The European Commission began an in-depth investigation yesterday into £2.6 billion of government funding received by the Royal Mail over the past six years.

The inquiry was triggered by complaints from some of Royal Mail’s competitors, including TNT and DHL. They claimed that the government finance amounted to illegal subsidies and gave Britain’s main supplier of postal services an unfair competitive advantage in the recently liberalised sector.

The Commission is focusing on three individual loans to Royal Mail: £500 million (2001), £1billion (2003) and £300 million (2007). It is also examining the conditions of the £850 million that has been placed in an escrow account to reduce the contributions the company will have to make to address the deficit in its pension fund.