Parliament votes to delay postal liberalisation

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Despite strong opposition from postal workers, members of the European Parliament gave the green light to postal liberalisation. Nevertheless, MEPs agreed that member states should have at least an extra two years – until 2011 – before having to complete full market opening.

A large majority of MEPs rejected pleas, from a select group of Greens and leftists in Parliament, to renounce to full liberalisation in the postal sector and maintain the so-called ‘reserved area’ as a means of financing the universal service, in a vote on 11 July 2007. 

Instead, a compromise agreement, which had already been approved by the EP’s transport committee on 18 June 2007 (EURACTIV 19/06/07) and had received the backing of Parliament’s three major political groups (EPP-ED, PES and ALDE) was adopted with only minor changes. 

The main elements of the agreement are: 

  • Rejection of the Commission’s proposal to complete market opening in all 27 member states by 1st January 2009. Instead, two stages are proposed:  
    • 31 December 2010, as the final deadline for complete market opening; 
    • possibility of extending the deadline until 31 December 2012, for: 
      • new member states;
      • countries with “a particularly difficult topography or many islands”, such as Greece, and;
      • countries “with a small population and a limited geographical size”. This last category is a novelty and is being termed the ‘Luxembourg clause’ as this country would most likely be the only member state to benefit from it. 
  • ‘reciprocity clause’ is included, aimed at preventing distortions of competition until then, by preventing postal operators in countries that maintain a reserved area from entering markets that have already been fully opened, such as the UK Sweden and Finland;
  • A strong Universal Service Obligation (USO), with member states obliged to ensure sufficient access and contact points across their territory and a uniform tariff between rural and urban areas.
  • Possibility of introducing new financing mechanisms for the USO where operators prove unable to provide such services profitably, including the set-up of a compensation fund or access to state subsidies;
  • Provisions aimed at guaranteeing minimum social standards for postal workers across Europe, in view of avoiding a “race to the bottom” as companies compete in the market. The report states that basic rights and working conditions applied in member states, such as minimum pay and the right to strike, will not be affected by the Directive.
  • The obligation for the Commission to issue detailed guidance on how to calculate the net cost of the universal service to ensure a level playing field among operators and avoid violations of competition law. 

The author of the report, German EPP-ED MEP Markus Ferber believes that his compromise solution can provide "a new impulse for finding an agreement in the Council" and that "a quick agreement by the end of the year should be possible". 

He explained that, while the two-stage approach "ensures that we take into account the interests of all member states", the reciprocity clause will help to avoid a situation where protected monopolists are able to "act as cannibals in liberalised markets". 

Internal Market Commissioner Charlie McCreevy, who has been pressing for the 2009 deadline to be respected, has said that he will wait to see how member states react to the proposals before commenting on Parliament's amendments. He defended his proposal, saying that it was not "the implementation of abstract theories dreamed up in an ivory tower or based on ideological zeal", but rather a response to the "communications revolution" that is taking place and that "poses a threat for those postal operators that fail to adapt". 

"No reserved area can protect any postal operator from the competition from other means of communication. The only option is to reform and to adapt, to turn the challenge into an opportunity," he said. 

The French socialist delegation in the EP, which in fact voted against the Ferber report, however stressed that "it is not by dismantling the postal service that we will reconcile Europe with its citizens". Gilles Savary said: "We have reached the summit of blind ultra-liberalsim here. We now have a liberalisation directive, which will prove costly in public subventions, there where the previous system, based on tariff solidarity, did not cost anything to taxpayers." 

Nevertheless, UK socialist Brian Simpson, shadow rapporteur on the proposal, said that the opening of the sector – planned in 1992 – was unavoidable. "For this last stage, we had the choice between simpley letting it go ahead or negotiating strong social protection rules," he said, welcoming Parliament's decision to opt for a controlled market opening with social guarantees. 

Eva Lichtenberger, Vice-President of the Greens/EFA group, said: "The compromises agreed are no more than a postponement of the problems until 2012. It is clear that the structural problems in small countries and in countries with a difficult topography will not be solved within five years." She regretted that the Parliament had failed to come up with a "sustainable solution" that would "safeguard services in remote regions without the need for huge subsidies from the state". 

