GREECE - The European Commission has opened a formal investigation into a proposal by Greece to pay about e360m to the early retirement plan of the Hellenic Telecommunication Organisation (OTE), saying this payment was excessive.
The Greek state proposed the payment to relieve OTE of the alleged extra costs it faced arising from the higher labour costs of its quasi-civil servant status employees.
The state’s offer followed an agreement between OTE and the trade unions to implement a voluntary early retirement scheme (VRS), which concerned about 5500 of its employees, at a cost of approximately e1bn.
According to the EC, because OTE employees can not be dismissed due to their permanent employment status, OTE established a voluntary early retirement scheme which was much costlier than redundancy packages offered in the private sector.
Greece has proposed to contribute to the cost of this scheme by transferring 4% of its shares in OTE, worth approximately e360m, to the company pension fund. Any remaining costs would then be borne by OTE. Greece has claimed this financial contribution does not constitute state aid because it only relieves OTE of the extraordinary charges incurred by the specific status of its employees.
But the EC said it doubted whether Greece’s contribution to the VRS was limited to relieving OTE of extra costs, when compared to other operators offering redundancy/early retirement schemes to their employees.
The EC has alleged that OTE may have benefited from other advantages such as an exemption from unemployment charges, or relief from pension obligations. Exemptions of this kind would work to neutralise the alleged surcharges, said the EC.
The EC added that it was possible OTE might also derive supplementary benefits from its former monopoly position with regard to its fixed telecom network.
EU Competition Commissioner Neelie Kroes said: “The Commission favours measures which help former monopolists adapt to a liberalised market environment, provided that they are limited to what is necessary to create a true level playing field.”
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