contractual personnel to improve Belgium’s competi
tiveness, granted unconditionally to all employers in Belgium.
(177) As this table shows, the rate of DPLP’s contributions to
(183) Although the direct costs borne directly by DPLP ([…] %)
the Belgian social security system (nominal percentage of
are not stricto sensu equivalent to social contributions, it
wage costs) is considerably lower than that of private
should be taken into account that these costs are not
operators ([…] % against […] %).
voluntary, but instead stem directly from the particular
status of the statutory employees and were therefore
imposed on DPLP. It seems therefore logical to treat
(178) However, when the costs directly borne by the employer
them as equivalent to other compulsory social security
are included, in order to compare the actual social
costs in terms of their origin and their purpose.
contribution rates, the two percentages are almost
equal and even slightly higher for DPLP statutory
personnel ([…] % against […] %).
(184) Consequently, these direct costs should be taken into
account when calculating DPLP’s actual social contribu
tions. The resulting total social security contribution rate
(179) It can also be noted that the contributions paid by
would be slightly higher for DPLP statutory personnel
employees are essentially equal in both cases ([…] %
([…] %) than for the personnel of private companies
against […] %).
([…] %).
(180) The lower nominal rate of social security contributions
6.2.2.4. Balancing test for pension relief
paid by DPLP for statutory personnel is because of the
exemption from certain social security contributions that
P o s i t i v e e f f e c t s o f t h e a i d m e a s u r e s
are not applicable to employees with civil servant status
(e.g. occupational illness, unemployment, industrial
(185) The reform of the pension arrangements applicable to
DPLP was an important stage in adapting the under
accident). However, DPLP itself directly supports the
taking to progressive liberalisation and with a view to
cost of the exempted contributions on account of the
the full liberalisation of the Belgian postal market,
special status of its statutory personnel. This approach
which plays an important role in the Lisbon strategy
results in high direct costs for DPLP.
for growth and employment.
(181) The employee contribution, which should also be taken
(186) In the La Poste Decision, the Commission stated that the
into account as employees have to pay this from the
liberalisation of the postal sector could be made more
salary paid to them by the employer (therefore it is
difficult if plans to reform pension schemes (comparable
also a cost for the employer), is slightly higher for
to that implemented in Belgium) were not approved.
statutory personnel than for contractual personnel.
(187) The Commission also considers that the measures in
(182) The Belgian authorities and DPLP have provided
question, even though they do not concern special
information showing the overall stability of direct
arrangements for the benefits paid to pensioners,
contributions over time.
introduce sustainability into a financing mechanism

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that past developments had rendered obsolete. The
(194) In the present case, these criteria, in particular the fourth
Commission considers that the measures are, therefore,
criterion, are not fulfilled: DPLP was not chosen by
to be seen in the more general framework of pension
means of a public procurement procedure. Moreover,
system reform in Member States, which has the support
the Belgian authorities have not proved that the level
of both the Council and the Commission.
of compensation was determined on the basis of an
analysis of the costs which a typical, well-run under
taking with adequate means would have incurred in
discharging the public service obligations entrusted to
N e g a t i v e e f f e c t s o f t h e a i d m e a s u r e s
it, nor is there any indication or information available
to the Commission that would suggest that the fourth
(188) The negative effects of the measure appear limited since,
criterion is met.
given DPLP’s history and its activities, it is evident that a
large proportion of its pension liabilities relate to
activities in the reserved sector, where the distortion of
competition is by nature limited.
(195) Since the annual compensation benefited only one
undertaking and provided additional funds to that under
taking, the measure conferred a selective advantage on
DPLP.
(189) Even if the measure in question could, in theory, enable
DPLP to retain a dominant position, the Commission
regards this as a low risk since the measures simply
align the contributions paid by DPLP with those paid
(196) 1997 capital injections: the Belgian authorities have
by its competitors.
acknowledged that the 1997 capital injections of EUR
62 million were in fact a delayed payment of SGEI
compensation for 1996. Therefore, they should be
assessed on the same basis as the annual compensation.
(190) It follows from the foregoing observations that the
Since not all the Altmark conditions are fulfilled, the
negative effects of the aid granted to DPLP have been
measure conferred a selective advantage on DPLP.
limited in comparison with the positive effects of the
measure.
Capital injections
(191) Since the measures are limited to what is strictly
(197) 2003 capital injection: the Belgian authorities have
necessary to establish a level playing field for social
claimed that the 2003 capital injection (EUR
security contributions and put an end to a distortion
297,5 million) complied with the MEIP and therefore
of competition that was a disadvantage for DPLP, they
did not constitute State aid. According to the Belgian
do not affect trading conditions to an extent contrary to
authorities, that capital increase aimed at strengthening
the common interest.
DPLP’s equity capital for the construction and upgrade of
the sorting centres, the optimisation of mail distribution
routes and automation. The funds injected were also
intended to cover personnel costs arising from a
(192) Consequently, the Commission is of the opinion that the
reduction in the number of employees through an
1997 pension waiver can therefore be declared to be
early retirement scheme, a reduction in working time
compatible aid within the meaning of Article 107(3)(c)
and an increase in the salaries of new postal workers.
TFEU since DPLP is not in a better situation than other
operators as regards the social security costs of its
statutory personnel.
(198) In order to prove that the capital injection complied with
the MEIP, the Belgian authorities carried out profitability
forecasts as part of their strategic plan, which showed a
6.3. ASSESSMENT OF THE PUBLIC SERVICE COMPENSATION
profitability level above the cost of capital that would be
AND OTHER MEASURES
required by a private investor.
6.3.1. Existence of aid within the meaning of
Article 107(1) TFEU
(199) The projections and profit calculation carried out by the
6.3.1.1. Advantage and selectivity
Belgian authorities are future-oriented, very detailed and
in line with the method that would be used by a private
A n n u a l c o m p e n s a t i o n
investor:
(193) In respect of the compensation for public service costs,
the Altmark judgment ( 1 ) lays down the criteria public
measures must fulfil in order to be regarded as compen
(1) profitability was calculated using the discounted
sation for public service obligations and not State aid
future cash flow method, which takes into account
within the meaning of Article 107(1) TFEU.
the future growth of the company and the ability of
the investments to generate profits and cash flows for
( 1 ) Case C-280/00 Altmark Trans GmbH, cited above.
shareholders;

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(2) three different scenarios were considered: an opti
(204) Moreover, the potential uncertainty for a private investor
mistic scenario, a pessimistic scenario and a most
that may have arisen from the non-notified aid in favour
likely scenario, which was finally retained to assess
of DPLP was mitigated by the formal authorisation to
the sensitiveness of the projections;
proceed with the capital injection granted by the
Commission in its 2003 decision. At the time the
investment was made, any private investor faced with
(3) the projections indicated an increase in the profit
good prospects of a return would have probably taken
margin to […] % in 2007 (see Figure 4) and an
the risk of making the investment following the adoption
expected internal rate of return of […] % for 2003-
of a positive Commission decision, even if that decision
2012 (see Figure 5), which is above the […] %
was not yet final. A private investor would not have
indicated by an independent expert (Bank Degroof)
waited several years for a judgment from the General
as the profit margin that would be regarded as
Court and the ECJ before taking an investment
appropriate by private investors in the postal sector.
decision. Therefore, the subsequent annulment of the
Commission decision is an event that was not foreseeable
Figure 4
at the time of the investment, and must have appeared
very unlikely as Commission decisions are considered
Ex-ante profit projections for 2003-2007 by the Belgian
legal until they are annulled.
authorities
[…]
(205) The Commission therefore takes the view that the 2003
Source: Belgian authorities.
capital injection can be regarded as complying with the
MEIP and does not constitute State aid within the
meaning of Article 107(1) TFEU.
Figure 5
Ex-ante internal rate of return calculation by the Belgian
(206) 2006 capital injection: the Belgian authorities have
authorities for the most likely scenario
claimed that the 2006 capital injection (EUR 40 million)
[…]
was made on MEIP terms and therefore did not
constitute State aid.
Source: Belgian authorities.
(207) The 2006 capital injection was made on the same terms
(200) It can also be noted that the robustness of the
as those applying to a private investor: the increase in
projections has been globally validated by the financial
DPLP’s capital was subscribed to by the State (EUR
results achieved in subsequent years (see Figure 6). As a
40 million) and by Post Invest Europe (EUR 300 million)
consequence of this increase in profitability, DPLP started
at an equivalent price per share (pari passu). At the time,
to distribute dividends from 2007 onwards.
Post Invest Europe was an external investor, which had
no connection with DPLP or the Belgian State.
Figure 6
Ex-post profits 2003-2007
(208) In addition, the issue price of the shares was set properly.
[…]
In order to determine the price of the new shares, the

investment bank hired by the Belgian authorities
Source: Belgian authorities.
estimated DPLP’s total value at between EUR […] and
EUR […]. The State finally opted for a valuation of EUR
[…] for the entire company before the capital injections.
The assumptions regarding the level of return and risk
(201) The performance over a 10-year period is also in line
based on a joint business plan were guided as such by
with the 2003 forecasts since the ex-post internal rate of
considerations of long-term profit optimisation. DPLP’s
return should amount to […] %, which is above the
subsequent performance following the 2006 capital
[…] % forecast in 2003.
increase (see below) also confirms the robustness of the
assumptions and parameters taken into account at the
(202) Although the profitability of the Belgian State’s
time of the investment decision.
investment seems to be sufficient to justify its
compliance with the MEIP, it should be noted that the
projected revenues used for the assessment of that profit
Figure 7
ability included State aid and, in particular, the annual
compensation granted to DPLP.
DPLP’s performance from 2006 to 2010
[…]
(203) However, these State aid measures have clearly distinct
aims and have no chronological link with the 2003
Source: Belgian authorities.
capital injection.

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(209) The Commission considers that the 2006 capital
benchmark that can be found on the financial markets,
injection of EUR 40 million clearly corresponds to the
the guarantee does not contain aid. If no corresponding
behaviour of a market economy investor and therefore
guarantee premium benchmark can be found on the
does not constitute State aid.
financial markets, the total financial cost of the guar
anteed loan, including the interest rate of the loan and
the guarantee premium, has to be compared to the
market price of a similar non-guaranteed loan’. As the
T a x e x e m p t i o n s
premium does not appear to be a normal market rate,
the State guarantee allowed DPLP to obtain funding at a
(210) The corporate tax exemption, while likely to confer an
cost below what it would have normally had to bear.
advantage on DPLP by possibly reducing the amount of
tax it would otherwise have paid, did not produce any
concrete advantage because, from 1992 to 2005, when
the tax exemption was abolished, DPLP’s cumulated
result after tax was negative. While DPLP’s net result in
(215) The measure therefore conferred a selective advantage on
some years was positive, the tax credit carried over from
DPLP, which amounts to the difference between the
one year to the next would have resulted in no tax
interest rate DPLP would have had to pay in the
payments even if DPLP had been liable for corporate
absence of the State guarantee and the actual interest
tax. Consequently, this exemption is not examined in
rate plus the premium paid for the guarantee.
any more detail in this Decision.
Therefore the advantage obtained was 15 basis points
on the capital outstanding each year. The advantage
can therefore be estimated at EUR 1,5 million over the
duration of the loan.
(211) The property tax and local tax exemptions, by contrast,
place DPLP in a more favourable position than that of
other undertakings by relieving it of obligations it would
have normally have had to bear. These tax exemptions
6.3.1.2. Existence of State resources
therefore confer a selective advantage on DPLP.
A n n u a l S G E I c o m p e n s a t i o n , i n c l u d i n g
t h e 1 9 9 7 c a p i t a l i n j e c t i o n s
T r a n s f e r o f b u i l d i n g s
(216) The annual SGEI compensation was financed from the
national budget, as specified in the successive
(212) The Belgian authorities have argued that the transfer of
management contracts between DPLP and the Belgian
buildings was part of an internal reorganisation of State
State. According to the information provided by
property since at the time DPLP was fully State-owned.
Belgium, the 1997 capital injections are de facto SGEI
However, the transfer of buildings made available to
compensation and are therefore included in this part of
DPLP new assets which had previously belonged to the
the Decision.
State. DPLP had already been using the buildings while
they belonged to the State, but was not the legal owner
of them. The transfer of the legal title of ownership gave
DPLP, an undertaking separate from the State, property
rights over the buildings. DPLP therefore obtained
T a x e x e m p t i o n s
additional resources compared with the situation before
(217) The tax exemptions have decreased the State’s tax
the transfer. The measure therefore conferred a selective
revenue by reducing the income it would have received
advantage on DPLP.
in the absence of the tax exemptions. They involve,
therefore, a transfer of State resources in the form of a
loss of tax revenue for the Belgian State.
S t a t e g u a r a n t e e
(213) Without the State guarantee, DPLP could not have
obtained a loan on the same terms. The Belgian auth
T r a n s f e r o f b u i l d i n g s
orities have estimated that market rates would have been
up to 40 basis points higher, whereas the premium paid
(218) The buildings transferred to DPLP were previously State
to the State was 25 basis points.
property. The State surrendered ownership to DPLP,
thereby reducing its own assets and increasing those of
DPLP. The measure therefore constitutes a transfer of
State resources.
(214) In accordance with the Commission communication on
the application of Articles 87 and 88 of the EC Treaty to
State aid in the form of guarantees ( 1 ) (paragraph 3.2(d)),
‘risk-carrying should normally be remunerated by an
S t a t e g u a r a n t e e
appropriate premium on the guaranteed or counter-guar
anteed amount. When the price paid for the guarantee is
(219) The loan guarantee was granted by the State, which
at least as high as the corresponding guarantee premium
assumed the associated risks from its own budget
without a consideration, and therefore constitutes a
( 1 ) OJ C 155, 20.6.2008, p. 10.
State resource in the form of foregone revenue.

