PRESS REVIEW

20 Oct 2001 EU: POSTAL SERVICES - INDUSTRY GIVES MIXED REACTION TO COUNCIL LIBERALISATION DEAL.

The European postal industry has given mixed reactions to the Council agreement on postal liberalisation reached by Telecommunication Ministers on October 15 (see previous issue of European Report). Most private operators feel the Council has not gone far enough in liberalising postal markets, while public operators are trying to forge their own common stance on the Council deal.

The pro-liberalisation Free and Fair Post Initiative (FFPI) says it falls short of what is needed to make the postal sector economically viable in the future. It is especially unhappy that no deadline was set for fully opening the postal markets to competition. The FFPI, which represents more than 7.1 million companies, predicts the Council deal will allow Member States to maintain national monopolies on significant parts of the postal market. "The ones who will be hurt by this are the consumers who will have to pay higher prices and have less choice", it said.The European Express Association (EEA), which represents private express carriers, is similarly unimpressed with the deal. A spokesman pointed out that according to the Council's plan, 77% of the postal market will remain closed to competition in 2006. The EEA fears that public operators will use profits made in the reserved sector to cross-subsidise losses accrued in the non-reserved sector. It believes this will discourage businesses from competing in the liberalised part of the market. By contrast FEDMA, the European Federation representing 350 firms in the direct marketing business, heralded the deal as "a step in the right direction". FEDMA manager Caroline Kostka stressed it wanted postal liberalisation to result in the highest quality of services and affordable prices for all users. PostEurop, which represents public postal operators in forty-two countries, including in the fifteen EU Member States, has yet to agree a united position on the Council deal. Speaking with a single voice may prove difficult however, as national postal operators diverge widely in their attitude to liberalisation.The ball is now in the European Parliament's court, which is due to deliver a second reading on the Commission's draft Directive. Its first reading of December 14, 2000 watered down the Commission text slightly more than the Council common position. The MEPs voted to subject letters weighing more than 150g to competition in 2003, while the Council has opted for 100g in 2003 and 50g in 2006. There are as yet no indications it has softened its line on the liberalisation package.-The European Commission on May 30, 2000 tabled a draft Directive to further open up the postal sector to competition. The proposal would require Member States to reduce weight-limits on letters and direct mail (address advertising material or "junk mail") from 350g to 50g by 2003. In tandem with this, Member States would have to reduce the price limits from five times the standard tariff to two-and-a-half times. The proposal envisaged the full opening up to competition of outward cross-border mail and express mail services. The Commission did not propose liberalising measures for inward cross-border mail.-.

Source: EUROPEAN REPORT 20/10/2001