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Competition Policy

Overview (Postal services)


Efficient and reliable postal services are a vital component of communication services in the EU affecting the everyday lives of all citizens as well as all business sectors. Other sectors such as e-commerce, publishing, mail order, insurance, banking and advertising depend heavily on the postal infrastructure. Postal services encompass a variety of services, from letters to parcels to value-added services.

The purpose of competition policy in this sector is to ensure that efficient, reliable and high quality postal services are available to all citizens and businesses at affordable prices. Formerly regulated sectors such as postal services, historically dominated by state-owned monopolies, pose particular challenges in terms of ensuring that the behaviour of these former monopolies does not stifle competition and in particular competition deriving from new entrants.  

The Commission can do this in two ways: by opening up the postal services markets to competition, and by enforcing competition rules where relevant.


Opening up the postal services markets

Postal services are a form of communication service for delivering goods and information in the form of letter or other print material from one point to another. In general, a postal service involves the collection, sorting, transporting and delivering of various items both addressed and unaddressed as well as parcels. Postal services comprise mainly two categories: letters, such as private correspondence, office mail, transactional mail publications, addressed advertising; and, secondly parcels and express services. Traditionally letters services were provided by public-service incumbents and were progressively liberalized under the three Postal Directives. However, parcel and express services were not part of the area reserved for national incumbents and therefore did not need to be liberalised.

Liberalization of postal services was brought about gradually starting in 1997 with the First Postal Directive: Directive 97/67/EC of 1997, as amended by Directive 2002/39 and culminating in 2008 with the Third Postal Directive: Directive 2008/6/EC. These Directives included guarantees that postal services would remain accessible everywhere and to everyone under the same conditions (i.e. the universal postal service). To that end, universal service providers can be compensated for the net cost of providing the universal service when this net cost represents a burden for the operator.

Full liberalization allows new operators and innovative services to appear, thus promoting competition in terms of quality and price of postal services.

Protecting consumers through Universal Service requirements

Clearly, liberalisation should not come at the cost of deterioration in service standards or diminution in service coverage in particular in sparsely populated areas. Universal service requirements were therefore introduced so as to maintain guarantees relating to a high quality universal service regarding for example density of post offices and letterboxes. These were fully maintained and are closely monitored by national authorities. These universal service obligations were designed to guarantee that all Member States would ensure the continued full coverage and affordability of postal services.


Impact of Liberalization

A review made by the Commission1 on the impact of liberalisation found that it had generally positive effects for the consumer – overall quality standards for intra-EU mail delivery had been maintained. Most Member States had established a price cap to ensure that basic postal services are affordable and in many Member States prices for stamps had increased in general in line with inflation rates and in order to help compensate for the fall in the number of letters being sent. These price increases had no significant impact on the affordability of the service for EU citizens, which remained affordable. The Report also found that all Member States ensure that all providers of postal services had a transparent, simple and inexpensive procedure for dealing with complaints from users, and most universal service providers have a system of compensation.

However, since liberalisation, competition in the form of new competitors in the letters markets had developed slowly in most Member States. Only some 13 Member States could show that competitors had achieved a greater than 5% share of the letters market by mid-2013, leaving effectively some 95% with the incumbents.

Where competition in the letters market had developed, this competition was more widespread in the market for end-to-end delivery provided by operators who created their own distribution network to deliver directly to recipients themselves. Also ‘Access competition’, where other operators hand over letters to the universal service provider for final delivery after pre-sorting, had developed in Slovenia and the UK, as well as Germany.

As regards the parcels market by contrast, according to the Commission Report, there has been an increase in competition and new companies have entered the market. In addition, universal service providers have been developing their parcel delivery services, by for example, guaranteeing delivery times to take advantage of the growth in demand from online shopping.