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Revenues from mail distribution services do not
They have not been modified since. These measures
constitute State resources
therefore constitute existing aid.
(220) Revenues from mail distribution services do not
constitute State resources following the Preussen Elektra
judgment ( 1 ) since the prices paid by users are financed
(226) The corporate tax exemption was abolished in 2005,
from their own funds, which are outside the State’s
whereas the property tax exemption still applies.
control.
6.3.2.2. Liberalisation of the postal market
(221) Nevertheless, for the purposes of the compatibility
assessment, these revenues are directly linked to the
(227) The Belgian authorities have argued that all the measures
provision of a service of general interest in the postal
dating from before the liberalisation of postal markets in
sector and must therefore be taken into account in
1999 should be considered existing aid. However, the
accordance with point 17 of the SIEG Framework and
measures in questions benefited all the activities of
Article 7 of Directive 97/67/EC for determining the
DPLP, which was active in competitive markets (such
necessity and proportionality of the compensation.
as parcel distribution and financial services) well before
the entry into force of Directive 97/67/EC in 1999.
Consequently, according to the Alzetta judgment ( 2 ),
6.3.1.3. Distortion of competition and effect on trade between
such aid cannot be considered existing aid because of
Member States
the evolution of the internal market: it can be considered
existing aid to a given beneficiary to the extent that the
(222) The measures are capable of affecting trade between
beneficiary was active solely on markets not open to
Member States for the reasons indicated in recital 156
competition when the aid was put into effect.
above.
6.3.1.4. Summary of aid measures
(228) This claim cannot therefore be accepted by the
Commission.
(223) For the reasons explained in recitals 193 to 222, the
following measures constitute State aid within the
meaning of Article 107(1) TFEU:
6.3.2.3. Ten-year limitation period
(229) The claim that the 10-year limitation period should be
(a) annual SGEI compensation (1992-2010);
counted from the opening of the current formal investi
gation in 2009 cannot be accepted either. The General
Court’s 2009 judgment did not annul all the preceding
(b) 1997 capital injections;
investigative acts, but only implied that the Commission
should have opened a formal investigation as a result of
them ( 3 ).
(c) property tax exemption (1992-2005);
(230) By contrast, as the Commission’s first investigative act
(d) transfer of buildings in 1992;
occurred on 23 December 2002, when it sent its first
request for information to the Belgian authorities, the
measures put into effect before 23 December 1992 are
(e) State guarantee granted in 2004.
to be considered existing aid.
6.3.2. Existing aid within the meaning of
Article 108(1) TFEU
6.3.3. Compatibility of SGEI compensation in the

light of Article 106(2) TFEU
(224) Some of the measures under assessment may be
considered existing aid within the meaning of
(231) The compatibility of the SGEI compensation is assessed
Article 108(1) TFEU.
under Article 106(2) TFEU and the SGEI Framework. The
SGEI Framework is applicable as of its entry into force
on 29 November 2005. Since the Framework is largely a
codification of rules that already existed before it entered
6.3.2.1. Corporate tax and property tax exemptions
into force, it will also be referred to when assessing the
measures that precede its entry into force.
(225) The exemptions from corporate tax and property tax
benefited DPLP when it was still a State administration
before 1971 and predate Belgium’s EEC membership.
( 2 ) Joined Cases T-298/92, T-312/97, T-313/97, T-315/97, T-600/97 to
T-607/97, T-1/98, T-3/98, T-6/98, T-23/98 Alzetta Mauro and Others
v Commission [2000] ECR II-2319.
( 1 ) Case C-379/98 PreussenElektra AG v Schleswag AG [2001] ECR I-
( 3 ) Case T-301/01 Alitalia — Linee aeree italiane SpA v Commission
2099.
[2008] ECR II-1753, paragraphs 98 – 100.

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6.3.3.1. Scope of the assessment based on the tasks entrusted
the entrustment and the parameters for calculating the
in the management contracts
compensation to be paid by the State. The management
contracts specify the activities included in the calculation
(232) In their submissions, the Belgian authorities and DPLP
of the amount of financial compensation granted by the
strongly opposed the Commission carrying out an
State.
overall analysis of all aid granted to DPLP over the
entire period, in line with the approach it adopted
previously for assessing other cases where aid was
illegally paid in the past, as it assumes that the aid
(236) The compatibility of the aid measures must be
financed without distinction all the public service
considered in the light of Article 106(2) TFEU since
missions entrusted to the undertaking. The Belgian auth
the compensation was granted to finance the costs
orities and DPLP have contended that in the case at issue,
incurred in discharging the public service missions. The
unlike in others, the management contracts they entered
compensation is compatible to the extent that it does not
into strictly delimit the scope of DPLP’s aided activities
overcompensate DPLP for the extra costs incurred in
and the amounts of aid for which they were eligible ( 1 ).
carrying out the public service missions entrusted to it
under the management contracts, including a reasonable
profit. Any overcompensation will have to be recovered.
(233) The Commission considers that the relevant management
contracts rigorously define the respective rights and
(237) The scope of the assessment of overcompensation
obligations of the State and the aid beneficiary by
includes those SGEIs for which compensation is
setting the parameters for calculating the compensation
provided for in the clauses of the successive management
to which the beneficiary is entitled for the specific
contracts.
activities listed and for the periods of time indicated.
Accordingly, the Commission will base its assessment
on the provisions laid down in the various management
contracts.
(238) It is important to note that the provisions of the
successive management contracts differ to some extent.
Consequently, overcompensation must be calculated on
the basis of the specific parameters provided for in each
contract.
(234) The SGEIs for which the compatibility of aid is to be
checked are defined in the acts of entrustment established
by the Member State. The public service missions to be
discharged by DPLP are entrusted to it in the successive
A i d e d
a c t i v i t i e s
u n d e r
t h e
f i r s t
administrative acts approving the management contracts
m a n a g e m e n t c o n t r a c t i n c l u d e a l l p u b l i c
signed between DPLP and the State approximately every
s e r v i c e s
five years. These contracts develop and complement the
provisions of national postal law.
(239) In the first management contract (1992-1996), the SGEI
compensation covers all public services. The provisions
of this contract do not apportion the compensation
between the different public services according to
whether or not they are eligible for compensation
(235) Each successive management contract constitutes a
under the provisions of the contract.
separate act of entrustment, which describes the public

missions to be discharged by DPLP, fixes the duration of
( 1 ) Submissions of 29.3.2011, paragraphs 3 and 4:
(240) Accordingly, the compensation provided for in the
‘3. In addition, but separately from the USO, DPLP was and still is
contract has to be understood to cover the additional
entrusted with certain specific non-mail SGEIs, such as home-
costs of discharging all the public service missions
delivery of pensions and allowances for disabled persons,
without distinction. Checking potential overcompen
delivery of election documents and, most significantly,
distribution of newspapers and periodicals. These SGEIs have,
sation in this period will therefore encompass all the
by and large, generated net costs and these net costs have, for
public service measures: the universal postal service
the most part, been covered by State compensation pursuant to
(USO), press distribution and other missions entrusted
successive management contracts concluded with the State.
to DPLP.
4. Accordingly, Belgian postal legislation has always carefully
distinguished between the USO and other (non-mail) SGEIs,
with respect to their financing. Thus, successive management
contracts between the State and DPLP have provided for
periodic State compensation for the net costs of (non-mail)
A i d e d a c t i v i t y u n d e r t h e s e c o n d , t h i r d
SGEIs, with the specific exception of the USO.’
a n d
f o u r t h
m a n a g e m e n t
c o n t r a c t s
In contrast, a specific statutory provision deals separately with
c o m p r i s e s p r e s s d i s t r i b u t i o n a n d o t h e r
the possible financing of the USO burden, until recently through
m i s s i o n s e l i g i b l e f o r c o m p e n s a t i o n
the possible creation of a compensation fund and, as of 2011,
by providing for the possibility of a direct subsidy under
(241) By contrast, under the clauses of the second, third and
conditions that mirror those in Annex I to Directive
fourth management contracts, the aided activities are
97/67/EC, as amended by Directive 2008/6/EC. However, this
compensation fund has never been activated, nor has the Belgian
limited to certain SGEI missions specified therein. The
State given any direct subsidy in respect of a loss-making USO.
SGEI missions entitled to be compensated are: the

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distribution of newspapers and periodicals, and other
may introduce incentive criteria relating, among other
public services listed in recital 33. The clauses deter
things, to the quality of service provided and gains in
mining the scope of the aided activities are contained
productive efficiency.’
in the management contracts: Article 7 of the second
management contract, Article 15 of the third
management contract, and Articles 12 and 13 of the
fourth management contract.
(247) The appropriate level of reasonable profit is thus to be
chosen taking into account a number of parameters, in
particular the average rate for the sector concerned, the
risk associated with the undertaking’s activities and,
(242) The universal postal service, by contrast, does not receive
where applicable, incentive criteria relating to the
any compensation under the management contracts, with
company concerned.
the exception of the first management contract.
(248) In order to establish a level of reasonable profit, the
(243) The costs and revenues of the universal postal service are
Commission has based itself on several expert studies,
therefore not included in the calculation of overcompen
which are set out in more detail below. Based on the
sation, except, where relevant, for the excess profits from
studies and on the level of risk of each management
the reserved area ( 1 ).
contract, the Commission has determined a range of
reasonable levels of profit for DPLP for mail delivery,
on the one hand, and press distribution, on the other,
for each of the four management contracts. These studies
6.3.3.2. Calculation of overcompensation
all attempt to identify sets of companies which are suffi
ciently comparable in terms of activities and risk profile
(244) On account of the differences in the public service
to the postal incumbent in question and to establish a
missions entrusted, as referred to in recitals 239-243,
benchmark profit level for the latter on the basis of the
the potential overcompensation is calculated differently
observed levels of profit of the comparator firms.
for the first management contract from the three
subsequent management contracts.
(249) As regards risk in particular, the Commission wishes to
R e a s o n a b l e p r o f i t
underline that DPLP, during the entire period under

investigation, has faced little or no competition in the
(245) In addition to the coverage of costs incurred in
vast majority of its operations since it either enjoyed a
discharging the public service obligations, the SGEI
legally protected monopoly (this applies to most mail
Framework also allows for compensation for a
services), or a dominant position characterised by very
reasonable rate of return (
high market shares and barriers to entry through the

2 ).
subsidisation of below-cost prices (e.g. press distribution).
In the Commission’s opinion, this aspect has to be borne
in mind in all analyses involving benchmarking with
(246) Paragraph 18 of the SGEI Framework specifies that the
companies that, while providing similar services to
reasonable profit ‘should be taken to mean a rate of
DPLP, had to operate in a competitive environment.
return on own capital that takes account of the risk, or
absence of risk, incurred by the undertaking by virtue of
the intervention by the Member State, particularly if the
latter grants exclusive or special rights. This rate must
(250) Furthermore, the extent to which a postal incumbent is
normally not exceed the average rate for the sector
exposed to risk depends essentially on the characteristics
concerned in recent years. In sectors where there is no
of the regulatory mechanism established by the public
undertaking comparable to the undertaking entrusted
authority.
with the operation of the service of general economic
interest, a comparison may be made with undertakings
situated in other Member States, or if necessary, in other
sectors, provided that the particular characteristics of
(251) In the context of mail delivery, a sector in which DPLP’s
each sector are taken into account. In determining
USO was mainly financed through stamp prices ( 3 ), the
what amounts to a reasonable profit, the Member State
Commission considers that it makes a substantial
difference in terms of risk whether the stamp prices
were, to a greater or lesser degree, frequently adjusted
( 1 ) See recitals 349 et seq.
( 2 ) Paragraph 17 of the SGEI Framework: ‘The revenue to be taken into
by the regulator (e.g. at the start of each year or
account must include at least the entire revenue earned from the
simply whenever necessary) so as to cover the net
service of general economic interest. If the undertaking in question
costs of the USO on an ongoing basis, or whether
holds special or exclusive rights linked to a service of general
stamp prices ( 4 ) were fixed in advance for a long
economic interest that generates profit in excess of the reasonable
profit, or benefits from other advantages granted by the State, these
must be taken into consideration, irrespective of their classification
( 3 ) Under the first management contract, DPLP also received financial
for the purposes of Article 87 of the EC Treaty, and are added to its
compensation.
revenue.’
( 4 ) Or movements therein.

