Bulgaria: EU Commission approves €25.51m restructuring aid for Bulgarian Posts

The European Commission has approved, under EU State aid rules, Bulgaria’s plans to grant postal operator Bulgarian Posts restructuring aid for up to €25.51 million (BGN 50 million). The measure will enable the company to restore its long-term viability while minimising competition distortions.

The restructuring aid

Bulgarian posts has received a rescue loan from Bulgaria of approximately €26.5 million (BGN 50 million), after approval by the Commission under EU State aid rules in May 2023.

On 21 December 2023, Bulgaria notified to the Commission restructuring aid in the form of conversion into equity of the rescue loan, supporting a plan for the restructuring of Bulgarian Posts. The restructuring plan sets out a package of measures for streamlining Bulgarian Post’s operations, optimising its network and reducing costs. In parallel, Bulgarian Posts will develop or provide services such as telemedicine or administration through its ubiquitous network on behalf of other public entities, bringing such services closer to citizens in remote areas not well served.

The Commission’s assessment

The Commission assessed the measures under its Guidelines for rescuing and restructuring non-financial undertakings in difficulties (‘R&R Guidelines’). In particular, it found that:

• The aid contributes to the objective of common interest of providing services of general economic interest including universal postal obligation to Bulgarian citizens by enabling Bulgarian Posts to return to viability through the implementation of its restructuring plan.
• The restructuring measures tackle the problems that caused Bulgarian Posts’ financial difficulties, in particular because Bulgarian Posts will invest into modernising  and optimising its network and reduce staff costs, whilst reducing its reliance on the declining letter post market through new activities and services provided in post offices.
• The measures are proportionate, as Bulgarian Posts make an own contribution to restructuring costs of around €26.78 million (BGN 52.49 million) in the form of bank loans, interest savings and project financing.
• The aid comes with safeguards to limit distortions of competition in the Single Market. These includes commitments from Bulgarian Posts to grant access to its network to other operators active in the universal and non-universal postal services.

On this basis, the Commission concluded that the Bulgarian measures are in line with EU State aid rules.

Background

EU State aid rules, more specifically the Guidelines on rescue and restructuring aid, enable Member States to support companies in difficulty, under certain strict conditions. In particular, aid may be granted for a period of up to six months (‘rescue aid’). Beyond this period, the aid must either be reimbursed or Member States must notify a restructuring plan to the Commission, for assessment under the State aid rules. In order for restructuring aid to be approved, the plan must ensure that the viability of the company can be restored without continued State support, that the company contributes sufficiently to the costs of its restructuring and that distortions of competition created by the aid are addressed through compensatory measures, including in particular structural or behavioural measures.

The non-confidential version of the decision will be made available under the case number SA.109026 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.

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