In its sector report on the postal sector, submitted to the Federal Government today, the Monopolies Commission has warned against granting Deutsche Post a VAT exemption.
An exclusive VAT exemption for Deutsche Post’s business correspondence would probably spell the end for most of its competitors.
Such a privilege is currently under discussion within the Federal Government. It would give Deutsche Post a massive competitive advantage with key customer groups that are not entitled to deduct input VAT. These include public authorities, banks and insurers. These customer groups account for around 60 per cent of the letters carried by competitors. The Monopolies Commission recommends that VAT should be payable on all business letters – regardless of whether they are sent via Deutsche Post or competitors.
Further privileges for Deutsche Post distort competition
In addition to what may soon become an exclusive VAT exemption, Deutsche Post also benefits from generous federal regulations governing its tariffs for letters and parcels. These include: cross-subsidies within the postal group are permitted. Furthermore, profit margins are based on return on turnover figures from companies such as Ferrari, L’Oréal and Adidas, rather than on standard market rates of return on capital. Such privileges distort competition. At present, Deutsche Post’s competitors in the letter business account for only a small share of total turnover, at around 15 per cent. In the retail sector, competitors account for less than five per cent of letters. The Monopolies Commission recommends securing and promoting competition in the letter sector in the long term.
We want Christmas cards to continue to be delivered well into the future, even if Deutsche Post were to cease its letter delivery service at some point. That is why we need viable alternatives.
In Denmark, falling letter volumes, widespread digitalisation and the abolition of statutory requirements have led to the former state monopoly, PostNord, ceasing its letter delivery service at the start of 2026. A local competitor has announced that it will nevertheless continue to provide letter delivery services.
Five delivery days instead of six: lower costs
In political discourse, Deutsche Post’s privileges are often justified on the grounds of the statutory universal postal service. This includes, amongst other things, six delivery days per week and nationwide coverage. Politicians had already relaxed certain requirements in 2024, for example regarding letter delivery times. Given the declining relevance of letter post, the Monopolies Commission continues to regard the statutory requirements as too onerous:
We need to lower the standards of basic service provision and thereby reduce overall costs. Five delivery days a week are quite sufficient.
Such a reduction would be permissible under EU law. Consumers and businesses could also benefit from these savings through lower postage rates. Furthermore, the Monopolies Commission recommends planning the necessary adjustments to the universal postal service with foresight and a long-term perspective – particularly in view of ongoing digitalisation.
Opportunities presented by the new Postal Services Act
The Monopolies Commission takes a generally positive view of the modernised Postal Services Act, which has been in force since July 2024. It offers new opportunities to strengthen competition. The ball is now in the Federal Network Agency’s court. By regulating Deutsche Post more consistently, particularly by limiting legal cross-subsidies, the Agency can capitalise on these opportunities.
