Discussion Papers

Mark Oelmann

Regulatorische Marktzutrittsbedingungen und ihre Auswirkungen auf den Wettbewerb: Erfahrungen aus ausgewählten Briefmärkten Europas

Nr. 291 / März 2007


This discussion paper analyzes the effect of different regulatory approaches on the structure of competition and on strategies of entrants in letter markets. It compares experience from Finland, Germany, Great Britain, the Netherlands and Sweden.

A crucial element of the German regulatory framework is the so “D-licence”, a licence that gives right to provide services of a superior quality compared to standard universal service. The licence conditions imply a relatively costly business model as entrants need to deliver every day. As a result, the German letter market witnessed substantial local entry. However, the recent increase in M&A in the sector will likely lead to the emergence of nationwide delivery networks in Germany. A potential impediment to a more dynamic development of competition is the lack of stability of the regulatory framework. This uncertainty results from the government’s decision to postpone the date of full liberalization in 2001 on the one hand, and from massive and lengthy litigation initiated by Deutsche Post on the other hand.

The Finnish postal monopoly was abolished in 1994. However, no competition emerged as licence conditions involve high universal service requirements. E.g., a licensed operator would need to deliver daily and, in addition, pay a ‘penalty tax’ unless he delivered evenly in all areas of Finland.

Compared to other regulators, British Postcomm takes a very restrictive approach to price control. Due to this relatively low price level, as well as rather attractive access products and Royal Mail’s VAT exemption, some consolidators have established successful operations in the U.K. – but there is hardly any end-to-end competition.

The Dutch reserved area does not include addressed advertising (direct mail). In order to serve this market segment, several entrants have established nationwide delivery networks.

Indeed, at present, the Netherlands appears as the only European country with alternative delivery networks. Like the operator Swedish CityMail, Dutch entrants control delivery cost by limiting delivery to about two days per week.

In Sweden, the postal monopoly was abolished in 1993 and there are no significant legal barriers to entry. VAT is evenly charged for all postal services, including those of the incumbent. Second to Sweden Post, CityMail has established itself as an important competitor that delivers mail in the more densely populated areas of Southern Sweden.

Our analysis concludes that abolishing legal monopolies is only a necessary condition for effective competition. However, formal liberalization alone is not sufficient to create a competitive postal market. [only a german version available]

Diskussion Paper is available for download.

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