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period (e.g. four to five years) as part of a long-term
B e n c h m a r k i n g o f r e a s o n a b l e p r o f i t
contract ( 1 ). The first type of price regulation tends to
be rather low risk for the firm in question, in so far as
(255) In order to address the question of a reasonable rate of
stamp prices are adjusted on a relatively frequent basis so
profit for DPLP, the Commission bases itself on several
as to maintain a constant financial equilibrium between
expert studies:
revenues and costs. This type of regulation protects the
company’s profit margins against uncertainty. The second
type involves more risk as it exposes the operator to the
consequences of variations in costs and revenues over a
long period.
(256) WIK study: in the context of Case C-36/07, a State aid
procedure relating to the German postal operator,
Deutsche Post AG (hereinafter ‘DP’), the Commission
asked WIK Consult to carry out a study on the appro
priate level of reasonable profit for postal incumbents ( 2 )
(252) Likewise, in the context of press distribution activities
(hereinafter ‘WIK study’). The relevant aspects of the WIK
(USO financed through financial compensation), it
study were shared with Belgium on 25 March 2010 and
makes a substantial difference whether the compensation
7 February 2011. The Commission received comments
is based on actual net costs (i.e. net costs actually
from Belgium on the WIK study on 23 April 2010 and
incurred) or whether it is based on projected net costs
1 March 2011.
over a long period. For instance, if the compensation
takes the form of a fixed lump-sum payment covering
expected net costs over a long period, it leaves the
operator exposed to all variations in revenues and
costs. In such a case, the operator faces a higher degree
of risk than when it is compensated in full on the basis
(257) Deloitte study: on 23 April 2010, the Commission
of ex-post costs and revenues.
received a study by Deloitte ( 3 ) (hereinafter ‘Deloitte
study’) setting out its views on the level of reasonable
profit to be used for DP’s universal services. This study
was sent to Belgium on 9 December 2011. The
Commission received comments from Belgium on the
(253) Where the contract between the operator and the public
Deloitte study on 26 December 2011.
authority is such that the public service is connected with
a certain degree of risk, for instance because it leaves the
incumbent exposed to significant variations in revenues
and costs, the reasonable profit allowed to the incumbent
should be commensurate with the corresponding level of
risk involved. By contrast, where the contract between
(258) CRA study: on 1 March 2011, Belgium submitted an
the incumbent and the public authority is such that the
expert study in response to the WIK study by Charles
public service is not connected with substantial risk, the
Rivers Associates ( 4 ) (hereinafter ‘CRA’).
reasonable profit allowed should be low as well.
T h e W I K s t u d y
(254) The Commission would also point out that the degree of
risk incurred by the company and the extent to which
(259) In this study, WIK establishes a reasonable profit
the company is entitled to compensation for efficiency
benchmark for DP. Specifically, WIK first performs a
gains are closely intertwined. For instance, a public
function and risk analysis of DP and concludes that DP
authority can set in advance a fixed level of compen
predominantly provides routine functions and faces
sation which anticipates and incorporates the efficiency
limited entrepreneurial risk ( 5 ). On the basis of this
gains that the undertaking can be expected to make over
analysis, WIK selects appropriate comparators, i.e.
the lifetime of the entrustment act. By exposing the
determines the composition of the benchmark groups
company to all variations in costs and revenues, the
from which the reasonable profit benchmark is derived.
contract gives it incentives to improve performance and
become more cost efficient. At the same time, it results
(
in more risk for the company. To some extent, therefore,

2 ) WIK Consult, ‘Benchmarking of Cost and Profit Accounting of
Certain Services Provided by DP AG (DPAG)’, Bad Honnef,
risk and efficiency incentives go hand in hand. Likewise,
October 2009. WIK Consult is a subsidiary of the Wissenschaftliches
an ex-ante price cap over a long period normally provides
Institut für Kommunikationsdienste (Scientific Institute for
stronger incentives for efficiency improvements, but is
Communication Services).
also more risky for the company involved.
( 3 ) Deloitte, ‘Profit Benchmarking for DP AG – Final Report’, 22 April
2010.
( 4 ) CRA, ‘Estimating a reasonable profit margin for DPLP’s provision of
( 1 ) There is an extensive economic literature on the risk and incentive
letter services’, 1 March 2011.
properties of contracts regulating the commercial policy of firms. Cf.
( 5 ) In this respect, WIK considers important the monopoly rights
J.J. Laffont and J. Tirole, A theory of incentives in regulation and
granted to DP and the specificities of the price regulation
procurement, MIT Press, 1993.
mechanism under which it operates.

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Overall, WIK points out that, conceptually, the adopted
groups: (i) benchmark group I, or the narrow parcel
benchmark procedure follows the standard methodology
sector, including companies that are primarily active as
used for profitability benchmarks in transfer pricing ( 1 ).
parcel service providers (10 companies, considered highly
Such a methodology is applied not only in national
comparable with universal postal service providers); (ii)
transfer pricing regulations but also in the OECD
benchmark group II, or the broader parcel sector,
Transfer Pricing Guidelines (hereinafter ‘OECD Guide
including companies whose main activity might focus
lines’) ( 2 ).
on other services, such as courier services (26
companies with a somewhat lower level of compara
bility); and (iii) benchmark group III, including also
companies from the land transportation sector (1 163
(260) WIK considers several measures of profitability, distin
companies with lower comparability) ( 5 ). This approach,
guishing between the internal rate of return (IRR),
according to WIK, reinforces the statistical validity of the
which relies on cash flows and is deemed the concep
final benchmark.
tually correct measure of the profitability of an activity,
and other measures derived from accounting data (rates
of return), such as the return on capital employed
(ROCE), the return on equity (ROE), the return on
assets (ROA) and the return on sales (ROS) ( 3 ). As set
(263) One of the selection criteria applied to all benchmark
out in Chapter 5 of the study, WIK proposes using the
groups is the size of the company; only companies
ROS as a profitability indicator. One advantage of this
with revenues above EUR 3 million are considered ( 6 ).
measure is that it only depends on accounting profit
As regards the time span of the data, reliable data were
(EBIT ( 4 )) and sales data, which are both easily observable
available only for the period 1998-2007, while backward
in the company’s accounts. In addition, the use of the
interpolation was used for the period 1990-1997 ( 7 ).
ROS avoids the valuation and attribution of assets
between different services, which would be necessary
for a capital-based benchmark, such as the ROE and
the ROCE, and which is normally a difficult exercise.
WIK also points out that a benchmark based on the
(264) Furthermore, WIK follows the analysis adopted in
ROS is advisable if the comparator companies and the
transfer pricing by relying on the concept of the inter
benchmarked company belong to the same branch/in
quartile range ( 8 ) to reduce the effect of outliers and to
dustry sector so as to ensure that the structure of EBIT
establish a level of reasonable profit.
and sales is homogeneous.
(261) Regarding the composition of the benchmark group,
WIK concludes that there is a trade-off between the
(265) WIK obtains the following results for the period 1998-
comparability of companies in the sample and the size
2007:
of the sample. WIK argues against including European
postal incumbents in the sample because their prices
have been regulated in a market which has been fore
closed to competition in most countries over the entire
period under investigation. For the same reason, the
(a) benchmark group I: 25th percentile equal to -0,42 %,
number of companies in direct competition with the
75th percentile equal to 6,72 % and median (50th
postal incumbents is rather limited. Mostly, these are
percentile) equal to 3,86 %;
smaller companies. In order to obtain a balanced set of
comparable companies, WIK includes both the direct
competitors on national markets and big multinational
players, such as large international express parcel
companies (e.g. UPS, FedEx, DHL), which run a more
(b) benchmark group II: 25th percentile equal to 0,45 %,
capital-intensive and riskier business than a postal
75th percentile equal to 6,77 % and median (50th
incumbent on a protected national market.
percentile) equal to 3,48 %;
( 5 ) The three samples were constructed by progressively relaxing some
of the criteria related to the level of comparability of the selected
(262) WIK addresses the trade-off between comparability and
companies’ activities to those of DP.
sample size by considering three different benchmark
( 6 ) According to WIK this should ensure a minimum of scale
economies (see, for example, Table 7, p. 76).
( 7 ) WIK reports results separately for the two periods to indicate that
( 1 ) See for instance section 5.1.4 of the WIK study.
the data for the period before 1998 ‘must be handled carefully’.
( 2 ) See OECD, Transfer Pricing Guidelines for Multinational Enterprises
( 8 ) The interquartile range is the range between the 25th percentile and
and Tax Administrations (1995); German Administrative Principles
the 75th percentile of the distribution, where the 25th percentile
— Procedures; Section 482 of the US IRS Tax Code.
and the 75th percentile are the points below which respectively
( 3 ) The ROCE is the ratio of EBIT over capital employed; the ROA is the
25 % and 75 % of the observations in the data set fall. In other
ratio of EBIT over total assets; the ROE is the ratio of EBIT over
words, the interquartile range does not include the lowest 25 %
equity and the ROS is the ratio of EBIT over sales (see also section
and the highest 25 % of data points. A related concept used in
5.1.5 of the WIK study).
the WIK study is the 50th percentile, or the median, which equals
( 4 ) EBIT is earnings (profit) before interest and tax. The EBIT margin is
the point of the distribution compared with which half of the
equivalent to the ROS.
observations have a lower value and half have a higher value.

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(c) benchmark group III: 25th percentile equal to
loss-making. DPLP’s costs have been cut, in particular by
0,64 %, 75th percentile equal to 5,57 % and
closing post offices. The 50 % share held by private
median (50th percentile) equal to 2,59 %.
investors since 2006 has created a new culture geared
towards efficiency. According to the Belgian authorities
such efficiency gains should be taken into account in
(266) WIK concludes that the broader parcel sector, or
determining the reasonable rate of return that can be
benchmark group II, is the best benchmark because the
granted to DPLP.
results obtained are relatively stable over time compared
with the alternative benchmark (narrow parcel sector)
and because this sector is functionally closer to letter
The Charles River Associates study
and parcel activities than the other alternative
benchmark (land transport sector).
(272) On 1 March 2011, the Belgian authorities sent the
Commission a report prepared by Charles River
Associates (CRA), which critically evaluates the WIK
(267) A further adjustment is made to obtain an upper limit
study and proposes an alternative method for bench
for the reasonable profit for DP on the basis of the
marking the reasonable profit of DPLP.
analysis of DP’s entrepreneurial risk relative to the
benchmark group. On this basis WIK proposes the
median benchmark II ROS of 3,48 % as an upper limit
(273) Regarding the sample composition, CRA argues that all
for a reasonable profit for DP. WIK chooses the median
three WIK samples include many small firms whose risk
instead of the 75th percentile as the upper value of
profiles are not comparable to the risk profile of a large
reasonable profit to reflect the fact that the companies
postal operator. Thus, CRA criticises WIK’s conclusions
in the sample bear higher risk than postal incumbents
that the provision of letter services by the incumbent
since they do not benefit from special rights.
postal operator in question is low risk and that the
companies included in the benchmark groups are good
comparators.
C o m m e n t s b y t h e B e l g i a n a u t h o r i t i e s o n
t h e W I K s t u d y
Comments on the WIK study
(274) In particular, CRA points to the relationship between a
firm’s cost structure (in terms of the proportion of fixed
(268) The Belgian authorities considered the methodology used
and variable costs) and the business risk it faces. CRA
in the WIK report to be flawed and submitted several
argues that a postal operator entrusted with a USO has
documents (letters, position papers and reports) on
larger fixed costs and, therefore, faces a relatively higher
23 April 2010, 1 March 2011, 14 June 2011,
risk of a downturn in demand compared with a company
5 August 2011, 10 August 2011, 14 December 2011
with lower fixed costs. In addition, CRA points to the
and 19 December 2011 which refute the approach of the
difference in the ROS between the small and big
WIK report and present their own method for estimating
companies in the WIK groups ( 1 ), which suggests, in
a reasonable profit benchmark.
CRA’s view, the existence of systematic differences
between the small parcel firms and the larger firms,
such as UPS and FedEx, which might be explained by
the different cost structure.
(269) In a position paper sent on 5 August 2011, the Belgian

