Bolkestein admits his hands are tied over remailing row

Date: 09/03/2000

By Peter Chapman

Post Commissioner Frits Bolkestein insists there is nothing he can do in the short term to offset the impact of a European Court of Justice ruling which critics claim has exposed the failings of the Union's single market for mail.

His officials say the Commissioner is powerless to act following the ECJ's decision to stop US bank Citibank taking advantage of cheap Dutch international postal tariffs by mailing thousands of credit-card account statements from the Netherlands to customers in Germany, where the cost of sending domestic letters is higher than anywhere else in the Union.

Dutch postal operator TPG sent the letters from the Netherlands - where customers' data was collated electronically - to Germany at a bulk discount price of €0.28 (0.55 DM) compared to €0.51 (1 DM) for domestic German mail.

Out of this fee, TPG paid German operator Deutsche Post internationally-agreed tariffs for cross-border mail known as 'terminal dues' of between €0.18 and €0.2 (0.37 and 0.4 marks) to carry the letters to their final destination.

But the ECJ ruled last month that these terminal dues did not reflect the true cost of delivering the letters and that Deutsche Post had the right to receive the equivalent of its full domestic stamp rate for handling each piece of mail.

The ruling has prompted a storm of criticism from industry, which argues that it flies in the face of the EU's commitment to a single market. "Citibank was centralising its business and for efficiency reasons it wanted to centralise its post operations. It is very frustrating for a company to hear that they cannot do it any more and yet they are sitting in the middle of a single market," said TPG EU affairs expert Mark Zellenrath.

But a spokesman for Bolkestein insisted this week that the Commissioner's hand were tied. "There is nothing we can do," he said. "Obviously we have to abide by the judgement of the court."

However, sources claim privately that Bolkestein was totally bemused by the ECJ ruling and plans to attack the apparent anomaly when he unveils proposals for a package of measures to open up the postal market to more competition in May by calling for the total liberalisation of cross-border mail.

Following the ECJ's ruling, the issue has now been referred back to a court in Frankfurt, which will take a final decision on the case.

The argument over re-mail is one the first skirmishes in a massive lobbying war over Bolkestein's imminent proposals.

Firms such as parcels giant UPS and TPG are calling for the total liberalisation of cross-border and direct mail as well as a reduction in the traditional post offices' monopolies in the letters markets (known as the reserved area) from 350 grammes to a maximum of 50 grammes.

But post operators in member states such as the UK, France and Spain argue that such a drop in their reserved area would undermine their ability to offer

universal services to remote rural areas and small towns.

Post Commissioner Frits Bolkestein insists there is nothing he can do in the short term to offset the impact of a European Court of Justice ruling which critics claim has exposed the failings of the Union's single market for mail.