The Italian Competition Authority (‘the Authority’) has decided to accept the commitments made by Poste Italiane with regard to supply agreements it entered into with several delivery agencies. This concludes the Authority’s investigation into Poste Italiane’s possible abuse of dominant position in the markets of liberalised and soon-to-be liberalised postal services.
Under Legislative Decree 1999 no. 261, which implements the initial European Directive on the progressive liberalisation of postal services, Poste Italiane is to be in charge of the universal postal service for a period of no more than 15 years.
The 1999 Decree enabled Poste Italiane to sub-contract a series of legally reserved services to a large number of delivery agencies (which previously operated ordinary and registered mail services under concession in competition with Poste Italiane).
The sub-contracting agreements, which were entered into between 2000 and 2001, all expired on 31 December 2006 in order to coincide with the initial target date for full liberalisation of the market. The new EU Postal Services directive has allowed the target date to be postponed until 1 January 2011, creating a gap for the years 2007-2011. The Italian government intervened to extend the sub-contracting contracts until 30 June 2007. Poste Italiane issued a tender for new sub-contracting contracts in May 2007.
On 3 August 2007, the Authority started an investigation into whether the sub-contracting agreements entered into between December 2000 and January 2007, together with the nature of the tender issued in May 2007, could be evidence of a concerted strategy on the part of Poste Italiane to reinforce and extend its dominant position in the market of postal services that are already or soon to be liberalised.
Although Poste Italiane entered into these supply agreements in order to sub-contract legally reserved services to the delivery agencies, the Authority took the view that the agreements were worded in such a way as to greatly constrain the overall activities of the former concession-holders as well as their ability to compete in postal services that are not reserved services and which therefore are open to competition. The Authority considered that the clauses contained in the contracts were intended to reduce the business autonomy of the delivery agencies and weaken them in view of the full liberalisation scheduled for 2011.
The fact that the old supply agreements covered activities that are not subject to the universal service obligation as well as reserved services, together with the nature of the May 2007 tender (whereby the new sub-contracting agreements would include exclusivity clauses preventing the delivery agencies from offering their services to Poste Italiane’s competitors), led the Authority to consider that Poste Italiane’s conduct could seriously restrict the activities of the former concession-holders and thus limit the role of competing operators in the markets for liberalised and soon to be liberalised postal services.
On 15 November 2007, Poste Italiane submitted a number of contractual commitments to the delivery agencies, which the Authority considered in light of the public tender. The following commitments were accepted and rendered binding by the Authority:
assurance that Poste Italiane will issue a new request for tender proposals for mail collection and distribution services (including unaddressed mail) and for auxiliary services in urban areas. The overall amount of activity (i.e. 168 million euros over three years) together with the assurance of a minimum guarantee of 80% of the value over three years of the assigned area, will reaffirm the amounts previously contracted out to the delivery agencies and therefore support the maintenance of their productive capacity until full liberalisation of the postal markets scheduled for 1 January 2011;
assurance that the contracts with the delivery agencies will be extended to cover the whole of the first quarter 2008, by which time the new tender procedure should be opened. This should enable the former concession-holders to carry on their business until the tender process is complete and the new contracts are awarded;
a guarantee that no less than 40% of registered mail on average will be outsourced (a minimum of 25% for each individual business). This will allow for a balance between Poste Italiane’s need to bring certain activities back in-house and the necessity to reduce the burden on delivery agencies of restructuring their distribution services;
assurance that Poste Italiane will remove exclusivity clauses as well as clauses requiring Poste Italiane’s approval, such as a right of pre-emption in favour of Poste Italiane over the sale of an agency business to another, and a right of approval over the buyer of such a business. This should encourage local business growth and help delivery agencies to strengthen their market position and compete with Poste Italiane in the market for liberalised postal services.
Sources: Italian Competition Authority Press Release 28/02/2008‘Postal services: investigation concluded following acceptance of commitments’ and Press Release 07/08/2007‘Poste Italiane under investigation for possible abuse of a dominant position in postal services’ available at www.agcm.it