Deutsche Post Faces Antitrust Conviction For Intercepts, Delays of International Mail
European antitrust enforcers are about to deliver another legal setback to Deutsche Post AG by finding the company guilty of unlawfully disrupting international mail bound for Germany, according to people familiar with the situation.
The European Commission is likely to issue its ruling as early as next week, requiring the company to stop the practice, these people say. It is unclear whether the commission will also impose a fine, which wouldn’t be unusual in such a case.
For over three years, the commission’s antitrust department has been investigating complaints alleging that Deutsche Post intercepts and delays mail destined for Germany from other countries. The German company’s customers and competitors have also accused it of overcharging for delivery of cross-border mail, requiring that senders pay a domestic stamp price rather than a lower international mailing fee. In postal jargon, these lower fees — paid by the postal company at the mailer’s end to the postal operator at the final destination — are known as “terminal dues.”
In a preliminary statement on the case last year, the commission’s investigators said that Deutsche Post’s “frequent and systematic interception, surcharging and delay of normal incoming cross-border mail infringes the competition rules of the European Union.”
Now, having examined the case in detail, the commission’s investigators have confirmed their initial suspicion that Deutsche Post has indeed broken EU antitrust law, which bans companies from abusing their dominant position on the market, the people familiar with the case say.
Martin Dopychai, a spokesman for Deutsche Post, said the company hasn’t broken any laws. “We are in full compliance with the German law” and with international postal agreements, he said. “But maybe the European legislation will have some different points of view on that.”
A commission spokeswoman couldn’t be reached for comment.
The antitrust department’s decision would come at a time when Deutsche Post is still fresh from another antitrust blow from Brussels, which resulted in the company’s agreement to effectively split itself in two parts.
That decision capped seven years of antitrust scrutiny triggered by Deutsche Post’s archrival, United Parcel Service , which complained that its German nemesis was subsidizing its commercial parcel business with profits from its monopoly on letter delivery in Germany. Without admitting wrongdoing, Deutsche Post agreed to set up a subsidiary to handle business packages “to bring the proceedings to a positive conclusion and so as to ensure effective pricing control in the parcel sector.”
The current case was also kick-started by a competitor, the British Post Office, which recently changed its name to Consignia. Its complaint, later strengthened by evidence provided by postal companies in other countries, charged that Deutsche Post was treating legitimate international mail as if it were “remailed” from Germany.
Remailing refers to the practice of routing mail through a country with lower postal rates, thus avoiding payment of more expensive domestic fees. In a typical case, a company doing bulk-mailing could send its mail to a third country and then have it mailed from there to the final destination, thus qualifying for the lower terminal dues.
European courts have ruled in the past that in some instances such remailing may not qualify for terminal dues. Ironically, Deutsche Post won one such case at the European Court of Justice last year.
In that case, Deutsche Post quashed a move by Citigroup Inc.’s Citibank unit to save money by sending account statements to its German clients through the Netherlands. Citibank e-mailed these statements from its processing facilities in the U.S. to the Netherlands, where they were printed out, stuffed into envelopes and mailed to Germany through a Dutch postal company TNT Post Groep NV. In doing so, Citibank saved money because the terminal dues that TNT pai
