Deutsche Post in talks with magazine trade

Deutsche Post is in talks to scoop a major delivery contract from under tile nose of Consignia, the company that runs the Royal Mail.
Officials from the German group are working to seal a long-term con tract with the Periodical Publishers Association (PPA) to deliver up to 700 million magazines a year on behalf of the magazine trade budvs members. The contract is equivalent to about 4 percent of
Consignia’s business.
Consignias monopoly over postal services in the UK is in the process of being dismantled, in accordance with a ruling from European Union competition authorities.
Under the status quo, magazine publishers renegotiate delivery contracts with
Consinia each year.
It is understood that Deutsche Post has offered to substantially undercut Consignia’s rates, in return for a commitment among potential customers to sign up to contracts for as long as five years.
If magazine publishers agree to the deal, the German post office will effect ivelv establish a profitable position in the UK from which to cherry-pick other parts of Consignia’s business.
I How ever, observers say the PPA could
use the threat of competition to negotiate better tenns with Consignia.
Consignia said that the magazine industry was important to the company and that it had a good working relationship with both the PPA and magazine publishers.