EU approves UK's Royal Mail debt, pension relief plan
(BRUSSELS) - European Union anti-trust regulators on Wednesday approved British government plans to provide pension relief and slash the debt of Royal Mail Group as part of its privatisation.
The British government plans to take over the Royal Mail's high pension costs and provide it with restructuring aid that will reduce its debt by GBP 1.089 billion (1.3 billion euros).
"RMG's revised restructuring plan will ensure a sustainable future for the group in its twofold function of providing universal postal services and of granting access to its delivery network to other providers in the UK," the European Commission said in a statement.
The plan negotiated with the commission includes "appropriate measures" to minimise distortions of competition caused by the aid, the EU's executive arm said in a statement.
"In order to achieve a level playing field in postal markets, it is crucial that incumbent operators neither enjoy undue advantages, nor suffer from structural disadvantages in comparison with competitors," said EU competition commissioner Joaquin Almunia.
"The relief of excessive pension costs and the restructuring aid approved today will help ensure this balance for Royal Mail and its competitors."
The Commission said the pension liabilities were the result of "legacy costs" dating back to the time when RMG held "a legal monopoly."
But it stressed that relief should only be "of costs which are in excess of the level of pension payments made by comparable companies in the UK."
The Commission said its decision was in line with past German, French and Belgian cases in the same market.
Royal Mail has cut about 65,000 full and part-time positions since 2002.
The British parliament has approved legislation enabling the firm to be sold next year.
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