Adapting the universal service to people’s everyday realities

The universal service requirements set out the minimum level of postal service that must be available to the public. In the letter post sector in particular, these requirements no longer reflect the realities of everyday life due to a lack of reform.

At present, 80 per cent of all letters must reach their recipients within one day. In future, different delivery times could be offered: on the one hand, the existing fast but expensive service, and on the other, a cheaper, slower option. Furthermore, reducing the number of letter delivery days from six to five should be examined, and the replacement of individual post offices with suitable self-service machines should be made possible. Furthermore, the legislator grants Deutsche Post AG excessive profit margins on universal services, which drives postage rates even higher. Profit margins should once again be determined by the established method of a reasonable return on equity.

Strengthening letter delivery through targeted promotion of competition

With a market share of 85 per cent, Deutsche Post AG dominates in particular the licensed letter sector. This covers letters weighing up to 1,000 grams. Nevertheless, competitors exert a disciplining influence on Deutsche Post AG.

In densely populated regions, competition between postal service providers is possible and should be encouraged. In sparsely populated areas, where only one postal service provider can deliver letters in a cost-effective manner, the mail flows from the various postal service providers should be consolidated and delivered by a single provider. This improves the reliability of service and the variety of services available in these areas. So-called ‘partial access’ enables competitors to hand over mail items to Deutsche Post AG in precisely such regions. Strengthening this should be a key priority of the reform of the Postal Services Act. The Monopolies Commission welcomes the fact that this is provided for in the current draft bill. However, it is a cause for concern that some of Deutsche Post AG’s services remain exempt from VAT and that there are plans to extend this exemption. This gives Deutsche Post AG a competitive advantage, as competitors’ services are not exempt from VAT.

Ensuring the effective enforcement of workers’ rights

The effective enforcement of employees’ rights ensures fair competition between companies. In the parcel delivery sector, numerous breaches of the law to the detriment of employees have been reported in the past. Whether the measures taken since then by the legislature and parcel delivery providers have been effective is currently still under investigation. Should further measures be necessary, the Monopolies Commission recommends starting by educating employees about their rights. Furthermore, they should be able to report breaches easily to the federal government’s central reporting office at the Federal Office of Justice. To this end, this reporting office must become better known and multilingual. The Monopolies Commission considers a ban on subcontracting – which is currently the subject of public debate – to be inappropriate. If parcel delivery companies were unable to engage regional subcontractors, for example to consolidate postal items from different providers, this would make it considerably more difficult for new entrants to enter the market in future.