NEWS

EU looks into gov’t role in OTE plan

The European Commission is expected today to call for an investigation into Greece’s plans to partially fund an OTE telecom voluntary retirement program, on the grounds that it could be in breach of EU competition rules, sources in Brussels said yesterday. The Commission is likely to question the government’s decision to contribute about 300 million euros to a retirement scheme aimed at slashing OTE’s staff by about 6,000 people, or a third of its work force. The total cost of the scheme is estimated at about 1.5 billion euros and may have to be fully paid for by OTE if the investigation deems the payments illegal state aid. The government, which controls about a third of OTE, has said that it will hand over a 4 percent stake in the telecom company to the company’s employees’ secondary pension fund. Sources in Brussels added that the investigation may result in the Commission agreeing to the deal based on certain conditions. Greece will be eager to find common ground on the decision and avoid any repeat of a similar incident that created enormous financial difficulties for the country’s national air carrier. In September, the Commission ordered Greece to recover an estimated 600 million euros in illegal state aid from Olympic Airlines. OTE, one of Greece’s largest companies, has seen profits tumble in recent years, losing market shares to the mobile phone sector.