Commission staff working document - Accompanying document to the  report from the Commission to the European Parliament and the Council on the application of the postal directive (Directive 97/67/EC as amended by Directive 2002/39/EC) {COM(2008) 884 final}
Date: 2008-12-22
Institutions: European Commission
Subjects: application of EU law, competition, liberalisation of the market, market supervision, national implementing measure, postal service

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 22.12.2008 
SEC(2008) 3076 

COMMISSION STAFF WORKING DOCUMENT 

Accompanying document to the  

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE 
COUNCIL 

on the application of the Postal Directive  
(Directive 97/67/EC as amended by Directive 2002/39/EC) 

{COM(2008) 884 final} 

Ce document ne sera transmis que par voie électronique 

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TABLE OF CONTENTS 

1. 

1.1. 

1.2. 

1.3. 

1.4. 

2. 

2.1. 

2.2. 

2.3. 

2.4. 

2.5. 

3. 

3.1. 

3.2. 

3.3. 

3.4. 

3.5. 

Introduction and Background....................................................................................... 4 

Purpose and scope of the Commission Staff Working Paper ...................................... 4 

The importance of postal services and their changing role.......................................... 5 

Developments 2006-2008 ............................................................................................ 6 

Approach ...................................................................................................................... 8 

The transposition of the Postal Directive ..................................................................... 8 

Aims of the Community regulatory system ................................................................. 8 

The requirements of the Postal Directive..................................................................... 9 

Transposition by Member States................................................................................ 10 

Transposition of the Postal Directive by the EFTA -EEA States .............................. 10 

Transposition of the Postal Directive by the Candidate Countries ............................ 11 

The Application of the Postal Directive..................................................................... 11 

A quality universal service for EU citizens................................................................ 11 

Reserved area ............................................................................................................. 15 

Licensing and authorisation ....................................................................................... 17 

Access to postal networks .......................................................................................... 19 

Tariff principles.......................................................................................................... 22 

3.5.1.  Tariff regulation and USP tariffs................................................................................ 22 

3.5.2.  Terminal Dues............................................................................................................ 26 

3.5.3.  Value Added Tax ....................................................................................................... 26 

3.6. 

3.7. 

3.8. 

3.9. 

Transparency of accounts........................................................................................... 30 

National Regulatory Authorities (NRAs)................................................................... 31 

Quality of services – Routing time............................................................................. 32 

Complaint and redress procedures ............................................................................. 36 

3.10. 

Technical standards.................................................................................................... 36 

3.11.  Conclusions on regulatory developments .................................................................. 37 

4. 

4.1. 

4.2. 

Market developments ................................................................................................. 39 

Evolution of the postal market in a wider communications market........................... 39 

Mail Volumes............................................................................................................. 39 

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4.3. 

4.4. 

4.5. 

4.6. 

4.7. 

4.8. 

4.9. 

Labour Costs and productivity ................................................................................... 40 

Legal Status of Universal Service Providers (USPs) ................................................. 42 

Development of competition in the letter mail market .............................................. 42 

Business strategies of competitor postal operators .................................................... 44 

Development of competition in the parcels and express market................................ 44 

Barriers to the development of competition............................................................... 45 

Social and employment aspects ................................................................................. 46 

4.10. 

Technological trends .................................................................................................. 48 

4.11.  Conclusions on market developments........................................................................ 48 

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1. 

INTRODUCTION AND BACKGROUND 

1.1. 

Purpose and scope of the Commission Staff Working Paper  

The  Community  framework  for  EU  postal  services  is  set  out  in  Directive  97/67/EC  as 
amended by Directive 2002/39/EC (hereafter referred as “the Postal Directive”)1. Article 23 
of  the  Postal  Directive  requires  the  Commission  to  report  on  the  application  of  the  Postal 
Directive to the European Parliament and Council “every two years”. It also requires that this 
report should include “appropriate information” on market developments including technical, 
social, employment and quality of service aspects. 

Regular market monitoring and reporting is an important element for the full accomplishment 
of a postal Internal Market. It also helps to identify any shortcomings and problems in good 
time  and  allows  policy  makers  the  opportunity  to  take  appropriate  (legal)  action  when 
necessary  and  implement  corrective  measures.  Market  monitoring  is  also  essential  to  the 
process of proceeding with the EU Postal Reform in a transparent manner and to establish if it 
has  generated  the  desired  effects  and  benefits.  It  should  be  recalled  that  the  previous 
Application  Reports  played  an  important  role  in  the  legislative  process  of  Directive 
2008/6/EC. 