authorities essentially argued that the sample used in the
WIK study is not representative in terms of activity, size,
risk profile and reference period. Belgium therefore
(275) CRA also analyses in more detail the characteristics of
claims that the sample is very hard to legitimise in the
some of the small parcel firms included in the WIK
light of the criteria set out in paragraph 18 of the SGEI
Benchmark I sample and concludes that their risk
Framework.
profile is not comparable to that of a large postal
operator. CRA also considers that increasing the size of
this already barely comparable sample by adding even
(270) In the same position paper, Belgium also argues that it
less comparable companies is not appropriate.
makes sense to differentiate between the profit margins
for activities which present very different levels of risk: if
press distribution and letters are activities which have a
(276) CRA dismisses WIK’s argument that European postal
different risk profile, the Belgian authorities argue that
incumbents should not be included in the sample
different levels of reasonable profit should be used.
because their profits have been constrained by price regu
lation, rather than by competition, leading to the risk
that price regulation has allowed these incumbents to
(271) In addition, the Belgian authorities claim that DPLP’s
earn excessive profits. CRA argues that in dismissing
operations benefit from productivity gains and that this
other postal incumbents as good comparators, WIK
should be considered by the Commission when estab
relies on the theoretical possibility that these incumbents
lishing the rate of reasonable return, as set out in
might have been allowed to charge excessive prices
paragraph 18 of the SGEI Framework. The Belgian auth
orities point out that DPLP has become profitable as a
( 1 ) Here, the number of employees is a proxy for size. See Table 1 on p.
result of numerous reforms, after having been historically
7 and the discussion in paragraph 26.

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without, however, supporting its argument with
for example, equal the 75th percentile. Such an
empirical evidence. In this regard, CRA points out that
approach, according to CRA, would be consistent with
the type of price regulation mechanisms applied in a
the practice in transfer pricing investigations of relying
number of Member States, such as price caps ( 1 ), would
on a range (for example, an interquartile range or other
suggest that the high profits observed are the result of
percentiles).
productivity gains rather than high prices.
D o c u m e n t p r e s e n t e d b y t h e B e l g i a n
(277) CRA argues that the natural method for calculating a
a u t h o r i t i e s o n 1 4 D e c 2 0 1 1 — D e m o n
reasonable profit margin for DPLP from its public
s t r a t i o n o f D P L P ’ s e n t i t l e m e n t t o a r i s k
service obligations would be based on the available
p r e m i u m o n r e a s o n a b l e p r o f i t f o r t h e
data on profit margins for the letter operations of
p e r i o d 1 9 9 2 - 2 0 1 0
other western European postal operators. This method
is all the more natural because the public services at
(281) On 14 Dec 2011, the Belgian authorities presented to
issue are primarily letter services and the data on profit
the Commission a document summarising DPLP’s views
margins from the letter-related operations of other
on the risks faced by postal operators and proposing a
western European postal operators are readily available
methodology with a view to developing a tool to
and do not suggest too lenient price regulation.
measure the risk premium which, together with the
risk-free return on sales, would provide a reasonable
ROS rate.
(278) Specifically, CRA argues that the analysis should be based
on the EBIT margins (ROS) realised on letter operations
by western European postal operators that report
(282) The document does not explain how the risk-free return
on sales (expressed in terms of ROS) could be determined
segment data showing EBIT margins for their letter oper
in the present case and does not provide a clear view of
ations or (if segment data on EBIT margins are not
what precisely the reasonable ROS should be on the basis
reported) the company-wide EBIT margins of western
of the proposed methodology. Instead, the analysis
European postal operators that derive more than 75 %
focuses on the assessment of the various risks and the
of their revenue from letter services. CRA excludes from
calculation of a risk premium that reflects all types of
its sample eastern European operators on the basis of
risks.
their relative inefficiency compared with postal

operators in western Europe.
(283) In particular, the Belgian authorities focus on three broad
risk categories – sectoral risk, service-related risk and
(279) As a result, CRA bases its analysis on a sample of 11
contractual risk – and on the typical types of risks in
western European postal operators during the period
each category to which postal operators are exposed. The
2002-2009 (73 observations in total). The mean ROS
methodology for the assessment of the risk premium
in this sample is […] %, the median is […] % and the
provides for: (i) the definition of a ‘maximum risk
75th percentile is […] % ( 2 ). CRA also calculates the
premium’ ( 4 ); (ii) the splitting of the relevant period
trimmed mean ([…]
%) and the Winsorised mean
into contract periods to capture the risks related to
([…] %), which, like the median, are not affected by
each contract; (iii) the use of a simple scale to grade
extreme values ( 3 ).
each individual risk for each contract period (as low,
medium or high); (iv) the conversion of the individual
risk scores into an overall score for each of the three
broad risk categories; and (v) the conversion of the
overall scores into risk premiums, the sum of which
(280) As regards establishing a benchmark for the reasonable
gives the total risk premium.
profit margin, CRA argues that there are methodological
problems with relying on average values. CRA explains
that because of variations in observed profit margins in
the sample, the critical threshold for establishing
excessive profitability should be higher than the mean
(284) Moreover, examples are provided to illustrate that DPLP
or any other measure of central tendency and could,
faces above-average risks. Thus, the Belgian authorities
maintain that DPLP faces higher volume risk as it
( 1 ) See Table 3, p. 20.
derives a higher proportion of its revenue from its mail
( 2 ) The Commission has calculated the 25th percentile to be […] %.
segment and is characterised by higher cost rigidity on
( 3 ) The trimmed mean is calculated by excluding the top 10 % and the
account of a higher-than-average proportion of fixed
bottom 10 % of the observations (given that the sample contains 73
costs. Another type of risk which is considered higher
observations, this means that the top seven and the bottom seven
observations are excluded). The Winsorised mean is obtained by
replacing the top seven and the bottom seven observations
( 4 ) The analysis does not specify how the maximum risk premium is to
respectively with the next highest and lowest observations.
be determined.

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for DPLP is security risk. According to the analysis, this is
(288) In particular, Deloitte considers that companies in the
because DPLP is one of the few European postal
parcel and postal sector that operate large, complex
operators to deliver cash payments of pensions to house
collection and delivery networks can be reasonably
holds.
compared to DP. The economies of scale, scope and
density prevalent in postal networks and the high
proportion of operating costs relative to capital costs,
as well as the associated risks (for example, volume
risk, risk of e-substitution), mean that large multi-
(285) On the basis of the assessment of the different risks, the
product businesses in the postal and parcel sector are
Belgian authorities conclude that the fourth management
more relevant comparators than small mail businesses.
contract shows a high level of all three risk types, while
Freight transport and logistics companies would also be
the first, second and third contracts are characterised by
– to a more limited degree – suitable comparators
medium-level risk (the only exception being sectoral risk,
because they employ similar assets.
which is considered low for the first contract). The
Belgian authorities provide further examples of how the
above ranking of the different risks can be converted into
a risk premium on the basis of different values for the
‘maximum risk premium’.
(289) In order to illustrate the importance of company size,
Deloitte compares its sample with that of WIK
benchmark group II. Deloitte illustrates that the average
ROS in the WIK sample differs significantly between
groups of companies of different size (proxied by the
T h e D e l o i t t e s t u d y
number of employees) ( 3 ). Deloitte argues that in its
own sample (based on larger firms) there is, on the
(286) The Deloitte study referred to in recital 257 above is
consistent with the WIK study on several points:
contrary, no strong relationship between scale and ROS.
(1) both studies use the same methodology to search
(290) As a result of the sample selection process, Deloitte bases
financial databases for comparable companies in
its analysis on seven postal and parcels companies, 18
terms of functions and risks;
logistics companies and 19 freight transport companies.
As regards the postal and parcel sector, the small set of
seven comparable companies includes big multinational
express parcel operators, such as UPS, FedEx, and TNT
Express, as well as a few other postal operators, mostly
(2) both studies propose ROS as the most relevant
from the United States and the United Kingdom ( 4 ). In
benchmark for profit benchmarking (because of
principle the data set covers the period 1990-2007,
data limitations and differences in accounting
however data for the early years is very limited and,
treatment between different companies);
therefore, Deloitte considers the results for these years
less robust ( 5 ).
(3) finally, universal postal service providers are excluded
from the set of comparable companies because they
(291) Deloitte also examines the advantages and disadvantages
mainly operate on regulated markets and benefit
of several alternative profitability measures. It dismisses
from exclusive rights.
the use of the IRR in the case in question because of the
practical difficulties in obtaining adequate cash-flow data.
It also rejects the use of the ROCE or the ROE because
of, for example, differences among companies in the
accounting treatment of costs and in the capital
(287) As regards the set of comparable companies, the main
structure (the latter being important for the ROE). ROA
difference between the WIK and Deloitte studies is the
is also deemed inappropriate because it focuses on total
size of the companies considered. Deloitte only includes
assets. Thus, Deloitte proposes to use the ROS but
in its sample companies with annual revenue higher than
emphasises that, as the ROS is not a direct measure of
EUR 100
million
( 1 ). This restriction is based on
return on capital, it can be relied upon for benchmarking
Deloitte’s analysis of the particular characteristics of the
purposes as long as the companies compared have
activities related to universal service provision and the
similar capital intensity.
associated business and market risks ( 2 ).
( 3 ) See Table 6, p. 36.
( 1 ) More specifically, only companies with more than 1 000 employees
( 4 ) The list of benchmark companies in each of the three sectors is
and those with either more than EUR 100 million in revenues or
given in Table 3, p. 31.
assets are included in the sample.
( 5 ) Note that this problem is particularly relevant for the postal and
( 2 ) Deloitte considers that particular business characteristics arise from
parcels sample, for which, according to Table 5, p. 35, the number
the requirement for a universal service provider to operate a
of observations per year ranges from 2 to 4 for the period 1990-
complex collection and delivery network.
1997, as compared with 5 to 7 for the period 1998-2007.

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(292) Deloitte nevertheless calculates the ROCE (as well as the
derives a range of reasonable ROS based on the inter
market-value ROCE and the ROA) for a small subsample
quartile annual ranges ( 3 ).
of six companies, but concludes that the range and
variation of the ROCE might reflect a number of
factors, which requires cautious interpretation and
undermines its usefulness as a benchmark. Among
A s s e s s m e n t o f b e n c h m a r k i n g
these factors Deloitte emphasises the importance of
capital intensity. Deloitte argues that, in terms of
Reasonable profit (default range)
capital intensity, DP’s universal service is more similar
(296) Choosing a good sample of comparable companies for
to that of, for instance, UPS and Fedex than to that of
postal incumbents is a complex task. It goes without
freight operators like Kuehne&Nagel or Wincanton.
saying that care must be taken to properly select a
suitable group of companies as a benchmark in terms
of business activities and risk.
(293) Deloitte further highlights the significant variation in
companies’ profitability over time, as well as within
(297) The WIK and Deloitte studies both focus on commercial
companies with activities comparable to those of DPLP,
and between the different sectors. This variation, in
while excluding postal incumbents from the comparator
Deloitte’s view, would warrant the use of ranges of
sample. CRA, by contrast, uses a comparator sample that
reasonable profit rather than a single average figure.
consists only of other European postal incumbents.
Such an approach would also be appropriate because

