Fair competition in the dispatch of newspapers and magazines – Bundeskartellamt effects changes to Deutsche Post’s conditions

In reaction to the Bundeskartellamt competition concerns, Deutsche Post AG has amended its system of conditions for the dispatch of newspapers and magazines.

Andreas Mundt, President of the Bundeskartellamt: “The changes to the system of conditions for the mailing of newspapers and magazines will increase the possibilities for Deutsche Post’s competitors to establish themselves as alternative mailing providers.”

Since the end of 2016 the Bundeskartellamt has conducted proceedings against Deutsche Post on suspicion of abusing its dominant position in the dispatch of newspapers and magazines (so-called newspaper post). The customers of such mailing services include not only publishing houses but e.g. also associations or health insurance funds which send out membership magazines. Deutsche Post was suspected of binding its customers to its services with an illegal discount structure to an extent that unlawfully impedes its competitors’ access to the dispatch volumes of these customers.

The original contracts between Deutsche Post and its customers partly contained clauses which made the allowance of discounts dependent on the entire circulation being dispatched via Deutsche Post. Any consignor dispatching even a part of its circulation via other companies had to bear the risk of losing its discount with Deutsche Post. When imposed by a dominant company these kind of exclusive purchasing obligations are definitely anti-competitive because they make it impossible for other companies to enter the market. Other original contracts contained so-called “soft” total circulation clauses which provided for a particularly large discount for sending the total circulation via Deutsche Post and also posed the risk that the discount would not be granted in future if partial quantities were handled by Deutsche Post’s competitors.

During the proceedings Deutsche Post informed the Bundeskartellamt that although it denies holding a dominant position and therefore did not consider itself subject to the control of abusive practices, it had nevertheless removed the contractual clauses to which the Bundeskartellamt objected by amending the contracts. The Bundeskartellamt then also examined the restructured discount system under competition law.

The preliminary result of this examination showed that even after Deutsche Post had amended its contracts it could not be ruled out that a pull effect could still deter the consignors from using Deutsche Post’s competitors for their press distribution. As previously, Deutsche Post still granted relevant discounts based on the total volume dispatched by a customer. In the Bundeskartellamt estimation any customer engaging alternative mailing service providers would also have had to accept a retroactive reduction in the amount of discount.

An assessment showed that there were also significant differences in the level of discount granted to individual customers. However, in the authority’s interim evaluation these differences were not objectively justified based on a sufficiently comprehensible and transparent system of conditions. Under competition law dominant companies are required not to discriminate against individual customers in their pricing and terms.

After the Bundeskartellamt had expressed its continuing concerns Deutsche Post abandoned its previous discount system. In future fixed unit prices will be agreed with the consignors for the delivery of addressed newspapers and magazines, without any differentiated discount rates. Any customer who in future also uses services of providers other than Deutsche Post will not run the risk of being penalised with rising unit prices during the contract period. Furthermore, Deutsche Post will not arbitrarily offer its customers different (dispatch) conditions i.e. without any objective justification. Overall these measures are intended to improve the situation of alternative mailing service providers and ensure alternative options for customers. This is also intended to encourage further liberalisation in the market concerned.

Deutsche Post denies holding a dominant position in the dispatch of newspapers and magazines and disputes falling under the prohibition of a dominant position. The company has nonetheless agreed with the Bundeskartellamt on a commitment to formalise these principles in its future contracts. The Bundeskartellamt has therefore refrained from drawing a final conclusion on the question of dominance and the assessment of the system of conditions under competition law and has discontinued the proceeding.

A case summary with further information is available on the Bundeskartellamt website (in German only)