The European Commission launched an investigation on Tuesday into the level of interest rates 'Poste Italiane' receives on money it has deposited at the Italian treasury since 2005.

'˜Poste Italiane' is the universal postal service provider in Italy. The group received €2.4 billion ($3.05 billion) in compensation during 2000-2005, for discharging postal services entrusted to it, according to the European Commission.

The regulator opened a formal investigation into the level of interest rates applied to the funds collected from '˜Poste Italiane's customers' current accounts and deposited with the Treasury as of 2005.

I am satisfied that the compensation for '˜Poste Italiane's public service obligations has not unduly distorted competition. However, we have to investigate the interest received by the '˜Poste Italiane' from the Treasury because it could constitute an illegal subsidy, said EU Competition Commissioner Neelie Kroes in a statement.

The regulator said the deposits accumulated higher returns than a private borrower would offer which is potentially creating an illegal state subsidy to business. These higher interest rates proved to be an economic advantage to '˜Poste Italiane' and which therefore potentially distorts competition and trade within the Single Market in violation of the EC Treaty's state aid rules.