of the need to avoid penalising above-average
performance as a result of efficiency gains.
(298) The Commission shares the views of both WIK and
Deloitte that the profits of postal incumbents (which
CRA uses for its benchmarking) are not determined
under normal market conditions, but largely result
from the regulatory choices of other Member States. As
(294) The results obtained by Deloitte, by sector and for all
sectors together, are summarised in Table 22 of the
such, they may not adequately reflect a proper return
Deloitte study. Thus,
benchmark. At the same time, given that the CRA
sample focuses on postal incumbents in other
European countries, it appears to constitute the sample
of companies most similar to DPLP. For this reason, the
Commission believes it is appropriate to take the CRA
sample fully into account, in particular in order to cross-
(a) for the postal and parcel sector, during the period
check the benchmark reasonable profit levels (ROS)
1998-2007, the average annual mean ROS is
established on the basis of the WIK and Deloitte studies.
8,1 %, the average annual median ROS is 7,4 %, the
average annual 25th percentile is 4,8 % and the
average annual 75th percentile is 12 %;
(299) The WIK and Deloitte studies both acknowledge the need
to have a sufficiently large sample to draw relevant
conclusions for the purpose of benchmarking. For this
purpose, they consider both a (relatively) narrow sample
of companies in the postal and parcels sector and wider
(b) for all sectors, during the period 1990-2007, the
samples including companies in the logistics and freight
average annual mean ROS is 6 %, the average
transport sectors. The Commission recognises that a
annual median ROS is 5,4 %, the average annual
sufficient sample size is important for statistical
25th percentile is 3,6 % and the average annual
purposes. In relation to CRA’s position in this regard,
75th percentile is 8,1 % ( 1 ).
which questions the usefulness of increasing the sample
size by adding less comparable companies, the
Commission takes the view that the wider samples
identified by WIK and, in particular, Deloitte on the
basis of the adopted sample selection methodologies
are sufficiently comparable to serve as meaningful
(295) As a reference benchmark Deloitte proposes a value
benchmark groups for benchmarking DPLP’s profit.
based on the average annual mean ROS of 7,9 % ( 2 ); to
reflect the observed variation of the ROS, Deloitte further
( 3 ) Deloitte derives the range of reasonable ROS on the basis of the
interquartile annual ranges for the postal and parcels sample for the
( 1 ) The Commission’s calculations show that the results for the sample
period 1998-2007 and the all-sector sample for the period 1990-
including all sectors do not differ materially if only the period 1998-
1997. Deloitte does not provide details of the calculations, but
2007 is considered.
reports the annual values for the upper and the lower bounds of
( 2 ) To derive the annual mean ROS for the postal and parcel sector for
the range (see for example Figure 1). The average upper bound is
the period before 1997, Deloitte uses the average ROS of all sectors
11,7 % and the average lower bound is 6,1 %. If the same calcu
in this period adjusted upwards by the difference between the ROS
lations are performed on the sample including all sectors, the
of the postal and parcel sector and the ROS of all sectors for the
average upper bound is 10,6 % and the average lower bound is
period 1998-2007.
6,1 %.

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(300) The WIK study attempts to establish a benchmark ROS
reason why fixed costs may be high), but also because it
on the basis of three different comparator groups. The
cannot adapt its overall costs in view of the obligation to
Commission is also of the opinion, however, that
maintain a large distribution network (related to the
the WIK study can be criticised on two distinct, yet
USO) and because it is unable to reduce labour costs
related, issues ( 1 ): (i) WIK’s use of samples that also
in view of existing labour contracts. The high proportion
include a large number of smaller companies ( 2 ) which
of fixed costs ( 5 ) further calls into question the inclusion
are clearly not comparable to incumbent postal operators
of small companies whose cost structure (ratio of fixed to
such as DPLP; and (ii) WIK’s assumptions regarding the
variable costs) appears to differ significantly ( 6 ).
level of risk faced by the postal operator under investi
gation.
(305) As set out in the introduction, the Commission is also of
the opinion that the extent to which a postal incumbent
(301) The Commission considers that the scale of operations,
is exposed to risk depends to a large extent on the char
as well as the cost structure of postal incumbents such as
acteristics of the regulatory mechanism established by the
DPLP (in conjunction with the type of regulatory
public authority to finance the USO. In particular, the
mechanism in place), are essential for assessing the
transition to a longer-term price cap for stamp prices (as
benchmarking of profit levels.
experienced by DPLP in 2006) entails a significant
increase in the size of the volume risk. The existence
of such risk weakens WIK’s assumption about the
inherently low-risk nature of DPLP’s activities, at least
for the period covered by a price cap.
(302) First, in the presence of significant fixed costs (related, for
example, to capital costs or other fixed costs linked to
the network), the largest companies benefit more from
economies of scale and density than small ones. By
comparing the average ROS for large and small
companies in WIK’s sample, the Deloitte II study shows
(306) Given the considerations in recitals 286 to 295, the
convincingly that the average ROS increases with the size
Commission believes that, for the purpose of bench
of the companies (measured by the number of
marking DPLP’s profit, the Deloitte samples improve
employees) ( 3 ). Indeed, the average first quartile value
upon WIK’s samples in so far as they are limited to
(Q1) is very low in the three WIK samples (e.g. only
companies with a bigger minimum size (annual
0,75 % for the WIK sample II over the period 1998-
turnover exceeding EUR 100 million).
2007) ( 4 ), so that it would appear that there is a
certain over-representation of the (smallest) firms that
are loss making and struggling to stay in the market.
By including so many small firms in its samples
(including in its main WIK II sample), WIK may have
(307) At the same time, it should be noted that, in some
underestimated the benchmark ROS that would be more
respects, the Deloitte approach has certain potential
relevant for larger and better-established firms such as DP
weaknesses and its conclusions should be interpreted
and DPLP.
cautiously.
(303) Second, while WIK correctly refers to the operator’s low
risk profile on account of the monopoly character of its
(308) In particular, the Deloitte samples appear to comprise
operations, it does not appear to have paid sufficient
many firms with a capital intensity higher than that
attention to the significant fixed costs (relative to
which applies to mail operators ( 7 ). From a methodo
variable costs) arising from the USO, nor to changes in
logical point of view, the use of ROS as a tool for
the risk profile that may have resulted from changes in
profit benchmarking requires a comparable sample of
the regulatory regime faced by the operator over time,
firms with similar levels of capital intensity (defined
particularly between the different regulatory periods (e.g.
here as the capital to sales ratio). The working hypothesis
the different management contracts, in the case of DPLP).
is that companies with the same ROS will have a return
on capital employed (ROCE ( 8 )) that is inversely propor
tional to their capital to sales ratio. Accordingly, the use
( 5 ) CRA, p. 8. According to DPLP, 66 % of its costs are fixed (see
(304) The proportion of fixed costs may be high not only
‘Demonstration of DPLP’s entitlement to a risk premium on
because a firm is very capital intensive (a common
reasonable profit for the period 1992-2010’, slide 8).
( 6 ) In line with CRA’s analysis of the sample of firms included in
benchmark group I of the WIK study. See Section 3.2 of the CRA
( 1 ) These criticisms have also been expressed in the Deloitte II and CRA
study.
studies.
( 7 ) This applies especially to Deloitte’s narrow sample of postal and
( 2 ) WIK includes companies with an annual turnover of EUR 3 million.
parcel companies.
( 3 ) Deloitte study, pp. 36-37.
( 8 ) The ROCE can be understood as an (imperfect) accounting proxy for
( 4 ) WIK study, p. 87.
the relevant economic return, the IRR on the capital invested.

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of ROS as a benchmark indicator of profitability requires
whether a more restrictive (i.e. lower) benchmark, e.g. the
identical capital intensity for the companies in the
first quartile (25th percentile), would not be sufficient for
benchmark group. Although reliable estimates of capital
a company in DPLP’s position. However, in the Commis
intensity are difficult to obtain ( 1 ), it would appear that
sion’s view, such an approach would not take sufficient
the mail and press distribution activities are less capital
account of the significant variation in profit levels, both
intensive than the express parcel delivery activities of big
across firms and over time. Furthermore, removing
multinational companies such as UPS, TNT, FedEx and
possible efficiency gains by imposing such a strict cap
DHL ( 2 ). Consequently, the reasonable profit indicator
on the ex-post ROS achieved by the company should be
established on the basis of the Deloitte samples may
avoided.
overstate the benchmark profit that would be appropriate
for companies with the same capital structure as
DPLP ( 3 ).
(312) In the case at hand, the Commission also considers it
inappropriate to base itself on measures that go beyond
the median, such as the third quartile ( 6 ). As the approach
(309) In view of the numerous uncertainties of this bench
chosen already establishes a range across different
marking exercise, the Commission deems it justifiable
samples, the value added of also considering, for stat
to establish a reasonable range of ROS on the basis of
istical purposes, ranges around the median within the
Deloitte’s estimations of the median ROS for the wider
individual samples (the interquartile range commonly
all-sectors sample (5,4 %) as well as the median ROS for
used in transfer pricing) appears somewhat limited ( 7 ).
the sample of companies active in the postal and parcel
The Commission therefore takes into account the
sector (7,4 %) ( 4 ). The resulting range [5,4-7,4 %] would,
variation in the median across the different benchmark
in the Commission’s view, constitute a ‘default range’ for
groups, rather than the variation around the median
reasonable profit, at least for those periods in which
within a particular sample ( 8 ).
DPLP faced a significant degree of risk, in the light of
the compensation contract in force, and strong incentives
to become more efficient ( 5 ).
(313) More importantly, however, given that DPLP’s mail
segment is less capital intensive than that of the
express parcel operators (
(310) The Commission considers the range of [5,4-7,4 %]

9 ), it would appear that using
the median of the latter sample already in itself offers
suitable as a default, both for DPLP’s mail delivery
some leeway for capturing the variation in profit levels
activities and for its press distribution activities, given
that these are closely related and have very similar
around the median for less capital-intensive companies,
business characteristics.
such as DPLP, and for sufficiently rewarding efficiency

gains where appropriate.
(311) It is true that DPLP has faced little or no competition in
the areas concerned (mail and press distribution). On this
(314) Several cross-checks for consistency can be performed by
basis, the question arises whether it is in fact appropriate
comparing the default range mentioned in recital 309
to benchmark its profit with the median profit of
with other available estimates of reasonable profit. As
samples of companies actually facing competition and
indicated at the start of this subsection, it is useful to
perform a cross-check with the median ROS of the CRA
study, which is […] % ( 10 ). The median ROS calculated
( 1 ) See Oxera (2003), Damodaran (2007).
( 2 ) An examination of Deutsche Post’s Annual Reports suggests that the
capital intensity (the ratio of segment assets over total segment
( 6 ) As suggested, for instance, by CRA, see recital 280 above.
revenue as a proxy) of DHL, its express parcel subsidiary, is higher
( 7 ) The latter approach could be more appropriate if the Commission
than that of DP’s mail activities (see 2004 Annual Report, p. 90,
had a relevant sample of firms comparable to DPLP. The question
Table 9, Segment Reporting).
would be whether a certain observed profit level for DPLP would,
( 3 ) See also WIK letter of 5.11.2010.
from a statistical point of view, be significantly different from the
( 4 ) In the Commission’s view, it is preferable in the present case to
sample mean.
consider the median ROS rather than the mean ROS, given that
( 8 ) In this context, the Commission notes that Deloitte’s third-quartile
the former measure is less exposed to outliers than the latter. The
estimate, especially for the narrow postal and parcel sample, may be
Commission notes that both the median and the mean are measures
particularly sensitive to the small sample size.
of central tendency and are commonly used when characterising the
( 9 ) See recital 308.
‘average’.
( 10 ) The results presented in the CRA study are based on the overall
( 5 ) It should be noted that all three expert reports proposed time-
(pooled) sample and, unlike the Deloitte or WIK results, do not
invariant benchmarks for the reasonable ROS, i.e. uniform
represent averages of the annual estimates. In order to ensure
benchmarks applicable for the whole period under consideration.
consistency, the Commission has calculated the average annual
The Commission does not propose to take the time dimension
median from the CRA sample and the result (6,7 %) does not
into account as such, but to differentiate between the various regu
differ materially from the overall median reported in the CRA
latory periods, which is conceptually different.
study (6,6 %).

