Monti launches inquiry into Italian post laws

Date: 03/02/2000

By Peter Chapman

EU competition watchdogs are investigating Italian laws governing the postal sector amid complaints from industry that they are squeezing private-sector firms out of the market.

Companies claim that a new law which was meant to implement the 1997 EU directive opening more of the Union's post industry to competition has actually made it tougher for the private sector to operate in the country.

An aide to Competition Commissioner Mario Monti confirmed that officials had begun an investigation into these complaints, but stressed that the probe was at an early stage.

The official said the inquiry was focusing on complaints about an "enlargement of the reserved area" of the Italian market which is currently protected by a monopoly. She said most of the alleged problems related to the provision of "new high value-added services such as hybrid mail" - electronic mail which is then printed and sent via traditional postal services.

A key casualty of the regime, according to industry sources, is Dutch company TNT Post Group, which has seen its Italian units stripped of licences to operate in some sectors of the market.

The probe comes as Internal Market Commissioner Frits Bolkestein prepares to unveil plans for further liberalisation of the sector in the spring.

Meanwhile, competition officials are now close to a decision on allegations that German operator Deutsche Post misused cash which it obtained from its monopoly of the German letters market to finance a string of acquisitions in the liberalised parcels sector.

All sides are pushing for a quick decision on the case, with Deutsche Post keen to clear the decks ahead of a planned multi-billion-euro flotation later this year and rival firms demanding that the company be punished by the Commission for flouting EU state-aid rules.

The European Court of Justice is also expected to rule this month on a key case related to US financial services giant Citicorp's mailing activities.

The firm's banking unit Citibank wants Germany to abolish rules which prevent it from mailing customers' statements into the country from across the border in the Netherlands.

Industry sources acknowledge that EU legislation outlaws the 'physical remail' of letters - taking them out of the country and then posting them back from another member state in order to take advantage of cheaper postal costs. But the industry claims there is nothing in the Union's rule book to prevent 'non-physical remail'.

In this case, Citibank gathered information via computer about clients in Germany, processed it in the Netherlands and then mailed the statements to Germany, where domestic rates for posting letters are the highest in the EU.