Postal liberalisation plan on hold

Bowing to intense pressure from member states, the European Commission has agreed to slow the already creeping pace of liberalisation within the EU's postal sector.

With more than 1.8 million people employed by post offices, which generate 1.3% of the Union's GDP, member states have tackled liberalisation with kid gloves. France, where postal unions are particularly strong, has led those standing firm against plans to open the market.

After a heated debate between telecoms ministers this week, Competition Commissioner Karel Van Miert announced that plans to adopt a notice clarifying how competition rules apply to postal services would be put on hold.

The notice forms part of a two-track approach to liberalisation of the sector. It spells out the Commission's approach to anti-trust behaviour in 'non-reserved' areas, or those open to competition, while a directive currently making its way through the legislative process sets out a timetable for liberalisation of postal services 'reserved' for monopolies.

The former provoked a storm of protest from governments and the European Parliament, which felt the Commission was trying to force the pace of liberalisation by using its competition powers instead of directives approved by all of the EU's institutions. For the same reason, the measure was welcomed by private couriers when it was published in draft form earlier this year. They took it as a sign of the Commission's new determination to get tough with post offices which break EU competition law, and have greeted its postponement with dismay.

'We really needed this notice as a guarantee that the Commission would ensure equal and fair play in non-reserved areas,' said Eric Merkel-Sobotta of European Express Organisation (EEO), which represents some 16 private-sector post companies in Europe.

In particular, the notice would have clarified the question of whether or not post offices may use monopoly profits to cross-subsidise loss-making parts of their business unable to compete with private sector rivals.

The Commission will now delay adoption of the notice until after the Parliament and ministers have adopted legislation aimed at opening up the market. Unveiled in July, the directive, in which the Commission adopts an extremely cautious approach, would limit the reach of monopolies but not destroy them. Post offices would maintain their hold on most domestic letters, only facing competition for those weighing more than 350g or costing more than five times the postal price of a standard domestic letter. Incoming cross-border mail and direct mail would not be liberalised until 2001.