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on the basis of the WIK benchmark II sample, restricted
appropriate benchmark profit range for the periods when
to companies with a turnover of more than EUR
DPLP faced a low level of risk.
100 million, gives an ROS of 7,1 %. The Commission
concludes that these figures fall within the range of
[5,4-7,4 %], thus supporting the claim that this range
can be viewed as reasonable.
A s s e s s m e n t o f t h e r i s k i n e s s o f D P L P ’ s
c o n t r a c t s
(321) As explained in the introduction to this section, the risk
(315) Thus, overall, the Commission concludes that a default
borne by DPLP depends on the compensation
range of [5,4-7,4 %] would appear to constitute an
mechanism applied by Belgium. This mechanism is
appropriate benchmark range of profit, at least for the
reflected in the different management contracts
periods when DPLP faced a significant degree of risk and
concluded between DPLP and the Belgian State, and
strong incentives to become more efficient.
varies over time. Therefore, it is reasonable to consider
different ranges for the ‘reasonable ROS’ depending on
the compensation mechanism in place, which determines
the degree of risk faced by DPLP, but also the extent to
which DPLP is incentivised to improve productivity.
A r e a s o n a b l e p r o f i t r a n g e i n t h e a b s e n c e
o f s i g n i f i c a n t c o n t r a c t - s p e c i f i c r i s k
(316) In general, the Commission considers that, where the
contract between the incumbent and the public
(322) In this context, the Commission wishes to underline that
authority is such that the public service is connected
the risk characterisation of the contracts is not only
with a significant degree of risk, the reasonable profit
dependent on the mere existence of risk in DPLP’s
allowed to the incumbent should be commensurate
management contracts, or even the absolute level of
with the corresponding level of risk involved. By
risk, but above all on the extent to which the risk is
contrast, where the contract entails little risk, the level
greater or smaller than that faced by the companies in
of reasonable profit should be low.
the same sample groups. The same applies to the extent
to which DPLP is incentivised to achieve efficiency gains.
Given that these sample groups are composed of firms
operating in a competitive environment, they normally
face significant risk and strong incentives to become
(317) In the previous section, the Commission explained its
more efficient.
approach for establishing a default reasonable profit
range of [5,4-7,4 %], which is considered appropriate
for contracts involving a significant degree of risk. It is
difficult to quantify the appropriate benchmark in terms
of a range of reasonable ROS, but it is clear that such an
(323) The Commission is of the opinion that the fourth
ROS range should be on the left-hand side of the sample
management contract (2006-2010) clearly provides for
distribution of observed profit levels. The Commission is
mechanisms involving long-term price and funding
of the opinion that it is justified from this perspective to
commitments based on ex-ante parameters. This applies
adopt a reasonable profit range based on the first quartile
both to DPLP’s mail delivery and press distribution activ
(25th percentile) instead of the median.
ities.
(318) The use of the 25th percentile as a benchmark for low-
(324) Specifically, as regards press distribution, Article 9 of the
risk contracts leads to a range for reasonable ROS of
fourth management contract specifies that, over the
[3,6-4,8 %] based on the different Deloitte samples.
contract period (standard five years), the weighted
average of tariffs for the provision of services belonging
to the ‘small users package’ will not increase more
quickly than allowed by a price cap mechanism based
on the ‘health index’ (a specific consumer price index)
(319) As before, a comparison with the CRA results for postal
and a quality bonus reflecting the percentage of mail
incumbents may be a further useful cross-check. The
items delivered on time. In the Commission’s view,
average annual 25th percentile calculated by the
fixing the tariffs over the entire contract period in this
Commission is […] %. The Commission concludes that
way reflects all the characteristics of an incentive
these figures fall within the range of [3,6-4,8 %], thus
contract, exposing the company to a significant degree
supporting the claim that this range can be viewed as
of risk.
reasonable.
(325) As regards press distribution, Article 2 of the fourth
(320) In general, the Commission concludes that a default
management contract specifies that, over the contract
range of [3,6-4,8 %] would appear to constitute an
period, tariffs for press distribution will not increase

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more quickly than the ‘health index’. In order to cover
refer, in rather general terms, to tariffs based on real
the net costs of press distribution, taking into account
costs, established on the basis of adequate accounting
projected efficiencies, Article 13(2) fixes the annual
principles ( 2 ).
compensation to which DPLP is entitled at EUR
290 613 000 (adjusted for inflation) ( 1 ). Article 13(5)
sets out that, in case the scope or conditions of the
SGEI change, or if there is a significant development of
the costs DPLP cannot control, the contracting parties
will investigate whether the compensation amount
(329) Likewise, as regards press distribution, the Commission
should be adjusted so that it remains in line with
observes that, unlike the fourth management contract,
costs. Any such adjustment requires a decision by the
the first three management contracts do not involve
Council of Minsters. The Commission recognises that
lump-sum budgets covering the contract period ( 3 ).
this latter clause could be read as an escape clause,
Rather, they refer to compensation on the basis of real
reintroducing certain ex-post elements into the contract
costs ( 4 ). The Commission notes that the second contract
(which protect DPLP from risk). However, the
also specified a global cap on compensation, but the
Commission considers that the language used by the
actual compensation amounts observed in the period
public authorities is sufficiently non-committal and that
seem to call into question whether the cap was really
DPLP cannot therefore count on the clause being used. In
binding ( 5 ). The first management contract also
general, the Commission considers that the arrangements
specified an annual compensation amount, but the
for DPLP’s press distribution activities imply a long-term
Commission notes that, at the same time, the contract
commitment as regards the level of compensation.
did not specify a long-term cap on the tariffs for press
distribution.
(330) As a result, the Commission is of the opinion that the
range of [3,6-4,8 %], which was deemed reasonable in
(326) Consequently, in the Commission’s view, the fourth
the absence of significant contract-specific risk, should
management contract (2006-2010) cannot be char
be applied to both press distribution and mail delivery
acterised as involving low risk, but should rather be
for the period covered by the first three management
deemed as involving a significant degree of risk.
contracts.
Overall, the default range of [5,4-7,4 %] would appear
appropriate for both types of activities provided for
under the fourth management contract.
(331) The Commission notes that a contract-based approach is
also proposed by the Belgian authorities in their
submission of 14 December 2011. Although their
proposed methodology raises a number of questions
concerning the individual risk factors and the way in
(327) By contrast, the earlier management contracts (up to
which they are weighted ( 6 ), an analysis by contract
2005) seem to have been largely based on price and
period, essentially classifying the risk faced by DPLP
compensation mechanisms involving a low degree of
using a three-grade scale (low, medium and high), is
risk for DPLP.
consistent overall with the approach adopted by the
Commission. On balance, the relevant ranking by DPLP
of the contracts in terms of riskiness appears consistent
with the Commission’s analysis, since the Belgian auth
orities also consider the fourth contract riskier overall
than the first three contracts.
( 2 ) Thus, Article 3 of the second management contract (1997-2001)
(328) As regards the setting of postage stamp prices, the
states: ‘Prices must be based on real costs. These costs are
Commission observes that the first three management
determined on the basis of the accounting rules that apply to
contracts do not use a price cap mechanism of the
commercial companies and whose accounting principles comply
type used in the fourth management contract (involving
with those accepted by the institute of auditors’. Similar language
a long-term price commitment). Instead, these contracts
is used in the first and third management contracts.
( 3 ) Confirmation of this view as regards the second and third
management contracts can be found in the Belgian submission of
( 1 ) ‘On the basis of the analysis of costs and revenues mentioned in
14 December. Slide 29 of this submission indicates that, in the
point 1, carried out by the IBPT/BIPT in conjunction with the
second and third management contracts, compensation was based
College of Commissioners of La Poste, and taking account of the
on real costs (not on lump sums).
savings measures planned by the management of La Poste in order
( 4 ) Thus, Article 3 of the second management contract (1997-2001)
to align the structure of La Poste’s costs with the European average
states: ‘La Poste invoices the State periodically, on the basis of real
for the sector, the State’s financial contribution mentioned in point 1
costs, for the services supplied at a price lower than cost price.’
is fixed at an annual amount of EUR 290 613 000 for each of the
( 5 ) See recital 38.
periods 24/09/05-23/09/06, 24/09/06-23/09/07, 24/09/07-
( 6 ) The submission does not give any indication of the relative
23/09/08, 24/09/08-23/09/09, 24/09/09-23/09/10.’
weightings of the different risk factors.

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C o n c l u s i o n o n t h e l e v e l o f r e a s o n a b l e
be included in DPLP’s revenue for the calculation of over
p r o f i t
compensation for the period covered by the first
management contract. DPLP did not pay any
(332) The Commission concludes that a default range for
consideration to the State for the use of the buildings
return on sales (ROS) of [5,4-7,4 %] is an appropriate
in the period preceding the transfer.
benchmark range for determining reasonable profit for
the periods when DPLP faced a significant degree of risk
and for taking account of the strong efficiency incentives.
Delayed SGEI compensation for 1996 amounting to EUR
62 million, paid as a capital injection in 1997
(333) The Commission also concludes that an ROS range of
[3,6-4,8 %] is an appropriate benchmark range for deter
mining reasonable profit for the periods when DPLP did
(341) An amount of EUR 62 million was paid by the State to
not face a significant degree of risk.
DPLP in 1997 and was booked by DPLP as a capital
injection. The Belgian authorities have subsequently
admitted that this transfer was in fact a delayed
(334) In order to take into account the efforts to achieve effi
payment of the balance of the annual compensation
ciency gains which the Belgian authorities claim DPLP
for 1996 provided for in the first management contract.
made, the Commission has decided to take a prudent
approach by using the upper bounds of these two
ranges for fixing the reasonable profit to be included in
(342) The amount had originally not been paid on time to
the costs of the public service. This approach is also
DPLP in 1996, so the State compensation was lower
emphasised by the Deloitte study (see recital 293),
than the annual amount provided for in the management
according to which it is appropriate to use ranges
contract for the year in question.
because of the need to avoid penalising above-average
performance resulting from efficiency gains.
(343) For the purposes of controlling overcompensation, the
(335) The Commission considers that the first three
payment of EUR 62 million is included in the SGEI
management contracts (1992-1996, 1997-2002 and
compensation for the period covered by the first
2003-2005) are low risk and a reasonable profit rate
management contract.
of 4,8 % ROS can be applied to them, both for mail
delivery and for press distribution. The fourth
management contract (2006-2010), on the other hand,
(344) The calculation of overcompensation for the first
is deemed to involve considerably more risk and a
management contract can be summarised as follows:
reasonable profit rate of 7,4 % ROS can be applied to
both mail delivery and press distribution.
– Net cost (costs minus revenues) of all public service
C o n t r o l o f o v e r c o m p e n s a t i o n f o r t h e
missions, including the USO
p e r i o d c o v e r e d b y t h e f i r s t m a n a g e m e n t
c o n t r a c t ( 1 9 9 2 - 1 9 9 6 )
– Reasonable profit allowed for SGEIs
(336) The first management contract specifies that the annual
State compensation is intended for all public service
missions.
+ Annual SGEI compensation
(337) The potential overcompensation is therefore to be
calculated by adding together all revenues and costs of
+ Transfer of buildings
all the public service missions.
+ 1997 Capital injection
(338) The annual State compensation for the public service
missions is to be included in revenue. The total
amount of annual compensation received by DPLP
= Overcompensation
under the first management contract is EUR 1,5 billion.
C o n t r o l o f o v e r c o m p e n s a t i o n f o r t h e
(339) In addition, the following aid measures have to be taken
into account:
p e r i o d c o v e r e d b y t h e s u b s e q u e n t t h r e e
m a n a g e m e n t c o n t r a c t s ( 1 9 9 7 - 2 0 1 0 )
Transfer of buildings
(345) For the three subsequent management contracts, the
calculation of overcompensation will take into account
only the revenues and costs of the SGEIs that, under the
(340) The first management contract also provided for a
provisions of those contracts, could be subject to public
transfer of buildings from the State to DPLP. This
service compensation. The corresponding revenues and
transfer of buildings, worth EUR 112,2 million, which
costs of the other SGEIs that, according to the provisions
did not include the payment of any consideration, is to
of these contracts, were not entitled to aid are not taken

