Monti to go nuclear over postal services

Date: 08/05/03

By Peter Chapman

MARIO Monti, the competition commissioner, is preparing to launch a pre-emptive strike on monopoly postal operators to prevent them abusing their dominant positions in EU markets.

European Voice has learned the Italian is planning to use the Commission's own legislative powers to adopt a directive forcing postal giants to separate their letters business, which is legally protected from competition, from other parts of their operations in the sector.

A director in Internal Market Commissioner Frits Bolkestein's department - also responsible for mail markets - described the move as a "nuclear option" because it could go on the EU's statute books without the approval of MEPs or member states.

Article 86 of the EC Treaty gives the Commission the right to act outside the usual legislative process to preserve competition where state-run firms enjoy special rights. Similar laws were enacted in the 1990s to prise open the telecoms sector.

The official confirmed that the directive had been discussed with his department, adding that Monti's aides are under pressure to deliver a proposal in time for adoption before the end of the year.

If Monti and his fellow commissioners press the button, the law would subject operators to the same obligations as those imposed on German post giant Deutsche Post in 2001, after it was found guilty of abusing its dominant position.

Monti said Deutsche Post had unfairly cross-subsidised its parcels market with profits from its letters business. Under the ruling, the company was forced to set up a separate legal entity for its business parcels services - already liberalised at the time for parcels weighing more than 350 grammes.

The EU postal market is on course for full liberalisation by the end of the decade.

Under the terms of the current postal directive, deliveries of letters and parcels weighing more than 50 grammes will be open to competition after 2006. All restrictions could subsequently be lifted pending further study of post markets.

However, the Monti law would still apply to operators paid to perform "universal service" obligations, such as deliveries to rural areas.

Postal operators told this newspaper they had been briefed about the Monti plan, but declined to comment.

Meanwhile, Frits Bolkestein this week unveiled plans to slap value-added tax on state-controlled post offices in most member states for the first time, although they can choose to levy a reduced rate.

The move was dubbed as an unnecessary new tax by MEPs. It will put post offices on a level footing with private firms, who must already charge VAT.

Sweden's post office, which charges the tax already, said the move would have pros as well as cons. For example, they will be able to claim back the VAT on services they pay for.

Mario Monti, the Competition Commissioner, is preparing to launch a pre-emptive strike on monopoly postal operators to prevent them abusing their dominant positions in EU markets.