1 Commission Report on the Impact of this liberalization (Report on the Postal Services Directives - Directive 97/67/EC as amended by Directive 2002/39/EC and 2008/6/EC)


Enforcing the Competition Rules – Cases and key judgements in the postal services sector

See the dedicated page for Cases and key judgments (Postal services)


State aid

In applying the State aid rules in this sector the Commission seeks to ensure that Member States continue to be able to finance essential public services such as the  universal postal service, distribution of newspapers and periodicals, basic banking services and payment of pensions entrusted to postal operators who are still mostly public incumbents. A secondary aim is to prevent the State from distorting competition in the postal sector and in adjacent markets where postal operators are increasingly active, including logistics, banking, insurance, and in particular the fiercely competitive parcel delivery market.

The legal basis for State aid control generally depends on the type of State intervention: Compensations for services of general economic interest (SGEI) entrusted to postal operators are assessed on the basis of the Community Framework for State aid in the form of public service compensation, entered into force on 31 January 2012, also called the 2012 SGEI Framework. This SGEI Framework defines the conditions under which SGEI compensations can be authorised under Article 106(2) TFEU. Among other things, the compensation must not exceed the net costs to the undertaking of delivering the SGEI. This aims to prevent undertakings from using public service compensation to cross-subsidise commercial activities. The third Postal Directive (2008/06/EC) also contains specific rules related to compensation for the provision of postal services operating under a universal service obligation (USO). Compensation can for example only be allowed if it can be demonstrated that the USO represents an unfair burden on the USO provider. The third Postal Directive also allows the establishment of a compensation fund for the financing of the USO, which may be funded by other postal service providers and/or users' fees provided that conditions of transparency, non-discrimination and proportionality are respected.

The State can also intervene by injecting capital into postal operators to finance their development. Such capital injections are assessed on the basis of the Market Economy Investor Principle to determine whether this investment constitutes State aid. According to this principle, it is necessary to assess whether, in similar circumstances, a private investor of a comparable size operating in normal conditions of a market economy could have been prompted to make the investment in question (para 74, Commission Notice on the notion of State aid as referred to in Article 107(1) of the Treaty on the Functioning of the European Union).

By way of example, the Commission has approved aid provided to Universal Service Providers in the Czech Republic, Italy, Poland, and Denmark. It has also approved aid provided to facilitate geographic reach across remote regions of Belgium, the UK and France as well as for press distribution at preferential tariffs (Belgium, France and Italy). More recent cases include approval for aid for electronic data boxes as a public service in the Czech Republic and aid provided for services exempted from postage fees in Poland. The amounts involved range from approximately €3.5 million in the Polish case to approximately €2.4 billion in the Italian USO case.

In other cases, in order to remedy the distortive impact of incompatible aid, the Commission adopted decisions requiring the Member State to recover the incompatible aid. For example in 2018, the Commission in a case concerning the Spanish incumbent Correos, found that Correos had been overcompensated for the delivery of its postal Universal Service Obligation (USO) between 2004 and 2010 and had benefited from incompatible tax exemptions. The amount, which had to be paid back, came to €167 million. Similarly, in 2021 the Commission found that two capital injections amounting to approximately €66 million and granted by Denmark and Sweden to PostNord Group, constituted incompatible State aid. Consequently, the Commission requested Denmark and Sweden to recover these amounts from PostNord Group.

The Commission’s approach has been confirmed by the European Courts in a number of cases. For instance, in Joined Cases T-282/16 and T-283/16, Inpost Paczkomaty and Inpost S.A. v Commission, the General Court fully upheld the Commission’s decision and in particular the application of the SGEI Framework to the postal USO. The Court also clarified the approach to be taken regarding compensation funds as well as the relationship between the third Postal Directive and the SGEI Framework. In Case T-316/18, První novinová společnost a.s. v Commission, the General Court for the first time explained that any alleged benefits (e.g. tax exemption) for the USO incumbent regarding non-USO related activities are irrelevant for the calculation of the USO compensation pursuant to the net avoided costs “NAC” methodology. The General Court also explained that the proceeds resulting from USO compensation can be used for other (non USO-related) activities. Also relevant is Case T-561/18, ITD and Danske Fragtmænd A/S v Commission, where the General Court confirmed that the Commission, when calculating the net cost of the universal service, was correct to include intangible benefits, such as the economies of scale and scope, advertising effects from intellectual property, demand effects due to VAT exemptions, advantages linked to full territorial coverage as well as bargaining power.