A scheme to compensate the Polish Post for losses in discharging its public service obligations between 2006 and 2011 has been approved by the European Commission.

Polish Post (Poczta Polska) is Poland's main postal service operator, and has been transformed from a state enterprise into a joint-stock company wholly-owned by the Treasury.

Its activities include postal, financial and other services outside its public service mission.

The compensation mechanism for Polish Post is in line with the framework on public service compensation. This allows compensation to be paid as long as the service is a genuine public service entrusted to the company by legislation that complies with various requirements specified in the framework.

In addition, the compensation cannot be excessive so as to amount to a cross-subsidy of non-public service activities.

The Commission has required some changes to the enabling legislation, such as requiring Poland to improve the parameters for calculating and controlling the amount of compensation, to ensure the compensation is not excessive.

The Polish Post has already lost the legal status which prevented it from going bankrupt, which was equivalent to an unlimited state guarantee. The company is now subject to ordinary bankruptcy proceedings.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 22/12/2009.