Due to our market-leading position, a large number of Deutsche Post AG services are subject to sectoral regulation in accordance with the Postgesetz (German ). The regulatory authority approves or reviews prices in particular, formulates the terms of and conducts general checks for market abuse. Any resulting proceedings may lead to a drop in revenue and earnings.
Legal risks arise from, amongst other things, appeals pending before the administrative courts against the regulatory authority’s July 2002 ruling concerning the conditions for the , from two appeals each against price approvals granted under the price-cap procedure for the years 2003, 2004 and 2005, and from appeals against other price approval decisions handed down by the regulatory authority.
European Commission competition proceedings were initiated on the basis of allegations about excessive mail prices made by the Deutscher Verband für Post und Telekommunikation (German association for posts and telecommunications). In these proceedings, Deutsche Post AG has presented detailed evidence to support its argument that the prices are reasonable.
Conditions determined by the regulator oblige Deutsche Post AG to allow customers and competitors downstream access to its network. Proceedings are pending before German administrative and civil courts and the European courts against the relevant rulings by the regulatory authority, the Bundeskartellamt (German federal antitrust authority) and the European Commission. Deutsche Post AG believes that the postal act (including the up to its expiry on 31 December 2007) is in compliance with EU and anti-trust law, and more specifically with the and the anti-trust rules stipulated by the EC Treaty. Depending on the outcome of the proceedings, Deutsche Post AG could be faced with further losses of revenue and earnings.
In response to a complaint from a third party, the European Commission made requests for information to the German government concerning an allegation by the Monopolkommission (German monopoly commission). The allegation is that Deutsche Post AG contravenes the prohibition on state aid under the EC Treaty by allowing Deutsche Postbank AG to use Deutsche Post outlets at below-market rates. In the opinion of Deutsche Post AG and Deutsche Postbank AG, this allegation is incorrect and the fee paid by Deutsche Postbank AG complies with the provisions on competition and state aid stipulated in European law. The European Commission is also asking the Federal Republic of Germany to comment on the sale of its entire interest in Deutsche Postbank AG to Deutsche Post AG in 1999. However, the Commission has already investigated the acquisition of Postbank as part of the state aid proceedings that were concluded with the ruling dated 19 June 2002. At the time, it explicitly concluded that the acquisition of Postbank involved “no grant of state aid”.
The German government has already argued before the European Commission that the allegations are in its opinion unfounded. Nevertheless, with regard to the two allegations relating to the requests for information, no assurance can be given that the Commission will not find that the facts of the case constitute state aid.
On 12 September 2007, the European Commission initiated a formal investigation against Germany concerning possible subsidies to Deutsche Post. The investigation will focus on whether Germany, using state resources, overcompensated Deutsche Post AG or its legal predecessor Deutsche Bundespost POSTDIENST for the cost of providing universal services between 1989 and 2007 and whether the company was thereby granted state aid incompatible with EU law. According to the decision opening the investigation, the Commission intends to examine all public transfers, public guarantees, statutorily granted exclusive rights, the price regulation of letter services and the public funding of civil servants’ pensions during the period in question. Also to be investigated is the cost allocation within Deutsche Post AG and its predecessor between the regulated letter service, the universal service and competitive services. This also relates to co-operation agreements between Deutsche Post AG and Postbank as well as between Deutsche Post AG and the business parcel service marketed by DHL Vertriebs GmbH.
Deutsche Post AG and Deutsche Postbank AG hold that the new investigation lacks any factual basis. All public transfers associated with the privatisation of Deutsche Bundespost, the public guarantees and the funding of pension obligations formed part of the subject matter of the state aid procedure closed by the decision of 19 June 2002. That decision did not identify the measures concerned as incompatible state aid. Deutsche Post AG and Deutsche Postbank AG are further of the opinion that the statutorily granted exclusive rights and the regulated letter prices do not fulfil the legal criteria to be considered a form of state aid in the first place. Deutsche Post AG also considers the internal allocation of costs with its subsidiaries to be consistent with EU state aid rules and the case law of the European Court of Justice. Nonetheless, based on an overall appraisal the possibility of the Commission finding a case of incompatible state aid cannot be ruled out.
On 22 November 2006, the European Commission opened formal proceedings with regard to possible state aid in connection with the construction of the DHL European air at Leipzig/Halle airport. The Commission notably has doubts that the financing of the new southern runway by the German state of Saxony, financial guarantees endorsed by Saxony and certain operational undertakings on the part of the airport operator are compatible with European law on state aid. In the opinion of Deutsche Post AG and DHL, the arrangements entered into with the state of Saxony and the airport comply with the law relating to state aid. It cannot be ruled out, however, that the Commission will deem specific features of these arrangements to be unlawful. This could result in additional costs for DHL in operating the air hub.
In October 2007 DHL Global Forwarding, along with all other major players in the freight forwarding industry, received a request for information from the Competition Directorate of the European Commission, a subpoena from the United States Department of Justice’s Antitrust Division, and information requests from competition authorities in other jurisdictions, in connection with a formal investigation into the setting of surcharges and fees in the international freight forwarding industry.
In January 2008, an anti-trust class action law suit was initiated in the New York district court on behalf of purchasers of freight forwarder services in which Deutsche Post AG and DHL are named as defendants. This civil law suit appears to be based on the fact that anti-trust investigations are on-going, but not on any known outcome or quantified loss.
Deutsche Post World Net is not able to predict or comment on the outcome of the investigations or the merits of the class action law suit, but believes its financial exposure in relation to both is limited and has not, therefore, taken any provision in its accounts.