German Postal Law breaches EU competition rules

20 January 2005

Filip Ragolle

On 20 October 2004, the European Commission decided that the German Postal Law unlawfully induces Deutsche Post AG ("DP") to abuse its dominant position by granting discriminatory discounts in the field of mail preparation services.

Upon a complaint by BdKEP, a German association of postal service providers, the Commission decided that certain provisions of the German Postal Act violate the EU competition rules because they induce DP, Germany’s incumbent postal services operator, to abuse its dominant position by discriminating against commercial mail preparation firms. The incriminating provisions encourage DP to grant quantity-based discounts to bulk mailers who feed self-prepared mail directly into sorting centres but bar it from granting such discounts to commercial firms that handle mail preparation services for others.

Mail preparation consists of collecting items, sorting by destination and delivering them to public access points. DP has the exclusive right to distribute letters below 100 grams (the so-called reserved area). Mail preparation services, including pre-sorting the mail and its transport from the sender’s premises to a chosen point in the incumbent’s network, do not fall within the ambit of the reserved area of the EU Postal Directive.

The Commission acted on the basis of Article 86(3) EC, which allows it to address decisions to Member States in order to ensure that they do not enact or maintain, in force, any measures which allow or encourage public undertakings to violate the EU competition rules (see Article 86(1) EC).

The German government has failed to demonstrate that the discriminatory tariffs were justified on the basis of Article 86(2). This provision contains an exception to the prohibition laid down in Article 86(1) EC where the application of the competition rules to undertakings entrusted with the operation of services of general economic interest would obstruct the performance, in law or in fact, of the particular tasks assigned to them. The Commission recalls that, as established in its 1998 Notice on the application of the competition rules to the postal sector, intermediaries should be able to choose freely amongst available access points to the public postal network.

Whilst acknowledging the infringement, Germany has so far refused to amend the law in a satisfactory manner. It now has two months to inform the Commission of the measures taken to comply with EU law.

Source: Commission Press Release IP/04/1254, 20 October 2004, available here.