Bolkestein to propose radical cut in EU postal monopolies

Date: 11/05/2000

By Peter Chapman

INTERNAL Market Commissioner Frits Bolkestein is set to defy critics who have called for a softly-softly approach to postal sector liberalisation by proposing a radical reduction in the state-run post offices' monopoly.

His plan to prise open nearly a third of the Union's highly-protected postal markets to competition will put him on a collision course with Paris, which has already warned that his approach is totally unacceptable. But he has also been criticised by private-sector companies who claim his proposals do not go far enough.

The draft plans set to be unveiled by Bolkestein within the next few weeks call for the proportion of the letters' market currently 'reserved' for state post offices to be slashed from 350 grammes to just 50 grammes. The Commissioner will also propose the complete liberalisation of direct 'junk' mail deliveries and opening up the first leg of all cross-border deliveries to competition.

This would allow companies to collect mail below the 50-gramme threshold from any member state and deliver it to the borders of another for collection and onward delivery to its final destination by the local operator. But it would not allow 'remailing', where big customers such as banks deliver mail to their domestic customers via a foreign postal operator charging cheaper tariffs.

Bolkestein has also backed away from

former Industry Commissioner Martin Bangemann's plan to call for full liberalisation by 2007. "If we had taken the Bangemann 'steam-roller approach' then we would be pushed off the cliff," said one official.

The draft proposal has nevertheless been fiercely criticised by France, which takes over the EU presidency in July and will therefore chair initial ministerial discussions on the plan. Paris argues that Bolkestein's approach would put the future of thousands of French post offices at risk and undermine the provision of loss-making 'universal service' deliveries by state operator La Poste to remote rural areas.

"This is definitely not in line with our view. It is not what we wanted," said one official. "The position of Post Minister Christian Pierret is quite firm. We are not in a position to give up on this or that. There are 17,000 post offices in France. All of this could be erased at the stroke of a pen. It is not an ideological point. Almost everyone in France supports it."

Commission sources say Bolkestein's draft proposals would open up 27% of national post offices' revenues to competition. Lowering the letters monopoly to 50 grammes would liberalise a sector accounting for 16% of their total income, opening direct mail to competition would add another 8%, with liberalisation of part of the cross-border market adding a further 3%.

But the plan has also come under fire from private postal operators, who claim it is a political fudge. "It is very modest. There is no reason why we had to wait so long for this," said Rohan Malhotra of the European Express Association, who added that the plan would still leave more than two-thirds of the post offices' monopolies intact.

Malhotra said the liberalisation of direct mail would give a massive boost to this growing sector of the market, but insisted Bolkestein should set a deadline for full liberalisation. "By failing to set a final date, there is a spectre of uncertainty in the market," he said, adding this would undermine firms' ability to make long-term investment plans.

Commission sources hinted this week that Bolkestein would have preferred an even more ambitious approach, but regards his proposals as a "pragmatic solution" aimed at placating doubting member states, fellow Commissioners who are opposed to radical market-opening and MEPs.

Internal market Commissioner Frits Bolkestein is set to defy critics who have called for a softly-softly approach to postal sector liberalisation by proposing a radical reduction in the state-run post offices' monopoly.