Discussion Papers

Christian M. Bender, Alex Kalevi Dieke, Petra Junk, Sonja Thiele

Downstream access in letter markets

No. 382/October 2013

(full version only available in German)


Since 2005, Deutsche Post is obliged to grant non-discriminatory network access for customers and competitors. Conditions and pricing of the network access products are important for the development of competition. In Germany, competition based on consolidation increasingly gains in importance. This study analyses the role of consolidators in the German postal market.

The purpose of this study is to discuss implications for the German regulatory practice and competition in letter post markets. Initially, the study draws the development of competition based on consolidation in Germany and provides an international comparison with Belgium, France, Great Britain and the US with respect to the conditions, pricing and use of network access services. Afterwards, the role of consolidators in the German postal market is analyzed. Finally, the expected effects of network access and consolidation based on observable developments are discussed.

The share of consolidated mail volume in Germany has constantly increased since the introduction of access obligation in 2005. In 2011, consolidated mail volume reached a similar volume as the mail delivered by end-to-end-competitors. In addition to the non-discriminatory access for consolidators, a successive and significant increase of access discounts and a gradual decrease of the required minimum volume since the full market liberalization in 2008 are essential for this development.

The international comparison shows that DPAG provides relatively broad access to their network. The access prices of DPAG are on a relatively low level for advertising mail and on an average level for transaction mail in comparison to the considered countries. Today, the usage of access services in Germany is similar developed as in other European countries.

Positive effects of consolidation on total letter post volume cannot be proved for Germany but customers directly benefit from the higher share of consolidated mail in total letter post volume: on the one hand, more customers can benefit from lower prices due to (additional) discounts. On the other hand, consolidators increase the transparency in the market due to consultancy services which yield lower search and transaction cost.

The positive development of competition based on consolidation seems to be to the detriment of end-to-end-competition. This could be problematic insofar as the active promotion of network access products and low access prices offered by DPAG since 2008 could be seen as a predatory strategy against end-to-end-competitors. Therefore, we advise for a tighter ex-post-control of changes in access prices and conditions, e.g. an explicit legal obligation for DPAG to disclose contracts and cost data.

Discussion Paper is available for download.

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