Clement opposes EU demand to restrict Deutsche Post’s monopoly
German Economics and Labor Minister Wolfgang Clement said he opposes a European Union demand to amend a law protecting Deutsche Post AG's monopoly on some services.
Companies including Federal Express Europe Inc. and United Parcel Deutschland Inc. & Co. say the mail carrier's letter monopoly, protected through 2007, infringes EU competition rules. Mario Monti, the trade bloc's competition commissioner, wants a legal amendment, easing Deutsche Post's domination of so-called mail preparation activities, such as collecting and sorting.
Asked in an interview in Berlin if he plans to change the law, Clement replied: “No, why should I?'' Deutsche Post “needs a clear framework on which it can plan to conduct business through 2007 and such activities are part of that,'' he said.
Bonn-based Deutsche Post, Europe's largest postal service, has been expanding into logistics, freight and express delivery to anticipate increased competition from 2008, when its exclusive license for letters expires. The letter business contributed more than two thirds of its 2.98 billion euros ($3.62 billion) of earnings before interest, tax and amortization last year.
Germany and France bowed to EU pressure in 2002 by agreeing to limit in stages the monopolies of the postal services in Europe's biggest mail markets, reducing exclusive delivery rights to an upper weight limit of 100 grams from 2003 and to 50 grams from 2006. Chancellor Gerhard Schroeder's government owns 62.5 percent of Deutsche Post, according to Bloomberg data.
`Important'
“I put a lot of weight on sticking with this timetable,'' said Clement. “It's important for everyone involved, not least the company concerned.'' The EU's antitrust regulator disagrees and sent the German government in April a letter demanding a change in the law. Failure to comply could lead to the commission filing a suit at the European Court of Justice in Luxembourg.
Deutsche Post mail preparation activities comply with EU competition rules, said Dirk Klasen, a spokesman for the company, in an interview. Deutsche Post's competitors “want to break into the company's monopoly ahead of schedule — yet the legal situation is very clear,'' he said.
Deutsche Post's domination of services such as collecting, sorting and stamping mail weighing below 100 grams is barred by the EU's competition rules. In the U.S., private companies have a 60 percent share of the mail preparation market.
Companies such as FedEx and UPS are seeking to broaden their business beyond so-called “added-value'' services, such as same- day deliveries, before 2008, said Hans-Peter Teufers, spokesman of the Hamburg-based BIEK express and courier group, representing FedEx and six other international express and courier services.
Lawsuit Planned
“Deutsche Post has gained market share of preparatory, services in the U.K. — we want the same rights'' in Germany, Teufers said. BIEK plans to launch a lawsuit against Germany this month over Deutsche Post's practices, he said.
Deutsche Post's competitors fear that Germany will extend its letter monopoly beyond 2007 to accommodate the wishes of ten new EU new members to slow down the easing of postal monopoly rules, said Rudolf Pfeiffer, chairman of the BdKEP group, representing 200 national express and courier services.
“We're stepping up pressure on the EU to act on preparation services,'' said Pfeiffer in a phone interview. “If the monopoly is extended again we've got to safeguard rights to those services as a minimum.'' In 2002 the German government overturned an earlier plan to end Deutsche Post's monopoly the following year.
Germany is expected to reply to the commission's letter this month. The EU hasn't set a deadline for Germany to comply with its demands.
