Special Report pursuant to Sec. 44 of the Postal Services Act, Bonn, 4 December 2017

  • The Monopolies Commission notes almost no progress, even twenty years after the entry into force of the Postal Act, in the development of competition on the letter markets.
  • The Monopolies Commission deems the creation of equal competitive conditions on the postal markets and the extension of the powers of the Federal Network Agency (Bundesnetzagentur) as urgently necessary preconditions for effective competition.
  • The Monopolies Commission recommends a reform of the national regulatory framework and an examination of the agreements of international postal organisations.

The Monopolies Commission notes in its Special Report published today, entitled "Eliminate privileges, design regulation effectively!", that there has been hardly any progress in the development of competition on the national letter markets. They continue to be dominated by the Deutsche Post AG, and an effective competition has not yet developed. On the national parcel markets competition prevails, but there is a high concentration of businesses in which the Deutsche Post AG has been able to solidify its leading market position. In cross-border postal services as well a high market concentration can be observed. In the transnational delivery of letters to and from Germany, the Deutsche Post AG holds a market-dominating position. To enhance competition it is particularly necessary in the view of the Monopolies Commission to reform the regulatory framework. "First and foremost, the privileges of the Deutsche Post AG must be done away with and the powers of the Federal Network Agency must be substantially expanded", concludes the Chair of the Monopolies Commission, Professor Achim Wambach.

Until now only the Deutsche Post AG has profited from the exemption from value-added tax for the provision of universal services, which gives it cost advantages over its competitors. In order to avoid distortions of competition, the universal service provisions of all postal service providers should in the near term be exempted from value-added tax. In the long term, the value-added tax exemption should be eliminated throughout Europe. Also, the German state should divest itself of its shares, amounting to 20.9 per cent, in the Deutsche Post AG. This shareholder status gives the Deutsche Post AG competitive advantages, as it has a positive influence on its creditworthiness and thus on its refinancing terms. At the same time, by selling its shares the state would resolve the conflict of interests it has as regulator and owner. Currently the Deutsche Post AG is the only postal service provider that represents the Federal Republic of Germany in the Universal Postal Union, which controls the regulation of international mail. So as to create uniform competitive conditions in this respect as well, the federal government should without exception give all postal operators who agree to offer cross-border mail non-discriminatory access to the Universal Postal Union. Regarding cross-border mail within Europe the Deutsche Post AG is the only German member of the International Post Corporation to profit from the exclusive agreements with foreign postal companies on tariffs and on the development of technical standards for mail delivery. The European Commission last reviewed the agreements of the International Post Corporation in 2003, granting them a conditional exemption. It is now time for a competition-law examination of the agreements, which have since been revised many times.

For an effective regulation of the postal markets the powers of the Federal Network Agency should be substantially expanded. To protect consumers from exploitative pricing the regulation of letter rates must be designed in a cost-oriented manner. Therefore the so-called Post-Entgeltregulierungsverordnung should be amended to stipulate that the Federal Network Agency must calculate the “reasonable surcharge” based on entrepreneurial risk and not – as the current legal situation provides – based on the return on sales of foreign postal companies. Violations of the Postal Act, for instance by abusive behaviour, should be sanctionable by the Federal Network Agency with fines. A legal basis needs to be created for this. In addition, the Federal Network Agency should be given farther-reaching rights of information, comparable with the respective powers of the Federal Cartel Office (Bundeskartellamt). Such information rights, for instance vis-à-vis bulk mailers of letters and parcels, would considerably facilitate investigations in abuse proceedings.

Beyond this, the details of the principles of the universal postal service need to be refined appropriately as determined by representative market surveys. Adjusting the principles to fit today’s communications habits could reduce inefficiencies in the postal infrastructure. This would lead to cost reductions and provide financial relief to consumers.

The following documents are now available for download: