An in-depth investigation has been launched into state funding measures taken by Britain in favor of Royal Mail, the European Commission said yesterday.

The European Union's antitrust watchdog said the ongoing investigation into the British principal supplier of postal services will decide on whether those measures constitute state subsidies.

The measures in question include a series of loans worth more than 2.6 billion euros made available to Royal Mail and placing of1.26 billion euros in an "escrow account" to reduce the pensions contributions which Royal Mail needs to make.

The opening of the investigation, following complaints from Royal Mail's competitors, gave interested parties the possibility to comment on the proposed measures.

"I take the complaints received very seriously. The postal sector is increasingly open to competition, and it is important to reassure competitors that the advantages of that opening are not neutralized by illegal state subsidies," the EU Competition Commissioner Neelie Kroes said.

The European Commission said the investigation does not cover the subsidies given to maintain the network of post offices, which was authorized by the Commission to support non-profitable rural area in February 2006.

Royal Mail is the main provider of postal services in Britain and is a wholly state-owned company. With about 193,000 employees for its operations in Britain, Royal Mail's turnover was 13.5 billion euros in 2005-2006.

The British postal service market was thrown open to competition in 2005 when Royal Mail's legal monopoly over basic letter services was removed.