GERMANY EXTENDS DEUTSCHE POST MONOPOLY
The German government has decided to extend the letter delivery monopoly held by Deutsche Post AG past a 2002 deadline for deregulation previously enacted into law in Germany.
The German economic ministry said it will extend the monopoly because other European Union countries have not agreed to mail deregulation plans. EU members have argued over postal deregulation since the beginning of last decade. Recent setbacks have again stalled the liberalization process.
The German government’s move to extend Deutsche Post’s monopoly is a huge windfall for a partially state-owned post office that in recent years has expanded through a multibillion-dollar global acquisition spree into logistics management, logistics financing, freight forwarding and global parcel delivery. The company owns such well-known transportation brands as DHL Worldwide Express and Danzas AEI.
Deutsche Post has exclusive rights in Germany to carry all mail weighing under 200 grams. It charges 1.10 deutsche marks (66 cents) per letter. Analysts had expected deregulation to cost Deutsche Post billions of dollars in lost revenue due to price competition.
Despite its recent international expansion, postal delivery is still by far Deutsche Post’s largest business. Mail alone accounted for 34.3 percent of the company’s revenue and more than 76 percent of pre-tax profit in 1999.
The monopoly extension will likely lead to more complaints from Deutsche Post rivals United Parcel Service, Federal Express and TNT Post Group. UPS has been fighting EU authorities for several years to penalize Deutsche Post for unfair business practices. Most recently, UPS has complained that Deutsche Post funded recent acquisitions with revenue earned from its monopoly mail business, breaking EU competition rules.
The EU is investigating Deutsche Post concerning several illegal business practices, including illegal pricing behavior in the German domestic and international mail delivery sectors.