Deutsche Post in talks with magazine trade

THE TIMES 27th October 2001
DEUTSCHE POST IN TALKS WITH MAGAZINE TRADE

Raymond Snoddy Media Editor

DEUTSCHE POST, the German post office, is in talks to scoop a major delivery contract from under the nose of Consignia, the company that runs the Royal Mail.

Officials from the German group are working to seal a long-term contract with the Periodical Publishers Association (PPA) to deliver up to 700 million magazines a year on behalf of the magazine trade body’s members.

The contract is equivalent to about 4 per cent of Consignia’s business.

Consignia’s 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 Consignia each year.

It is understood that Deutsche Post has offered to undercut Consignia’s rates substantially, 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 effectively establish a profitable position in the UK from which to cherry pick other parts of Consignia’s business.

However, observers say the PPA could use the threat of competition to negotiate better terms with Consignia.

Consignia said last night that the magazine industry was important to the company and that it had a good working relationship with both the PPA and magazine publishers.

(c) Times Newspapers Ltd, 2001