Deutsche Post AG abuses dominant position in tariffs for bulk mail customers

The Bundeskartellamt has concluded its abuse proceedings against Deutsche Post AG (DPAG). The authority accuses DPAG of having abused its dominant position in the provision of postal services and by doing so having hindered its competitors.

Andreas Mundt, President of the Bundeskartellamt: "Deutsche Post AG is without any doubt a dominant company in the German market for postal services. Dominant companies have certain obligations vis-a-vis their competitors. Deutsche Post AG agreed letter prices and loyalty discounts with its large customers which were impossible for other postal service providers to compete against. Such market foreclosure activities prevent the development of any real competition."

DPAG has in the meantime abandoned the measures objected to.

With a market share of well above 80%, DPAG continues to hold a dominant position in the market for licensed postal services, despite the liberalisation of the postal markets. As a dominant postal service provider DPAG is obliged to grant competitors access to its network for the provision of parts of their services (partial service access). If a competitor wishes to make use of this right, he collects the letters at his customers, prepares them for mailing (i.e. franks, numbers and presorts them) and delivers them to one of DPAG's mailing centres from where they are onward delivered by DPAG. DPAG charges a fee for this service.

The Bundeskartellamt has ascertained that DPAG agreed on letter prices with four large volume mailers that were below the prices a competitor has to pay in order to gain access to the delivery network of DPAG. The agreements were implemented in the form of so-called "target price agreements". By offering these prices DPAG engaged in a so-called margin squeeze. This margin squeeze hindered DPAG's competitors because they were no longer able to make a competitive offer to the large customers in question.

The low letter prices were the result of discounts which DPAG granted on the original price, as well as further reductions for the transmission of "quality data" to DPAG or for advertising services (imprint on envelope: "delivered by Deutsche Post" or alternatively the Deutsche Post logo). The design of the target price agreements suggested that these discounts were only granted to the extent necessary to reach the agreed target prices. In some cases, the target prices were significantly below the partial service fees.

The prohibition on the abuse of a dominant position was also violated by the fact that the cheap letter prices were to some degree made dependent on the customer using DPAG's services for almost his entire mailing business. DPAG's competitors were also hindered by these loyalty discounts.

In the meantime DPAG has discontinued the abusive practices. During the proceedings the company was of the opinion that the objected practices were admissible, which is why a declaratory decision was required to prevent a recurrence of the practices in the future. The decision is not yet final. Deutsche Post may appeal the decision to the Düsseldorf Higher Regional Court.