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Commission to push for open postal markets by 2009

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Published 17 October 2006 - Updated 04 January 2007
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postal reform Postal services
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Internal Market Commissioner Charlie McCreevy will unveil a new proposal on 18 October 2006 to suppress lingering monopolies in the European postal services market.

The Commission believes that total liberalisation of the postal sector would lead to a better, faster and cheaper service for consumers and businesses, but trade unions are concerned that it would cause job losses. Furthermore, some member states remain protective of their public services and are reluctant to open them up to private-sector and foreign competition. 

In the UK, where full competition came into effect at the beginning of 2006, postal deliveries are found to be cheaper and faster. Nevertheless, a number of member states, including France, Italy, Spain, Belgium, Greece and Poland remain opposed to full liberalisation. They would prefer to put certain safeguards into place to establish financing mechanisms to guarantee the universal service obligation and to have a long transition period. 

Companies seeking access to Europe’s closed postal markets hope that Commissioner McCreevey will stand up to these countries, but they are doubtful as to whether the new Directive will be sufficient to break the domination of national champions. 

It appears that the Commission’s new proposal will not go much further than to abolish remaining “reserved areas” (where member states could restrict access for economic operators, as is currently the case for the delivery of letters that weigh less than 50 grammes). 

However, market entry for new players could be difficult so long as former incumbents maintain their unique access to public postal networks which include assets and infrastructure such as post offices, letter boxes and postmen. 

Positions: 

Postal operators in Belgium, Cyprus, France, Greece, Italy, Hungary, Luxembourg, Malta, Poland and Spain believe that the universal postal service will not be effectively safeguarded by the Commission’s planned measures because of a lack of funding. “It is essential that truly effective measures for financing the universal postal service are identified and implemented before removing the only one which, up to now, has shown to be efficient when appropriately defined: a restricted reserved area,” they state in a joint press release. 

Poczta Polska, the Polish postal operator warned that abolishing the reserved area could lead to a “decline in quality service [regarding] on-time delivery and frequency as well as in frequency of emptying collection boxes and office hours of postal outlets”. 

UNI Europa Postal, which represents Europe’s trade unions in the postal sector, added: “We have difficulties in finding any positive social impact which could result from a full market opening.” 

The Free & Fair Post Initiative (FFPI), which represents users and competitors of the public postal operators, however states that: “Full market opening would offer considerable opportunities for dynamism and growth, allowing market operators to make best use of an efficient network to satisfy at best the users’ and consumers’ needs and demands.” It believes the universal service obligation “has often been used as an excuse to protect…monopolies” and advocates downstream access as a key driver for more competition. 

The UK’s Royal Mail believes that downstream access enables the development of a flourishing 'upstream' market. It thus believes that competitors must be able to choose between building alternative networks or accessing existing networks on a non-discriminatory basis at prices related to costs. “This needs to be enshrined in any new postal services Directive,” it stated. 

Public Postal Services Providers of Sweden, Norway, Iceland, Finland and Denmark believe that downstream access should not be imposed in future regulation of the European postal sector. They say that imposed access will only allow for “partial and administratively determined rather than market-driven opening up…without taking due consideration of the need for establishing end-to-end competition”. They claim that only an increase in the provision of end-to-end services will ensure a “dynamic and viable universal service” whereas imposing downstream access will work against this.

Next steps: 
  • 17 October 2006: ‘Delivering Postal Liberalisation on Time’: Conference bringing together the CEOs of five pro-liberalisation operators and Commissioner McCreevey.
  • 18 October 2006: The Commission will present its proposal for a new Postal Services Directive, aimed at liberalising the sector by 2009.
  • 2008: Council and Parliament will examine the proposal.
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Background: 

The postal sector is of major economic importance, as it affects the competitiveness of other sectors and generates a turnover of more than €88 billion euro - approximately 1% of EU GDP. Nevertheless, with the rise of electronic communications, the postal market is in need of reform.

The 1997 Postal Services Directive (97/67/EC) aimed to gradually open up the postal services market to competition – similar to what was done in telecoms – to turn it into a competitive sector, while continuing to guarantee a universal service for citizens (ie a permanent, quality service at affordable prices for all users).

While the directive succeeded in opening up a number of postal services, it stopped short of allowing competition for the delivery of letters weighing less than 50 grammes. Although this type of service represents only a small proportion of total sales, it accounts for around half of all letters delivered in the EU, and has allowed incumbent operators to hold on to their lucrative exclusivity.

As planned in 1997, the new proposal to be unveiled on 18 October takes the necessary steps to speed up liberalisation in this sector, in order to remove the last obstacles to a single market before 2009. But it will first face the tough challenge of being approved by member states and Parliament. 

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