Discussion Papers

No. 402: Market definition for courier-express-parcel services in Germany
Authors: Christian M. Bender, Alex Kalevi Dieke, Petra Junk
November 2015

(Full version only available in German)


Courier, express, and parcel markets (CEP) are traditionally considered as competitive markets and were basically not regulated under postal law in the past. Hence they were subject to general competition law. Available data on market shares in the German CEP sector, however, suggests that some operators may be approaching market dominance. Against this background, market definition plays a central role for regulation and competition policy.

This study identifies and discusses approaches for delineating different product markets in the German CEP sector. The study is methodologically based on relevant economic literature and competition law cases as well as on expert discussions the authors had with CEP operators, authorities and sector associations.

The central questions in defining relevant product markets is whether the CEP-sector constitutes a single market or whether separate product markets can be distinguished (for instance separate markets for deferred/standard parcels and express services; or separate markets for business parcels (B2B) and mail-order parcels (B2C). The determining criterion is the identification of products which are sufficiently substitutable to allocate them to the same market (from demand or supply perspectives).

The study concludes that there are sufficient arguments for defining separate markets for courier services, express services, and standard parcel services. By contrast, there is no clear evidence supporting a further definition of markets for different express services, based on delivery guarantees or different delivery times.

For standard parcels, the study offers the following results: markets for over-the-counter parcels (C2X) on the one hand and for business parcels (B2X) on the other hand appear to be separate markets. Within the market for business parcels, there are good arguments both in favour and against defining separate markets for B2B- and B2C-parcels. At the same time, this dynamic market is developing rapidly. At present, it is uncertain whether traditional B2B service providers will be successful in extending their services to the B2C segment. For this reason, the study offers no firm result as regards separate markets for B2B versus B2C (standard) parcels. The weight limits for parcel markets should be determined in light of products and operations in the market (for example 31.5 kg), and need not reflect legal definitions of universal service.

A final definition of the relevant product markets in regulatory or competition law proceedings must always consider the specifics of the proceeding. The results of this discussion paper offer a starting point for such market definition exercises and are meant to support regulatory and competition authorities in this task.

Discussion Paper is available for download.

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