As the postal sector has been gradually liberalised there is a greater need for enforcement of the competition rules so as to ensure that these markets remain open to competition. Added vigilance is needed for signs of exclusionary behaviour, which would impede effective competition. It is also necessary, through merger control law, to prevent too much concentration of market power in too few market players. In the postal sector, there is a particular need to ensure that the objective of facilitating and encouraging new entrants is not undermined through excessive market consolidation.
In implementing the competition rules to the European postal services markets the Commission applies the principles set out in the 1998 "Notice from the Commission on the application of the competition rules to the postal sector and on the assessment of certain State measures relating to postal services".
Antitrust
In one of its first formal decisions in the postal sector the Commission condemned Deutsche Post AG1 the German national postal operator, for adopting certain anti-competitive practices, involving fidelity rebates and predatory pricing in the market for business parcel services. These practices were found to be harmful to competition. The Commission in its decision clarified the conditions under which below-cost pricing charged by a monopoly operator would be considered abusive and therefore illegal under the competition rules. The Commission also condemned the scheme of fidelity rebates granted by Deutsche Post in the mail order parcel deliveries market because it tended to foreclose competition in this market.
In one of the first cases2 following the first liberalization measures, the Commission found that Deutsche Post, the German national incumbent, had engaged in abusive behaviour in the German letter market by intercepting, surcharging and delaying incoming international mail, which it had erroneously classified, as circumvented domestic mail. It was found that Deutsche Post had engaged in anti-competitive conduct by discriminating between different customers, by charging excessive prices and by refusing to supply certain services unless an unjustified surcharge was paid.
Since liberalisation, the Commission has worked closely with the National Competition Authorities (NCA) in several cases where the provider of the universal postal service was found to have engaged in an abuse of a dominant position.
Some of these NCA cases have given rise to important case law of the European Court of Justice through the preliminary reference procedure. For example, the Danish NCA had found that Post Danmark3, the Danish incumbent postal operator, had engaged in anti-competitive behaviour in the form of predatory pricing in relation to the customers of its only competitor. In a landmark judgment and following an appeal by Post Danmark, the European Court of Justice provided guidance on the definition of illegal predatory pricing, specifying the circumstances in which it would be necessary to show that the prices had actual or probable exclusionary effects to the detriment of competition.
In a second seminal ruling in 2015, also involving the Danish national postal operator Post Danmark II4, the European Court of Justice provided further guidance on the circumstances in which certain types of fidelity rebates offered by dominant firms could be considered anti-competitive.
The Commission has also intervened directly in a case involving the Slovakian postal sector where it found that the Slovak State had unfairly granted a concession to the Slovakian incumbent postal operator in the hybrid mail sector thereby effectively re-monopolizing the sector. In effect, the Commission found that certain amendments to Slovakia's postal legislation infringed the competition rules on dominant market positions. The amendment in question had extended the monopoly of the incumbent operator, Slovenská Pošta, to the delivery of hybrid mail services whereas this activity had until then been open to competition. As a consequence, Slovak postal operators, which had already entered this market, were prevented from continuing their activity and their economic viability was endangered. In 2015, the EU General Court5 dismissed an action for annulment by the Slovak postal operator against the Commission decision and confirmed the Commission's assessment that re-monopolizing hybrid mail to the benefit of the incumbent postal operator was contrary to Article 106(1) in conjunction with Article 102 TFEU. The European Court of Justice confirmed the judgment of the General Court in June 20166.
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1 European Commission, 20 March 2001, Case 35.141, Deutsche Post AG, [2001] OJ L125/27
2 Commission Decision 2001/892/EC of 25 July 2001 Deutsche Post AG L.331/40 15/12/2001
3 Case C-209/10 Post Danmark I ECLI:EU:C:2011:342
4 Case C-23/14 Post Danmark II EU:C:2015:651
5 T 556/08 Judgment of the General Court of 25 March 2015 Slovenská pošta a.s. v European Commission ECLI:EU:T:2015:189:
6 C-293/15 P - Slovenská pošta v Commission. Judgement 30 June 2016 ECLI:EU:C:2016:511
Mergers
In parallel with the monitoring of anti-trust rules, the Commission also enforces the Merger Regulation in postal services markets with the aim of preventing effective competition from being hampered. Since its adoption in 2004, the Commission has adopted numerous merger decisions in the postal services sector.
