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FRANKFURT -(Dow Jones)- German mail and logistics giant Deutsche Post AG (XETRA:DPW) ( DPW.XE) said Tuesday the German government will repay the company around EUR1 billion after the European Court annulled a 2002 European ruling on state aid.
Deutsche Post said the European Court of the First Instance in Luxembourg confirmed the company's legal position.
The company expects to receive the repayment in several weeks' time and wants to earmark the cash inflow to be returned to shareholders, pending clarity regarding other cash-relevant issues.
European law allows countries to subsidize postal operations to ensure that hard-to-reach or thinly populated areas, more expensive to service, get postal deliveries.
However, in 2002, the commission found the postal operator, between 1994 and 1998, covered a cost deficit in the competitive business parcel segment through improper crosssubsidization with State aid funds earmarked for the financing of the universal service. Brussels nabbed Germany for overpaying Deutsche Post. The commission forced Germany to take back EUR572 million in subsidies it had given to Deutsche Post plus EUR335 million in interest at the beginning of 2003.
Deutsche Post in 2002 appealed the decision and will now receive a repayment.
The court said the commission had failed to prove the money received from the state hadn't been used to cover Deutsche Post's universal services.
Moreover, the money received was insufficient to cover the losses incurred by the parcel activity, it said.
Germany will now repay the around EUR907 million with interest to Deutsche Post.
Company Web site: www.dpwn.com
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(END) Dow Jones Newswires 07-01-08 0459 Copyright (c) 2008 Dow Jones & Company, Inc.