EU expected to fine Deutsche Post
The European Union is expected to fine Deutsche Post World Net for predatory pricing in the German parcel delivery market. United Parcel Service, which filed the original complaint against Deutsche Post in 1994, last year called for DP’s profitable mail monopoly to be separated from its other units, including parcel delivery. UPS argued that a split would make it more difficult to cross-subsidize Deutsche Post’s unprofitable activities.
The commission, which is due to take action before Easter, has refused to respond to German press reports that it will fine Deutsche Post 100 million euros ($93 million). The company has set aside $23 million to pay fines. The commission is not expected to seek the break-up of Deutsche Post.
The commission’s investigations will not have a major impact on Deutsche Post’s acquisitions, totaling more than $5 billion over the past 2 1/2 years, including AEI, the leading U.S. air forwarder, and a controlling stake in DHL Worldwide Express, the global air express operator. Rivals say the spending spree was unfairly financed by profits from Deutsche Post’s lucrative letter monopoly.
Deutsche Post’s prospects have improved significantly since the German government ruled earlier this month that its domestic mail monopoly will be extended beyond the scheduled expiration at the end of 2002. The reason for the ruling was the failure of EU member states to agree on a timetable to deregulate postal monopolies in the 15-nation bloc.
Deutsche Post is expected to make further acquisitions, funded by real estate sales, but it has ruled out taking a stake in Lufthansa Cargo.
Bruce Barnard can be reached at [email protected].
JOURNAL OF COMMERCE, 21st February 2001
