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.