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Commission approves UK plans for Royal Mail Group
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Published on 21-03-12

The European Commission has approved UK plans to relieve the Royal Mail Group (RMG) from excessive pension costs relating to its past monopoly position and to provide RMG with restructuring aid consisting of a debt reduction of ₤1089 million (around €1311 million). RMG's revised restructuring plan will ensure a sustainable future for the group while providing universal postal services and granting access to its delivery network to other providers in the UK. The plan negotiated with the Commission includes appropriate measures to minimise distortions of competition induced by the aid.

    © Royal Mail Group

    © Royal Mail Group

    The Commission's investigation found that RMG was liable for higher pension costs than its private competitors, as a consequence of legacy costs originating in the pre-liberalisation period, when RMG held a legal monopoly. The Commission therefore authorised the pension measure, under the condition that it only relieves RMG of costs which are in excess of the level of pension payments made by comparable companies in the UK.

    The UK also plans to grant RMG a debt reduction amounting to £1 089 million in the context of a broad restructuring plan, aimed at ensuring the sustained viability of RMG. The revised restructuring plan, taking into account the Commission's concerns, will be implemented over 2010-2015. It foresees an improved business model for RMG which will better address its weaknesses and ensure its future viability. It builds on the significant restructuring that Royal Mail has already undertaken since 2002 to modernise its business and drive costs down. The plan includes operational modernisation, the offset of the remaining pension deficit of the RMG pension plan, which falls outside the legacy costs relief, and a structural reduction of mail centres. RMG will finance 50% of the restructuring costs through several measures, such as asset divestments.

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    Last update: 29/03/2012  |Top