The last hope for the rescue of the Royal Mail is in… Brussels

Royal Mail could be saved from a rapacious takeover bid by Daniel Kretinsky by European Union competition watchdogs, The Mail on Sunday can reveal.

The investigation by EU authorities comes as scrutiny of the Czech billionaire’s business ties with Russia intensifies.

Kretinsky, 49, wants to take over the company in a £3.6bn deal. If successful, Royal Mail would fall into foreign hands for the first time in its 508-year history.

The Labor government is thought to be likely to approve the deal in the coming weeks. However, European competition authorities – whose investigation began in late summer – will take a much harder line.

Kretinsky already owns a majority stake in the Dutch mail service PostNL.

The European Commission is investigating whether a takeover of Royal Mail, combined with its interests in the Netherlands, would give it too much market power.

Some experts believe that Kretinsky, nicknamed the Czech Sphinx for his inscrutable behavior, intends to combine PostNL with GLS, Royal Mail’s hugely profitable European parcel arm.

A competition lawyer told The Mail on Sunday: ‘UK regulators are just one part of the puzzle. The European Commission really has teeth and I think Kretinsky and his team will secretly be more worried about them.’

The EU investigation comes amid growing concerns about Kretinsky’s connections to Russia.

The accounts of EP Group, the holding company of his business empire, reveal that one of his commodities trading companies is in a £174m dispute with a Russian company after it defaulted on a coal contract when the war in Ukraine began. in 2022.

The trading house EP Resources refused to buy coal from the Russian company in compliance with international sanctions.

However, the legal dispute shows the extent of Kretinsky’s ties to Russia.

The conflict is in the arbitration process and the EP Group has warned that the result is impossible to predict.

Kretinsky, who owns a stake in the Slovak EUStream gas pipeline, one of the main gas routes from Russia to Western Europe, has always downplayed his ties to the country, now an international pariah. He insists that he does not buy gas from Russia or have any dealings with the Kremlin.

Business Secretary Jonathan Reynolds last week described him as a “legitimate” businessman.

Under tough Margrethe Vestager, the European Commission has blocked a series of high-profile M&A deals in recent years.

In 2017, the EU ended the £21bn alliance between the London Stock Exchange and German rival Deutsche Borse after Vestager said it would create a “de facto monopoly”.

Last year, the Commission intervened in Illumina’s deal for cancer testing start-up Grail and also moved to block US software company Adobe’s acquisition of smaller rival Figma.

Analysts believe the Commission could force Kretinsky to divest its assets or block the deal entirely.

He also owns book and magazine publishers, as well as stakes in football clubs Foot Locker, Sainsbury’s and West Ham United.

Last week it was revealed that Kretinsky had agreed additional concessions with the Labor government to get the deal approved. Kretinsky previously agreed to maintain the post’s universal service obligation, which requires it to deliver letters six days a week.

Other commitments include not touching the Royal Mail pension scheme surplus.

Kretinsky wants to modernize Royal Mail and capitalize on the growth of e-commerce.