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into consideration. As the universal postal service is not
their classification for the purposes of Article 87 of the
part of the aided activities, its potential net cost will not
EC Treaty, and are added to its revenue’ ( 1 ). This principle
be taken into account and is to be fully financed by
reflects the necessity and proportionality condition
DPLP from its own resources in accordance with the
inherent in Article 106(2) TFEU. In fact, any aid for an
public service mission entrusted to it under the
SGEI paid on top of excess profits resulting from an
management contracts. The activities that, in accordance
exclusive or special right granted to the same operator
with the management contracts, are entitled to the level
which are already sufficient to cover the costs of another
of compensation established in each contract, include, in
SGEI is not necessary for the provision of that SGEI. The
particular, press distribution (newspapers and periodicals)
operator making such excess profits already benefits from
and the other public services listed in recital 33 above.
a State measure allowing it to provide the SGEI under
conditions of economic equilibrium and, therefore, no
additional compensation is necessary.
(346) On account of the low tariffs charged for press
distribution, the aided SGEIs are loss-making overall.
(351) Therefore, any excess profit earned in the reserved area as
a result of the exclusive right must be taken into account
when assessing the necessity of the SGEI compensation
(347) As potential overcompensation of one service may be
granted to DPLP.
used to finance the net costs of other undercompensated
public service missions, the calculation will add together
all revenues and costs of the SGEIs eligible for aid under
the management contracts.
(352) Accordingly, any profit from the reserved area (USO R)
above the level of reasonable profit is included in the
analysis of the SGEI overcompensation.
(348) The total amount of annual compensation received by
DPLP under these three management contracts is EUR
3,5 billion.
(353) However, since the reserved area is first and foremost
meant to finance the universal service, any loss in the
other domains of the universal service will reduce the
contribution of the reserved area to the costs of other
I n c l u s i o n o f e x c e s s p r o f i t f r o m t h e
linked SGEIs.
r e s e r v e d a r e a
(349) Apart from the compensation provided for in the
management contracts, DPLP benefited, throughout the
relevant period under investigation, from exclusive rights
C o s t s i n c u r r e d b y U S O c o n s t r a i n t s
granted by the State for the provision of reserved postal
services. Although the potential net surpluses from this
(354) Furthermore, in order to determine the genuine excess
reserved area do not constitute State resources for the
profit generated by the reserved area, it is necessary to
purposes of State aid control and cannot as a result be
take account of costs incurred as a result of the universal
subject to a recovery order in case of overcompensation,
service obligation that are borne by activities outside the
they can and must be taken into account under the State
scope of the universal service. In line with the Chronopost
aid rules when assessing the necessity and proportionality
case law, the costs of the retail network are apportioned
of any other State aid granted to the same operator as
in DPLP’s cost accounting among the activities using the
public service compensation. Therefore, when assessing
retail network, which includes products both within and
the compatibility of the compensation granted to DPLP
outside the scope of the universal service. In particular,
under the different management contracts in the light of
the obligation imposed on DPLP to maintain a retail
Article 106(2) TFEU, the excess profits generated by the
network of a certain size and density to provide a
Belgian postal operator in the reserved area will be
universal postal service at an adequate level of quality
deducted from the costs of any SGEI entitled to public
as defined by the Belgian authorities leads to losses in
service compensation in accordance with the provisions
commercial activities outside the scope of the universal
of those contracts.
service because a share of the retail network costs is
allocated, in line with the Chronopost case law, to the
commercial products using the retail network.
(350) It should be noted in this respect that this principle is
included in the SGEI Framework, which states: ‘if the
undertaking in question holds special or exclusive
(355) Network constraint imposed by the management
rights linked to a service of general economic interest
contracts: the constraints imposed by the State concern
that generates profit in excess of the reasonable profit,
the density and type of outlets (post offices and/or
or benefits from other advantages granted by the State,
these must be taken into consideration, irrespective of
( 1 ) Paragraph 17 thereof.

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‘points poste’ (service counters)) composing the retail
territorial coverage obligation imposed by the State
network. These constraints are defined in the successive
beyond the requirements linked to the USO. On this
management contracts. For example, the fourth
basis Belgium considers that all the net costs of that
management contract (2005-2010) provides for:
specific territorial coverage obligation should be
compensated by the State.
(a) the general requirement to operate a network
enabling the provision of the universal service and
(357) Quantifying the network constraint: in order to
other public services entrusted to DPLP ( 1 );
determine the net costs for DPLP arising from the
obligation to operate a retail network composed of at
least 1 300 outlets, of which a minimum of 589 must
(b) the requirement to operate at least 1 300 outlets
be post offices, the Belgian authorities have compared the
(post offices and points poste ( 2 ));
actual retail network, in which the density and type of
outlets are imposed by the State, with a hypothetical
retail network that DPLP would operate in the absence
(c) the requirement to operate at least 589 post offices;
of specific constraints. In other words, the hypothetical
retail network is what DPLP would have chosen to
operate under commercial terms in the absence of the
(d) additionally, the maximum road distance from each
public service obligations imposed by the State.
outlet with a basic range of services to a post office
offering a complete range of services must not exceed
10 km.
(358) The Belgian authorities consider that the hypothetical
network would be composed entirely of points poste.
There would no longer be post offices. However, in
(356) The Belgian authorities consider that the specific
order to be able to continue to serve the same total
requirements concerning the number and type of
volume of customers, DPLP would have to drastically
outlets in the DPLP retail network constitute a separate,
increase the number of points poste.
Comparison of DPLP’s current retail network with a hypothetical network in the absence of State obligations
Total number of outlets (a) Number of post offices (b) Number of points poste
Post offices (a) + points
(dedicated outlets run
(service counters located
poste (b)
by DPLP itself)
in third-party premises)
DPLP’s actual retail network (end 2009) 1
401
= 713
+ 688
Hypothetical retail network in the absence
[…] = […]
+ […]
of constraints imposed by the State
(according to the Belgian authorities)
Retail network obligation imposed by the
Minimum 1 300 Minimum
589 No
obligation
State
(359) As can be seen from table above, DPLP’s actual retail
commercial basis would be significantly different: the
network fulfils the requirements of the State: the total
total number of points poste would increase, but there
number of outlets and the number of post offices are
would no longer be post offices run by DPLP.
both above the required level. By contrast, the hypo
thetical network that DPLP would operate if it were
allowed to choose its retail network on a purely
(360) Reality of the network constraint: it should be pointed
out that the State-imposed constraint on DPLP is not
( 1 ) Article 19: ‘La Poste shall maintain basic network infrastructure for
clearly established.
collection, sorting, transport and appropriate distribution in order to
meet its obligations regarding the provision of the universal service
and other public service missions mentioned in Article 2 of this
management contract.’
( 2 ) Post offices are stand-alone outlets run and staffed by DPLP itself,
(361) First, the actual network operated by DPLP is larger than
whereas points poste are service counters located in third-party
that required by the State. Both the total number of
premises, such as supermarkets or bookstores, operating without
outlets and the number of post offices is higher than
DPLP personnel. While all the costs of post offices are borne by
the minimum required by the State. This could imply
DPLP, third parties hosting a point poste receive only service fees for
that DPLP is not actually constrained by the obligations,
the postal operations carried out there. As a result, points poste are
much less costly for DPLP to run than separate, stand-alone post
but instead chooses freely to operate a network of the
offices.
current size.

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(362) The Belgian authorities justify this excess number of post
(365) Existence of a specific obligation for territorial coverage:
offices by the 10 km distance requirement, the need to
even if the existence of the network constraint were
have a safety margin in case of unexpected closures of
accepted, the Belgian authorities’ claim that it results in
points poste, and their intention to increase the required
a separate territorial coverage mission does not seem
minimum number of post offices to 650 in the next
justified because there do not appear to be specific
management contract, which would make it counter-
provisions in the management contracts defining such
productive to close offices to come down to the level
an obligation that would be distinct from and go
currently required, only to re-open them again later. The
beyond the requirements of the USO and other public
Belgian authorities argue that, for these reasons, it has
services obligations. On the contrary, the management
not been feasible for DPLP to further decrease the
contracts between DPLP and the Belgian State specify
number of post offices to move it closer to the
that the sole purpose of the network constraint is to
minimum requirement of 589. According to the
ensure the universal service and the other SGEIs (dis
Belgian authorities, the current network of 713 post
tribution of newspapers, magazines, postal accounts,
offices is therefore de facto constrained by the State
postal orders, etc.); and the network costs necessary for
requirements despite the nominal excess in the
the provision of these services are a priori already booked
numbers of outlets.
in the accounts of these different services ( 1 ). In addition,
the management contracts do not provide for any
mechanism to compensate for the costs of a territorial
coverage obligation. The Commission notes that the
requirement to define parameters in advance for calcu
lating compensation was introduced in the 2005 SGEI
Framework and that overcompensation for SGEI costs
(363) Second, the method chosen by the Belgian authorities
incurred by DPLP has been identified in the period
relies upon backward projection of retail network costs
after 2005 (see recital 386).
from 2009 to 1992. Such backward projection inevitably
entails methodological uncertainties. The business model
of the points poste has not necessarily been available
since 1992. Furthermore, in the past, DPLP’s workforce
was mainly composed of civil servants, whose payroll
costs were very rigid. As the points poste are not run
by DPLP personnel, the DPLP statutory employees no
longer working in post offices would have remained on
DPLP’s payroll. It is therefore doubtful whether, in the
(366) It should be noted that, in accordance with Article 3 of
early part of the period under investigation, the potential
Directive 97/67/EC, Member States are required to
closure of post offices would have entailed savings in
impose an obligation upon postal incumbents to
direct payroll costs. By contrast, in 2009, when the
provide a universal service at an appropriate level of
workforce was composed to a higher degree of
quality, including appropriate geographic coverage.
contractual workers, such cost savings could have materi
However, this territorial coverage, which also exists in
alised to some extent. With the gradual transition
the present Belgian case, is only one of the multiple
towards less rigid staffing and the successive
aspects of the USO. In the management contracts
improvements in the cost accounting system, the
entrusting DPLP with the universal service mission, the
accounting data from more recent years can be
Commission cannot identify any reference to an
considered free from this type of distortion. However,
additional mission requiring the postal incumbent to
given that there are still over 20 000 civil servants
operate a larger network of offices beyond the territorial
working for bpost, who can neither be employed in
coverage imposed by the USO and other related public
points poste nor be dismissed, the replacement of all
services to meet objectives of territorial cohesion or
post offices by points poste remains a purely theoretical
development. There is no doubt that each post office
and unrealistic option even today.
run by DPLP for universal service reasons contributes
to territorial cohesion ( 2 ). However, legally speaking, the
obligation to operate it is linked to the need to guarantee
a sufficient degree of quality in the universal postal
service and other related services. In order to invoke
such a complementary territorial mission, in the light
of the relevant case law, it would be necessary for
(364) The Belgian authorities underline, however, that potential
DPLP to be entrusted with a separate and clearly
redundancy costs in the past would have been offset by
defined mission to operate offices beyond the size of
savings in operating costs and the sale of unnecessary
the postal network fixed for universal service reasons.
buildings. As regards the reliability of the data for the
This entrustment would have to specify the obligations,
years 1992-2002, the Belgian authorities state that the
the ensuing costs and the system for financing the net
costs of the retail network have probably been underesti
costs of the additional territorial mission.
mated, as some items that could have been considered
network costs have been grouped in other cost centres.
( 1 ) First management contract, Article 1 of the amendment of
Consequently, the weaknesses in the backward projection
10.5.1995; second management contract, Article 4; third
method would be offset by the other, conservative
management contract, Article 22; fourth management contract,
Article 19.
assumptions made by the Belgian authorities when calcu
( 2 ) Directive 2002/39/EC, recital 6 and Directive 2008/6/EC, recitals
lating the cost in the past years.
18-22.

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(367) The Commission cannot find any of these elements in
from a cost-accounting perspective, is that a proportion
the management contracts between the State and DPLP.
of the network costs that would otherwise be charged to
The Belgian authorities and DPLP are in fact trying artifi
the public service is instead allocated to the commercial
cially to justify a posteriori the existence of a distinct
products, which appear loss making as a result.
territorial mission by arguing that the territorial
coverage set out in the management contracts is
necessary on two counts: both for USO purposes and
S y s t e m f o r c a l c u l a t i n g o v e r c o m p e n
for an alleged territorial mission beyond the USO.
s a t i o n
However, the relevant contracts lack any provisions on
the alleged separate territorial mission requiring DPLP to
(372) Accordingly, the calculation of overcompensation in the
operate a larger network than that laid down for
present case can summarised as follows:
universal service provision.
– Net cost (costs minus revenues) of SGEIs
(368) It should be noted that the artificial nature of the claims
made by the Belgian authorities and DPLP is further
– Reasonable profit allowed to SGEIs
evidenced by their own reasoning. The Belgian auth
orities, with a view to diminishing the level of
potential overcompensation, would like the Commission
+ Annual SGEI compensation
to take into consideration, as part of the costs of an
additional territorial mission beyond the scope of the
USO, the difference between the real cost of a fully-
+ Surplus from excess profit from USO reserved area
fledged office and the cost of a hypothetical point
(after the financing of the universal service, including
poste that would replace it. This reasoning does not
the additional cost it induces for commercial services)
rely upon a hypothetical larger network that DPLP
would operate to meet its territorial objectives, but
only identifies the extra cost of the universal service
= Overcompensation
coverage, which is not entitled to aid under the
management contracts. This absence of a territorial
objective is confirmed by the fact that the Belgian auth
C o m p a t i b i l i t y o f t h e c a p i t a l i n j e c t i o n s
orities would have to substantially increase the number
of points poste to provide the universal service since it is
(373) The compatibility of the 1997 capital injection should be
not possible to do it with an equivalent number of points
examined as part of the assessment of the compatibility
poste.
of the annual SGEI compensation since it was not a
separate recapitalisation, but a payment related to
compensation for the public service missions for the
(369) Nevertheless, it can be observed that, although it does
period 1992-1996.
not appear possible to accept the claim by the Belgian
authorities of a real and distinct territorial coverage
obligation, the network constraint imposed by the
(374) As the 2003 capital injection does not constitute State
Belgian State to operate a network capable of delivering
aid within the meaning of Article 107(1) TFEU, the issue
the universal service and the other public services not
of compatibility of the aid does not arise.
only concerns those services, but also induces additional
costs for the commercial services.
(375) As the 2006 capital injection does not constitute State
aid within the meaning of Article 107(1) TFEU, the issue
(370) In line with activity-based costing and in accordance with
of compatibility of the aid does not arise.
the Chronopost case law, all the activities using the retail
network contribute towards its common costs, as
explained in recital 354. Consequently, all the products,
I n c o m p a t i b i l i t y o f t h e S t a t e g u a r a n t e e
including the commercial products, contribute to the
(376) It is worth noting that the State guarantee is not included
network costs. The costs deriving from the State-
in the management contract as a form of compensation
imposed requirement to operate post offices are a
for the public service obligations, and therefore its
burden on the commercial products, which appear to
compatibility cannot be assessed in the light of
be consistently loss making as a result, even though
Article 106(2) TFEU. As no other basis for compatibility
they are sold at market price. DPLP sells its commercial
has been brought forward by the Belgian authorities nor
services through the network because they finance a
detected by the Commission, the measure constitutes
share of the fixed costs of the network and therefore
operating aid that is incompatible with the internal
contribute indirectly to the universal service.
market and, consequently, must be recovered.
(371) From an economic viewpoint, it would seem sensible,
T a x m e a s u r e s
when assessing overcompensation to DPLP, to take into
account the losses on commercial products induced by
(377) As already mentioned, the corporate tax exemption has
the USO and other public services obligations. While
not conferred an advantage on DPLP and therefore does
DPLP has an economic incentive to sell commercial
not constitute State aid within the meaning of
products through the retail network, the consequence,
Article 107(1) TFEU.

