Dutch action angers postal delivery firms

Liberalisation of Europe's postal services may have come a step nearer with the news that the Dutch Post Office is about to become one of the world's biggest communications companies.

The move has fuelled fears within the private sector that unless competition is applied to the industry soon, the post offices will be able to carve up the market ahead of liberalisation.

Express delivery companies which compete with the post offices say the Dutch move underlines the need for urgent action, and are pressing for a quick decision to open up a fifth of the market to competition when communication ministers meet at the end of November.

Last week, Koniklijke PTT Nederland NV (KPN) - the Netherlands' privatised post and telecommunications company - announced that it was to buy Australian delivery firm TNT for 1.2 billion ecu.

KPN, which only eight years ago was a government department, will at a stroke become one of the world's top four communications companies and the global leader in 'remailing' (specialist bulk mail delivery for business).

Companies such as Federal Express and United Parcel Service (UPS) are fearful that this could be the beginning of a trend as partial liberalisation slowly approaches in the EU.

'We want to encourage cooperation between private and public operators and they do need time to set up global networks, but we do not think this is fair,' said Anton van der Lande, the head of public affairs at UPS.

'It has taken us 20 years to set up a world-wide network at considerable expense and it is unfair that a company can become a global player overnight using monopoly profits'.

KPN is extraordinarily profitable, making an operating profit of 195 million ecu on turnover of 1.4 billion ecu last year. In buying TNT, it is purchasing a company with twice its annual sales revenue. UPS believes that KPN can only afford to make an acquisition of this size by overcharging its Dutch customers, and will be writing to the European Commission in the coming weeks urging it to set conditions on the merger.

'We doubt the Commission will block it, but we hope they will make it conditional on separate accounts for monopoly and non-monopoly areas', said Van Der Lande.

At the same time, the express companies will be urging the Commission to move swiftly to adopt a notice applying normal competition rules to the postal sector. These would oblige post offices to publish transparent accounts and make their profitable operations take on a proportional share of the cost of their loss-making services.

After the Commission published its draft notice last year, the reaction from the anti-liberalisation lobby, led by France and Belgium, was so fierce that the Directorate-General for competition promised only to introduce it if the Council of Ministers failed to agree on a directive to open up the market.

This would allow post offices to keep their monopoly on basic letter services - the collection, sorting and delivery of letters weighing up to 350 grams - as well as incoming cross-border mail and direct mail, until 2001, although accounts would have to be separate.

At their last meeting at the end of September, communications ministers were unable to reach an agreement on the directive, but the Irish presidency remains relatively optimistic that a qualified majority in favour of the proposal could be found during their next session on 27 November.

Portugal, Greece and Luxembourg have so far lined up with the French in opposition to post liberalisation, but those in favour of the proposal believe that the Luxembourgers could be persuaded to come over to their side.