Competition watchdogs in Germany have criticised a lack of competition in the domestic postalmarket due to various regulations and have submitted numerous proposals to encourage more
competition.The German Monopoly Commission, an independent body of experts that advises the government,presented in its seventh special report on the development of competition in postal markets (“Post2011: Give competition a chance”) a relatively unchanged competitive picture compared to its lastreport in 2009. “The increase in market shares of the competitors to just over 10% cannot hide thefact that the development of competition on the postal market is stagnating and no functioningcompetition exists,” said Justus Haucap, Chairman of the Monopoly Commission.
He lamented various institutional obstacles to competition saying that the Federal NetworkAgency (Bundesnetzagentur) is not fully authorised according to the current postal law to “uncoverabusive behaviour of the dominant Deutsche Post AG in an effective way and to stop it”. Among itsproposals for the amendment of the postal act, the commission recommended, among other things, tosell the government’s shares of around 30% in Deutsche Post’s equity capital.
It also demanded the re-introduction of the “Ex-ante fee licensing requirement” for partialservices by Deutsche Post explaining that “the access to partial services of the dominant DeutschePost is essential for the future development of the competition due to the stagnating volumes inthe postal sector”. In addition, the commission recommended the introduction of an obligation ofdisclosure of individual wholesale agreements by Deutsche Post to be submitted to the FederalNetwork Agency.
It further noted that the German postal operator is no longer required, according to the currentlegislation, to provide the universal service and that it does so on a voluntary basis as part ofits corporate strategy. “The costs for these voluntary services should neither be charged to thecompetitors’ account nor lead to a price increase.”
Another obstacle to competition the commission named is sales tax exemption. Since July 2010,Deutsche Post revenues that are directly related to the postal sector are no longer exempted fromthe tax, but only the universal services under certain conditions. The condition for the taxexemption is, among others, that Deutsche Post commits itself to offer at least part of theuniversal service across the whole of Germany.
Finally, the commission again objected to the introduction of an industry-specific minimum wageas representing an obstacle to functioning competition.
Meanwhile, Matthias Kurth, the Federal Network Agency president, has presented the organisation’s postal activity report for 2010/2011 saying that not much has changed on the German postal marketduring the last three years in terms of the market conditions. “In 2010, revenues amounted to €9billion compared to €9.2 billion in 2009, with shipping volumes amounting to 16.4 billion in 2010and 16.3 billion in 2009. However, the market share of the competitors increased from 9.3% in 2009to 10.4% in 2010.”
According to the report, the revenues of the overall market amounted to around €28 billion in2010. In the licensed postal area up to 1,000 g, Deutsche Post had a share of €8.1 billion comparedto the competitors with €0.9 billion.
However, the German CEP market (courier, express and parcel services) developed economically ina positive way. “The sales volumes amounted to €18.8 billion compared to €16.4 billion in 2009, andto €9.7 billion during the first half year of 2011. The competition state has further improved onthe parcel market. Private customers have been using for some time the nationwide offering ofHermes, in addition to Deutsche Post DHL services. Parcel volumes continue to increase considerablyespecially due to the gradual growth in distance trading,” Kurth added.
The German association of international express and parcel operators (BIEK), welcomed theproposals of the Monopoly Commission to improve postal competition. “In particular, therecommendations for the turnover taxation should be noted. Despite the new regulation of the salestax liability in 2010, Deutsche Post is still privileged, according to the report. Therefore, westrongly agree to the fact mentioned by the Commission that there is no convincing reason for asales tax exemption of postal universal services. If a nationwide solution cannot be found, achange in the EU directive should be considered,” BIEK president Gunnar Uldall stated.