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EN
29.6.2012 Official
Journal
of
the
European
Union L
170/41
(378) The property tax and local tax exemptions constitute
by Articles 17-19 of Council Regulation (EC) No
State aid within the meaning of Article 107(1) TFEU,
659/1999 of 22 March 1999 laying down detailed
but are to be considered existing aid as they were estab
rules for the application of Article 93 of the EC
lished before the entry into force of the Treaty. In
Treaty ( 1 ).
addition, it is to be noted that these fiscal measures are
not included in the management contracts as a form of
compensation for the public service obligations.
6.3.3.3. Calculation of the amount of overcompensation
(379) Consequently, the tax exemptions do not affect the calcu
lation of overcompensation, which is based on the actual
(381) The amount of overcompensation can be calculated on
costs borne by DPLP (which already include the effect of
the basis of the assessment set out in subsection 6.3.3.2.
those tax exemptions).
In line with the public service financing mechanism
established by the Belgian authorities in the management
(380) Therefore, the tax exemptions will be dealt with
contracts, overcompensation will be calculated separately
separately in an existing aid procedure as provided for
for each period of entrustment.
First management contract: 1992-1996
(thousand EUR)
– Public
service
net
costs :
– […]
– Induced
network
costs :
– […]
– Reasonable
profit
:
– […]
(4,8 % return on sales)
allowed
+ State
compensation
:
+ […]
+ Capital
injection
:
+ 62
000
(delayed SGEI compensation)
(1997)
+ Transfer
of
buildings
:
+ 112
209
= Overcompensation
= […]
Second management contract: 1997-2002
Calculation of surplus from excess profit from USO reserved area (OSU R)
(thousand EUR)
+ Excess profit from USO R :
+ […]
(USO R profit above 4,8 % ROS)
USO induced network costs : […]
Net cost of USO NR
: […]
(USO NR is loss making)
USO NR Reasonable profit : […]
(4,8 % return on sales)
= USO costs to be financed
= […]
by the reserved area
Surplus from excess profit
= […]
from the reserved area
reducing the SGEI net
costs
Overcompensation calculation:
(thousand EUR)
– Public
service
net
costs :
– […]
– Reasonable
profit
:
– […]
(4,8 % return on sales)
allowed
( 1 ) OJ L 83, 27.3.1999, p. 1.

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L 170/42
EN
Official Journal of the European Union
29.6.2012
+ State
compensation
:
+ 1
286
461
+ USO
R
surplus
+ […]
= Overcompensation
= […]
Third management contract: 2003-2005
Calculation of surplus from excess profit from USO reserved area (USO R)
(thousand EUR)
+ Excess profit from USO R :
+ […]
(USO R profit above 4,8 % ROS)
USO induced network costs : […]
Net cost of USO NR
:
– […]
(USO NR is profit making)
USO Reasonable profit
: […]
(4,8 % return on sales)
= USO cost to be financed
= […]
(no losses to be financed)
by the reserved area
Surplus from excess profit
= […]
from the reserved area
reducing the SGEI net
costs
Overcompensation calculation:
(thousand EUR)
– Public
service
net
costs :
– […]
– Reasonable
profit
:
– […]
(4,8 % return on sales)
allowed
+ State
compensation
:
+ 677
985
+ USO
R
surplus:
:
+ […]
= Overcompensation
= […]
Fourth management contract: 2006-2010
Calculation of surplus from excess profit from USO reserved area (USO R)
(thousand EUR)
+ Excess profit from USO R :
+ […]
(USO R profit above 7,4 % ROS)
USO induced network costs : […]
Net cost of USO NR
: […]
(USO NR is profit making)
USO reasonable profit
: […]
(7,4 % return on sales)
= USO cost to be financed
= […]
(no losses to be financed)
by the reserved area
Surplus from excess profit
= […]
from the reserved area
reducing the SGEI net
costs

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EN
29.6.2012 Official
Journal
of
the
European
Union L
170/43
Overcompensation calculation:
(thousand EUR)
– Public
service
net
costs
:
- […]
– Reasonable
profit
allowed :
– […]
(7,4 % return on sales)
+ State
compensation
:
+ 1
568
787
+ USO
R
surplus
:
+ […]
= Overcompensation
= […]
Other measures
State guarantee
(thousand EUR)
State guarantee 2004: 1
500
= 1
500
T i m e - h o r i z o n f o r c a l c u l a t i n g o v e r c o m
its period of validity (2006-2010), undercompensation
p e n s a t i o n
identified for periods not covered by the contract
cannot be offset against possible overcompensation
(382) As agreed with the Belgian authorities
( 1 ), the ‘most
granted to DPLP.
objective and balanced’ method for defining the time
period to be taken into account in calculating overall
overcompensation in the present case is the ‘contract-
R e s u l t o f t h e c a l c u l a t i o n o f o v e r c o m
by-contract’ approach. The Commission does not see
p e n s a t i o n
any problem in accepting the Belgian authorities’
request. In fact this method ensures greater predictability
(386) The Commission concludes that DPLP has been over
and legal certainty for the contracting parties and thereby
compensated by the amount of EUR 415 million for
tends to reduce the risk of overcompensation.
discharging its public service mission, notably during
Consequently, each period will be considered separately
the period of application of the fourth management
and no over-/undercompensation will be carried over
contract. Since overcompensation constitutes incom
from one period to the next.
patible aid, it must be recovered.
(383) The Belgian authorities, however, argue that, before the
2005 SGEI Framework entered into force, the
7. CONCLUSION
Commission had consistently applied a global method
(387) The pension relief, the annual public transfers, the
for calculating over-/undercompensation. On that basis,
transfers of buildings, the 1997 capital injection, the
the Belgian authorities have specifically requested a
tax exemptions, and the State guarantee constitute aid
pooling of all years before 2005 ( 2 ) in one global calcu
measures within the meaning of Article 107(1) TFEU
lation of over-/undercompensation.
because they relieved DPLP of costs that are normally
borne by private undertakings.
(384) The Commission observes that, since all three
management contracts before 2005 result in undercom
pensation, the pooling of all years would have no
(388) The 2003 and 2006 capital injections do not constitute
consequence on the amount of overcompensation to be
aid within the meaning of Article 107(1) TFEU because
recovered.
the State acted in conformity with the MEIP.
(385) Furthermore, the Commission notes that, since the
(389) The Commission finds that Belgium unlawfully imple
adoption of the 2005 SGEI Framework, the ‘parameters
mented the measures in breach of Article 108(2) TFEU,
for calculating, controlling and reviewing the compen
with the exception of the 2003 capital injection, which
sation’ have to be defined in advance in the entrustment
was duly notified to the Commission before being
act(s) ( 3 ). Since the fourth management contract does not
executed, and the tax exemptions, which constitute
provide for compensation for any costs incurred outside
existing aid.
( 1 ) Letter from the Belgian authorities of 20 December 2011.
( 2 ) The Belgian authorities consider, in particular, that the global
(390) The pension relief has not placed DPLP in a more
approach for pre-2006 periods has been confirmed by Commission
favourable situation than its competitors with regard to
Decision 2011/747/EU of 24 May 2011 on State aid C 88/97
social security contributions. The measure can therefore
implemented by France in favour of Crédit Mutuel (OJ L 309,
24.11.2011, p. 23).
be declared compatible pursuant to Article 107(3)(c)
( 3 ) SGEI Framework, paragraph 12(d).
TFEU.

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L 170/44
EN
Official Journal of the European Union
29.6.2012
(391) The annual compensation granted under the fourth
3. The
interest
shall
be
calculated
on
a
compound
basis
in
management contract constitutes incompatible aid
accordance with Chapter V of Commission Regulation (EC) No
pursuant to Article 106(2) TFEU to the extent that it
794/2004 ( 1 ) and Regulation (EC) No 271/2008 amending
overcompensated DPLP.
Regulation (EC) No 794/2004.
(392) The State guarantee constitutes incompatible aid.
4. Belgium
shall
cancel,
with
effect
from
the
date
of
adoption
of this Decision, all outstanding payments of aid referred to in
(393) The property tax exemption and local tax exemption
Articles 2 and 4.
constitute existing aid and will be dealt with separately
in an existing aid procedure in accordance with Articles
17-19 of Regulation (EC) No 659/1999.
Article 6

1. Recovery of the aid granted under the measures referred
(394) In accordance with Article 5 of the SGEI Framework, this
Decision is without prejudice to the Union provisions in
to in Articles 2 and 4 shall be immediate and effective.
force in the field of public procurement and competition,
2. Belgium shall ensure that this Decision is implemented
HAS ADOPTED THIS DECISION:
within four months of the date of its notification.
Article 1
Article 7
The State aid in the form of pension relief granted to De Post-
1. Within two months of the notification of this Decision,
La Poste (DPLP, now bpost) implemented by Belgium is
Belgium shall submit the following information to the
compatible with the internal market within the meaning of
Commission:
Article 107(3)(c) of the Treaty on the Functioning of the
European Union.
(a) the total amount (principal and interest) to be recovered
from the beneficiary;
Article 2
(b) a detailed description of the measures already taken and
The State aid in the form of compensation for public service
those planned to comply with this Decision;
costs granted to De Post-La Poste (DPLP, now bpost) unlawfully
implemented by Belgium in breach of Article 108(3) of the
(c) documents demonstrating that the beneficiary has been
Treaty on the Functioning of the European Union is incom
ordered to repay the aid.
patible with the internal market.
Article 3
2. Belgium
shall
keep
the
Commission
informed
of
the
progress of the national measures taken to implement this
The injections of capital into De Post-La Poste (DPLP, now
Decision until recovery of the aid granted under the schemes
bpost) made by Belgium in 2003 and 2006 do not constitute
referred to in Articles 2 and 4 has been completed. It shall
aid within the meaning of Article 107(1) of the Treaty on the
immediately submit, upon simple request by the Commission,
Functioning of the European Union.
any information on the measures already taken and those
planned to comply with this Decision. It shall also provide
Article 4
detailed information concerning the amounts of aid and
interest already recovered from the beneficiary.
The State aid in the form of a State guarantee granted to De
Post-La Poste (DPLP, now bpost) unlawfully implemented by
Article 8
Belgium in breach of Article 108(3) of the Treaty on the Func
tioning of the European Union is incompatible with the internal
This Decision is addressed to the Kingdom of Belgium.
market.
Article 5
Done at Brussels, 25 January 2012.
1. Belgium
shall
recover
the
incompatible
aid
granted
under
the measures referred to in Articles 2 and 4.
For the Commission
2. The sums to be recovered shall bear interest from the date
on which they were placed at the disposal of the beneficiary
Joaquín ALMUNIA
until their actual recovery.
Vice-President
( 1 ) OJ L 140, 30.4.2004, p. 1.

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Document Outline

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