The majority of these cases did not raise competition concerns and qualified for clearance under the ‘simplified’ merger review procedure. See, for instance, the following cases:
M.7664 - Schibsted Distribusjon/ Amedia Distribusjon/Helthjem on the acquisition of joint control over a joint venture (JV) delivering parcels in Norway by Amedia AS and Schibsted ASA, both of Norway;
M.8225 - GeoPost/Corfin 14/BRT, on the acquisition of joint control over BRT of Italy, a parcel and freight delivery services provider by GeoPost of France and Corfin 14 of Italy;
M.8280 - Deutsche Post DHL/ UK Mail, on the acquisition of the UK Mail Group by DPDHL of Germany;
M.9618 - La Poste/BRT, on the acquisition of sole control over BRT of Italy by GeoPost of France;
M.9957 - Advent International/ OTTO / Hermes Parcelnet / Hermes Germany, on the acquisition by the US based Advent International Corporation of sole control of Hermes UK and joint control with OTTO of Hermes Germany. Both Hermes companies provided multi-channel courier services in the UK and Germany respectively.
An interesting example of intervention in this sector is the La Poste/Swiss Post/JV Case which involved the creation of a joint venture between the French and Swiss incumbents. The proposed joint venture was intended to carry out most of the parties’ activities in international mail delivery services. Initially, the Commission had concerns that the transaction could have reinforced La Poste’s dominance on the French international business mail market leading to less choice and possibly higher prices for customers. To address the Commission’s concerns, Swiss Post offered to divest Swiss Post International France, the subsidiary through which it was active in France and to also transfer its customer relationships to the purchaser. The Commission’s analysis showed that the commitments package would help maintain the competitive dynamics in the international business mail market in France and that customers would continue to benefit from choice and affordable prices. The transaction was approved by Commission decision of 4 July 2012 in case M.6503 - La Poste/Swiss Post/JV.
In a more recent case - FedEx/TNT Express - the Commission cleared the acquisition of TNT Express by FedEx. The case mainly related to the small package delivery services sector where both FedEx and TNT were active on a global basis. They were two out of the four so-called “integrators” operating in the sector in Europe. “Integrators” are companies that control a comprehensive air and road small package delivery network and have the reputation of reliably delivering small packages on time (so-called ‘end-to-end’ credibility). The other two “integrators” are the German-based DHL, owned by Deutsche Post and the US-based UPS.
Initially, the Commission had concerns that post-Transaction, the merged entity would face insufficient competitive constraints from the only two remaining integrators, DHL and UPS. This lack of sufficient competitive constraints could have led to higher prices for business customers and consumers. However, following an in-depth investigation the Commission concluded that the acquisition of TNT by FedEx would not give rise to competition concerns and issued an unconditional clearance decision. The Commission estimated that the merged entity's market position would be moderate and that no important competitor would be removed by the merger. The merged entity would continue to face competition on both intra-EEA and extra-EEA markets from two other strong “integrators”, DHL and UPS, which would prevent any negative effects from materialising. The Commission’s assessment also found that the transaction could be expected to give rise to efficiencies due to network cost savings and that these would benefit customers. The Transaction was approved by Commission decision of 8 January 2016 in case M.7630 - FedEx/TNT Express.
Three years earlier, in January 2013, the Commission had prohibited the proposed acquisition of TNT Express by UPS (case M.6570 - UPS/TNT Express ). UPS’ appeal against the Commission decision was successful and the decision was annulled by the European Court of Justice.