Sector Report of the Monopolies Commission pursuant to Section 84(2) of the Postal Services Act, 10 December 2025
In its sector report on postal services presented to the German government today, the Monopolies Commission warns against granting Deutsche Post a VAT privilege. ‘An exclusive VAT exemption for Deutsche Post's business customer letters would probably drive most of its competitors out of the market,’ warns Tomaso Duso, Chairman of the Monopolies Commission. The German government is currently considering such a privi-lege. This would put Deutsche Post at a clear competitive advantage among important cus-tomer groups that are not entitled to deduct input tax. These include public authorities, banks and insurance companies. These customer groups account for around 60 per cent of the letters transported by competitors. The Monopolies Commission recommends that VAT be levied on all business customer letters, regardless of whether they are sent via Deutsche Post or competitors.
Further Privileges for Deutsche Post Distort Competition
Besides the VAT exemption, which may soon become exclusive, Deutsche Post also benefits from generous regulations governing its charges for letters and parcels. Cross-subsidies within the company are legal and profit margins are based on the returns on sales of com-panies such as Ferrari, L'Oréal and Adidas rather than on standard market rates based on return on capital. Such privileges distort competition. In the letter segment, Deutsche Post's competitors currently account for only around 15 per cent of total sales. In the private customer sector, competitors hold less than five per cent of the letter business. The Monopolies Commission recommends securing and promoting competition in the letter sector in the long term. ‘We still want Christmas cards to continue to be delivered, even if Deutsche Post were ever to abandon its letter business. That’s why we need alternative service providers,’ emphasises Duso. In Denmark, the former state monopoly PostNord decided to end its letter operations as of the beginning of 2026. Declining letter volumes, advanced digitalisation and the abolition of legal requirements have led to this decision. A national competitor has announced to guarantee letter delivery from 2026 on-wards.
Five Delivery Days instead of Six: Lower Costs
In political discourse, the privileges granted to Deutsche Post are often justified by its univer-sal service obligations. They include, among other things, six delivery days per week and nationwide accessibility. Politicians had already relaxed certain requirements in 2024, e.g. with regard to letter delivery times. In view of the declining relevance of letter mail, the Monopolies Commission considers the legal requirements too high: ‘We must reduce the standards of basic service and thus lower the overall costs. Five delivery days per week are completely sufficient,’ says Tomaso Duso. Such a reduction would be permissible under EU law. Consumers and businesses could also benefit from these savings through lower postage prices. In addition, the Monopolies Commission recommends plan-ning the necessary adjustments to basic postal services in a forward-looking and long-term manner – especially in view of advancing digitalisation.
Opportunities Arising from the New Postal Act
The Monopolies Commission has given an overall positive assessment of the modernised Postal Act, which has been in force since July 2024. It offers new opportunities to strengthen competition. Now it is up to the German Federal Network Agency to act. With more con-sistent regulation of Deutsche Post, particularly with regard to limiting legal cross-subsidies, it can take advantage of these opportunities.
The following documents are now available for download:
Sector Report (in German language only)