A ruling by the European Commission could result in a total restructuring of the German postal monopoly, Deutsche Post. The ruling affirms a formal suit filed by United Postal Service in 1994 that Deutsche Post has set predatory pricing, is cross-subsidizing its commercial products with revenue from its monopoly services and creating an unfair and unlevel competitive playing field.
A second EC investigation of the Deutsche Post’s anti-competitive practices is currently underway.
The ruling will result in a separation of Deutsche Post’s monopoly letter mail services and its competitive parcel business that compete directly with the private sector.
The EC has also ordered Deutsche Post to pay a substantial fine for abusing its monopoly position.
“This is important news for the global marketplace and a boost to the principles of free trade and fair competition. International companies have been trying to compete with a German post office that has systematically used its profits from stamps to undercut competition. Deutsche Post has some of the highest stamp prices in the world (about 51-cents) to deliver a letter in a densely-populated country about the size of Montana. Now the EC has spotlighted what they’ve been doing with that money,”
said UPS vice chairman Mike Eskew.
Eskew said UPS has applauded the process set up by the EC to ensure fair competition and said it should serve as a benchmark in the international debate over how monopoly postal services should be regulated.
“We sincerely hope the European Commission’s ruling will be fully enforced and will serve as the starting point for other governments around the world,” Eskew said.
As a result of the EC ruling, UPS has also called on the U.S. Department of Transportation to revoke a foreign air freight forwarder license granted to DHL Worldwide Express, which is owned and controlled by the Deutsche Post. The license gives Deutsche Post – through DHL – the ability to establish interstate package delivery services in the U.S.
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