To date, only Deutsche Post AG has benefited from the VAT exemption for universal services, giving it a cost advantage over its competitors. To prevent distortions of competition, the universal services provided by all postal service providers should be exempt from VAT in the short term. In the longer term, the VAT exemption should be abolished across Europe. Furthermore, the federal government should sell its 20.9 per cent stake in Deutsche Post AG. This shareholding gives Deutsche Post AG a competitive advantage, as it has a positive impact on its credit rating and thus on its refinancing terms. At the same time, by selling its shares, the Federal Government would resolve its conflict of interest as both regulator and owner. To date, Deutsche Post AG is the only postal service provider representing the Federal Republic of Germany in the Universal Postal Union, which plays a key role in regulating international postal traffic. In order to create a level playing field in this respect as well, the Federal Government should, as a matter of principle, grant non-discriminatory access to the Universal Postal Union to all postal service providers willing to offer cross-border postal services. In the case of cross-border postal traffic within Europe, Deutsche Post AG, as the sole German member of the International Post Corporation, benefits from exclusive agreements with foreign postal operators regarding remuneration and the development of technical standards for the transport of mail. The European Commission last reviewed the International Post Corporation’s agreements in 2003 and approved them subject to certain conditions. A competition law review of the agreements, which have since been revised several times, is now required.

To ensure effective regulation of the postal markets, the powers of the Federal Network Agency should be substantially expanded. To protect consumers from excessive pricing, the regulation of letter post charges should be cost-oriented. The Postal Tariff Regulation should therefore be amended to require the Federal Network Agency to determine the ‘reasonable profit margin’ on the basis of business risk and not – as the current legal situation provides – on the basis of the returns on turnover of foreign postal operators. The Federal Network Agency should, as a matter of principle, be able to impose fines for breaches of the Postal Act, e.g. through abusive conduct. A legal basis for this must be established. Furthermore, the Federal Network Agency should be granted more extensive rights to request information, comparable to the corresponding powers of the Federal Cartel Office. Such rights to request information, for example from large-scale senders of letters and parcels, would considerably facilitate investigations into cases of abuse.

Furthermore, the requirements of the universal postal service should be tailored to actual demand on the basis of representative market surveys. Adapting these requirements to current communication patterns could reduce inefficiencies in the postal infrastructure. This would lead to cost reductions and provide financial relief for consumers.