(BRUSSELS) - The European Commission on Tuesday announced an in-depth investigation into French government guarantees for the national postal service, La Poste.

The formal investigation against France concerns the unlimited state guarantee provided for La Poste which "enables La Poste to obtain finance on favourable terms," the EU's top competition watchdog said in a statement.

"Because its competitors do not enjoy the same advantage, the guarantee is likely to distort competition to an extent detrimental to the common interest, at a time when the postal sector is in the process of being liberalised," it said.

"I attach great importance to fair competition between the postal operators, based on the companies' own merits, and the Council of Ministers (27 EU nations) has just agreed on a date for opening postal services to full competition," said EU Competition Commissioner Neelie Kroes.

The Commission had recommended that France withdraw the unlimited guarantee by the end of 2008.

"However, the subsequent negotiations with France did not convince the Commission that the French proposals amounted to terminating La Poste's guarantee," it said.

Brussels stressed that it is not disputing the public ownership of La Poste, but added that EU competition rules "must be applied equally to private and public enterprises".

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