In this respect, the Monopolies Commission welcomes the new Federal Government’s plan, set out in the coalition agreement, to promote the development of competition in the letter markets. The Monopolies Commission views positively the development of competition in the courier, express and parcel services sector, which in recent years has proved to be a driver of growth and a source of jobs in the postal market.

The stagnation in competition within letter services is the result of numerous institutional and regulatory barriers and restrictions on competition. Following the extension of the Postal Workers’ Posting Act to cover letter services, a minimum wage collective agreement concluded at the end of 2007 between the employers’ association Postdienste e.V. – dominated by Deutsche Post AG – and the trade union ver.di was declared generally binding by statutory order; this agreement even exceeded the demands of the German Trade Union Confederation. As Deutsche Post AG’s employees are predominantly paid under an in-house collective agreement, the majority of employees covered by this collective agreement are, in fact, employed by competitors. The company has thus succeeded in increasing its competitors’ labour costs without being affected itself. Even before the statutory order was issued, the Monopolies Commission had already drawn attention to the economic impact of the postal minimum wage and the legal uncertainties surrounding its extension across the sector. The statutory order has since been declared unlawful by two courts; the decision on the appeal before the Federal Administrative Court is still pending. Numerous competitors have withdrawn from the market or have put their plans for large-scale market entry on hold. The minimum wage has thus severely hampered the development of effective competition in the letter post sector. The Monopolies Commission reiterates its proposal to grant the Federal Cartel Office the right to be heard in future on any form of declaration of general applicability. The aim is to ensure that the impact on product market competition and the interests of consumers are given due consideration in the Federal Minister of Labour’s decision.

Deutsche Post AG’s VAT exemption gives the company a cost advantage of almost 19 per cent over its competitors who are liable for VAT. This unequal treatment hinders competition, particularly for customers not liable for VAT (i.e. those not entitled to deduct input VAT), such as private customers, public authorities, banks and insurance companies, charitable organisations and hospitals, which account for approximately 50 per cent of the market. Due to significant synergy effects in the delivery sector, this distortion of competition also has a massive impact on competition for customers subject to VAT (i.e. those entitled to deduct input VAT). Even infringement proceedings brought by the European Commission against Germany failed to persuade the last federal government to abolish the preferential treatment afforded to Deutsche Post AG. Yet a ruling by the European Court of Justice in April 2009 sets out clear guidelines: The tax exemption must apply to public or private undertakings that undertake to provide the entire universal postal service or part thereof in a Member State; the exemption is to be applied to services that form part of the universal service (as defined at national level).

Deutsche Post AG continues to have the option of having the additional costs of providing the universal service and all special burdens arising from its succession to the Deutsche Bundespost taken into account when its tariffs are approved. The Monopolies Commission sees no justification for this. The company is no longer obliged to provide the universal service, but does so voluntarily – in its own interests. Compensation for historical liabilities has now been more than adequately provided for through the monopoly profits generated over many years from the exclusive licence for standard letters, which ran until the end of 2007. In 2008, Deutsche Post AG achieved a return on turnover of 15.7 per cent in the letter post sector. The private customer mail sector is subject to price-cap regulation. The Monopolies Commission reiterates its criticism of the Federal Network Agency’s decision regarding the parameters of price-cap regulation and once again calls on the authority to lower the baseline level of charges and increase the factor for taking productivity into account, so that consumers can benefit adequately from the efficiency gains achieved by Deutsche Post AG and those expected in the future. Since January 2008, the business mail sector has been subject only to ex-post tariff control. There is an urgent need to strengthen the Federal Network Agency’s investigative powers in this area in order to counter Deutsche Post AG’s strong incentives for abusive behaviour through swift and effective supervision of such practices.

With regard to competitors’ access to Deutsche Post AG’s post office box facilities, competitors report numerous problems, meaning that in practice it is often cheaper for them to to hand in letters with post office box addresses, fully franked, to Deutsche Post AG; to deliver the items to residential addresses (where known); or to decline orders containing a large number of items addressed to post office boxes. Consequently, demand for access to post office box facilities is very low. Similar complaints were lodged with the Monopolies Commission during the reporting period regarding the terms of delivery for competitors’ access to Deutsche Post AG’s transport network (partial service access); the Federal Network Agency has since instructed Deutsche Post AG to make the posting conditions more competition-friendly. In the Monopolies Commission’s view, any restriction on competitors’ access to Deutsche Post AG’s infrastructure constitutes a significant barrier to competition. The Monopolies Commission therefore calls on the Federal Network Agency to identify the access problems attributable to Deutsche Post AG and to remedy them without delay.

The Monopolies Commission considers it a matter of urgent necessity that the Federal Government divest itself as quickly as possible of all financial instruments which result in the Treasury having a specific financial interest in the well-being of Deutsche Post AG.