GUE/NGL Dutch MEP Erik Meijer drew attention to the fact that it was the inadequacy of private operation of postal services in the past that led states to assume responsibility for them. "With this proposal, private operators will use temporary workers, post offices will disappear and be replaced by supermarkets, and vital services to the elderly and those living in rural areas will disappear to the detriment of these people and communities", he said. 

A group of 12 postal operators, including France’s La Poste and operators from Austria, Belgium, Cyprus, Greece, Hungary, Italy, Latvia, Luxembourg, Malta, Poland and Slovakia, welcomed Parliament's "substantial improvements" to the initial proposal, but warned: "Postponement alone does not address the many legal, economic and technical questions which remain as acute as ever." The main point that they want resolved is the question of financing for the USO. 

Dirk Klasen, in charge of Corporate Communications at Deutsche Post World Net, told EURACTIV: "The proposed postponement of the market opening to 2011 or 2013 for 'new' member states and Greece does not concur with Deutsche Post World Net's call for a harmonised market opening. However, the model of a two-stage market opening for old and new member states might be a useful step forward in order to find a compromise. For Deutsche Post it is important not only to focus on the deadline for full market opening but also to ensure a level playing field. The reciprocity clause might as well help in this respect." 

UEAPME, the European craft and SME employers’ organisation, said that, despite the delay, it was pleased to see the Parliament acting in favour of liberalisation while at the same time reinforcing safeguards for universal service. "This is of the utmost importance for small users of postal services such as crafts and SMEs, which have no bargaining power with service providers and cannot benefit from economies of scale as larger enterprises," it stated. 

Postal users, represented by the Free and Fair Post Initiative (FFPI) and the Postal Users Group (PUG) however said they were disappointed by the delay. "We are convinced that 2009 is the right time for ending postal monopolies across Europe," said FFPI President Philippe Bodson. 

PUG Chairman Per Mortensen added: "However, I am happy that there is now a fixed date and that we, the users, can prepare for the further development of a healthy business relationship between the Posts and its customers. Users will enjoy the full potential of a liberalised postal sector and the efficiency and innovation that comes with it." 

UNI Postal, which represents trade unions in the postal sector, said that it would not give up the fight: "We are disappointed but the Save our Post campaign will now be urging European governments to put in better safeguards," said UNI's John Pedersen, adding: "Europe is about protecting key services to the public and decent work - not just satisfying free market neo-liberals." 

In October 2006, the Commission presented plans to dissolve lingering monopolies in the mail market and open up Europe's €88 billion postal sector to full competition by 1 January 2009. 

While postal services have already been substantially opened up over the past decade, incumbents have retained the right to maintain a lucrative "reserved area" over the delivery of letters weighing less than 50 grammes, in return for them providing all citizens – be they city-dwellers or isolated inhabitants of rural areas – with a five-day per week delivery service at affordable prices. 

The Commission now wants to get rid of this restriction, making it easier for new operators to enter the market, in the hope that increased competition will lead to a cheaper, faster and more innovative service provision. But postal workers across Europe, as well as monopolistic operators in France, Belgium, Luxembourg, Italy, Spain, Greece, Poland and Hungary, as well as a number of other new member states, say that the timeline proposed by the Commission would destroy public operators in some parts of the EU, resulting in a weaker customer service and big job cuts. 

On the other hand, the Commission's proposal has received staunch backing from the few countries in which liberalisation has already begun or been finalised, including the UK, Sweden, Finland, the Netherlands and Germany. They say that the nearly 20-year liberalisation process has already dragged on far too long, and are seeking to open up new markets for their national operators. 

  • 11 July 2007: EP adopted a compromise agreement in a first reading vote in plenary. 
  • 20 July 2007: Possible discussion and political agreement by member states at an informal meeting of competitiveness ministers. 
  • 1 October 2007: Transports, Telecommunications and Energy Council. 

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