Social welfare recipients will continue to receive their payments despite a misunderstanding between the Government and the EU over the contract, a senior minister said tonight.
A European Court of Justice official today upheld an earlier European Commission finding that the Government had broken competition rules by not publicly advertising the contract.
The views of advocate general Christine Stix-Hack are not binding, but the Court of Justice follows her legal opinion in a majority of cases.
The Government may now be forced to retender other lucrative public service contracts, including an emergency ambulance service to Dublin City Council.
Social & Family Affairs Minister Seamus Brennan tonight expressed concern at the advocate general's opinion and said he will examine it in detail.
However he warned the overall binding ruling by the European Court of Justice could differ and it should not be pre-empted.
"Minister Brennan will inform the Government of the position and ask departmental officials to examine the detail of the advocate general's opinion with particular reference to how it might impact on the future delivery of payment services," a spokesman said.
"The department expects to receive the court's judgment in the coming months.
"Minister Brennan wishes to reassure all our customers that they will continue to receive their payments as normal."
An Post, which won the contract to manage the country's social welfare payments, is currently in talks with Belgian-Dutch financial services group Fortis to create a joint venture in Ireland.
The granting of a contract to provide emergency ambulance services to Dublin City Council without any prior advertising was also deemed in contravention of the European Union's treaty rules.
"I propose that the court should declare that, in deciding to entrust the provision of services to An Post without a prior notice, although there were no circumstances which would have allowed no advertising at all, Ireland has failed to comply with its obligations under the (EU) Treaty," said the advocate general.
An Post said it was studying the ruling and declined to comment further at this stage.