11 May 2000

Controversial plans to liberalise the €80bn ($75.5bn) European Union mail market were published yesterday by the European Commission. If implemented as proposed, they will lead to Europe-wide competition for handling and delivering letters weighing over 50g – opening to competition 16% of the revenues of existing national postal monopolies. The directive also proposes to liberalise direct mail deliveries and outgoing cross-border mail.

Many national postal services and governments, especially France, are strongly opposed to increased liberalisation, and the debate has become a political hot potato with dire warnings of the threat to rural services and post offices. Some EU postal services are demanding that the weight limit be reduced to 150g, thereby opening-up only 6% of the market.

Meanwhile, the Commission is under pressure from private carrier services to accelerate the move to greater competition, and the directive is expected to be adopted on May 24. Unless subsequently amended, it will liberalise 27% of existing postal monopoly services by 2003, although EC president Romano Prodi, is said to have stepped-in to prevent the setting of a date for full competition because of the issue’s extreme sensitivity.

Although pan-European parcel deliveries and express services have been open to competition for some time, most of Europe’s national post offices enjoy a monopoly over letter deliveries up to a weight of 350g. Overall, this leaves only 3% of the mail market open to competition – although Sweden and the Netherlands have already liberalised their letter markets. But, says Frits Bolkestein, EU internal market commissioner: "If we don't open up the market further, the world will pass us by."

Bolkestein believes that a more competitive market would not endanger a universal delivery service, despite warnings from the monopolies that this would be an inevitable result. All new entrants to the market, reassures Bolkenstein, will be required to contribute to a compensation fund specifically to subsidise the cost of delivering to outlying areas.

News source: Financial Times