On 10 May 2007 the EU Commission announced that it had cleared the Greek Government’s plan to transfer its 4% stake in OTE Telecoms to the company’s pension fund, to help finance a voluntary redundancy scheme. Greece was seeking permission to transfer the stake – worth around 400 million Euros – to help OTE pay for an exit scheme for about 5,500 workers. The scheme is a key part of its plans to streamline the former telecoms monopoly and make it more competitive. OTE estimates that the entire plan will cost about 1 billion Euros. In a statement the EU Competition Commissioner, Neelie Kroes, said: “The Commission is in favour of measures which help former monopolists adapt to a fully liberalised market environment, provided that they comply with the state aid rules”.

The scheme aims to shrink OTE’s workforce by a third to around 10,000 employees. Due to the life tenure of OTE employees, stemming from rules dating back to its days as a state-run monopoly, the company has to be able to offer employees generous conditions as part of the voluntary redundancy scheme if its efforts to reduce worker numbers materially are to have any prospect of success.

Hammonds in Brussels advised OTE Telecoms on its State Aid application. Konstantinos Adamantopoulos, Partner and Head of Brussels office, who led the team said: “The EU’s decision will help ensure the company’s competitiveness and allow it to continue its process of privatisation. In addition it safeguards the future of thousands of employees who can now look forward to security in retirement”.