Germany's former postal monopoly, Deutsche Post has won a six-year legal battle with the EU Commission earning the right from the European Court to claim back up to 1 billion euros ($1.6 billion) from the government.
Deutsche Post can soon expect a rather large check to drop through the door
In a statement, the European Court of First Instance ruled that the EU executive "had not proven sufficiently for legal purposes that the disputed (German government) payments had given Deutsche Post an advantage in the meaning of the ban on state aid."
The case concerns Deutsche Post's door-to-door parcel delivery service, which it operates in competition with commercial firms.
And Tuesday's ruling was expected to have implications on a separate EU probe, launched by the commission in September, over claims that Germany had supplied Deutsche Post with illegal state aid for carrying out its universal service obligations.
"We will take due account of the court's ruling and apply any lessons to be learned from it to ongoing cases," said Jonathan Todd, spokesman for EU Competition Commissioner Neelie Kroes.
Government welcomes ruling despite financial burden
The ruling was welcomed by the German government, in spite of the fact that it posed a substantial additional burden on state the finances.
Noting that the EU court had backed Germany's legal position, a spokesman for the Finance Ministry said the return of the funds to Deutsche Post would be carried out in the current budget.
Tuesday's ruling refers to a case first brought to the attention of the EU in 1994, when a number of competitors complained that Deutsche Post was offering the service at below cost price.
The plaintiffs argued that Deutsche Post was covering the loss generated by its door-to-door parcels service with the state support it was given for delivering letters, and was therefore effectively benefiting from unfair state aid.
Commission ruled Post had broken competition rules
The EU ruled that Deutsche Post had broken the law
In 2001, the commission ruled that Deutsche Post had indeed broken EU competition rules, and ordered it to pay the German government 572 million euros, which the commission calculated it had received in aid.
Tuesday's judgement overturns that decision and means that Deutsche Post is now free to claim the 572 million euros plus interest, bringing the total to close to 1 billion euros, back from the government.
The commission said it would study the verdict "carefully" before deciding whether to file an appeal to the European Court of Justice. It has two months to do so.