The  Commission  provided  its  first  Application  Report  in  November  20022,  its  second 
Application  Report  in  March  20053  and  a  third  Application  Report  in  October  20064.  The 
Reports  were  accompanied  by  Commission  Staff  Working  Papers  containing  more  detailed 
information on regulatory and market developments.  

This  Commission  Staff  Working  Paper  (hereinafter  the  CSWP)  provides  a  comprehensive 
assessment  of  the  overall  transposition  of  the  Postal  Directive  in  Member  States,  the 
application  of  its  key  elements  as  well  as  detailed  market  trends  (including  economic, 
technical,  social,  employment  and  quality  of  services  aspects).  The  Application  Report 
describes  the  main  developments  since  the  previous  Application  Report  adopted  in  October 
2006  and  covers  the  reporting  period  is  2006  –  2008.  Since  the  adoption  of  the  2006 
Application  Report  important  achievements  and  significant  changes  have  occurred  in  the 
postal  sector.  These  are  captured  in  this  CSWP  and  are  analysed  from  a  Community 
perspective.  To  assist  comparison  with  the  Commission's  2006  Staff  Working  Paper,  the 
structure used in the latter has been retained. 

1 

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Directive 97/67/EC of the European Parliament and the Council of 15 December 1997 on common rules 
for  the  development  of  the  internal  market  of  Community  postal  services  and  the  improvement  of 
quality of service, OJ L 15, 21.01.1998, p. 14; Directive 2002/39/EC of the European Parliament and of 
the  Council  of  10  June  2002  amending  Directive  97/67/EC  with  regard  to  the  further  opening  to 
competition of Community postal services, OJ L 176, 5.7.2002, p. 21. 
Report  from  the  Commission  to  the  European  Parliament  and  the  Council  on  the  Application  of  the 
Postal Directive (97/67/EC), COM (2002) 632 final. 
Report  from  the  Commission  to  the  European  Parliament  and  the  Council  on  the  Application  of  the 
Postal  Directive  (97/67/EC  as  amended  by  Directive  2002/39/EC),  COM  (2005)  102  final  and  SEC 
(2005) 388. 
Report  from  the  Commission  to  the  European  Parliament  and  the  Council  on  the  Application  of  the 
Postal  Directive  (97/67/EC  as  amended  by  Directive  2002/39/EC),  COM  (2006)  595  final  and  SEC 
(2006) 1293. 

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The main elements and conclusions of the Commission Staff Working Paper are presented in 
a  concise  form  in  the  2008  Report  from  the  Commission  to  the  Council  and  the  European 
Parliament on the Application of the Postal Directive. The latter also assesses the conclusions 
of this document in broader context of the Lisbon Agenda and the Single Market Review  

The reporting period is of a particular relevance for the postal sector in the EU, as a number of 
decisive  developments  took  place  in  the  short  timeframe  this  Report  is  covering:  First,  the 
Federal Republic of Germany – by far the biggest single (national) postal market in the EU - 
fully liberalised its postal market on 1 January 2008. Second, an evaluation of the full market 
opening in the UK, which took place on 1 January 2006, is being undertaken by independent 
experts in the UK. Third, the effects of the reduction of the threshold for the reserved area to 
50 grams by 1 January 2006 throughout the EU – which is the last intermediate step before 
the full market opening - can now be assessed. 

Last but not least it should be recalled that in February 2008 the Council and the European 
Parliament  adopted  Directive  2008/6/EC  further  amending  the  Postal  Directive  (hereafter 
referred to as "the Third Postal Directive")5. The Third Postal Directive sets a deadline for the 
full market opening by 31st December 2010 for the majority of Member States (95% of the 
EU  postal  markets  in  terms  of  volumes)  and  by  31st  December  2012  for  the  remaining 
Member  States.  The  Third  Postal  Directive  thus  provides  the  legal  basis  for  the 
accomplishment of the  internal  market for postal services. This important decision taken by 
broad consensus by the European Parliament and Council is not only concluding the reference 
period of this report but also adding an essential perspective to it. The purpose and scope of 
this CSWP is not to provide a forecast on the application of the Third Postal Directive - but to 
report on the application of the current Postal Directive over the reference period.  

1.2. 

The importance of postal services and their changing role  

Postal services are a significant industry in the EU economy. In 2004, postal services in the 
EU  earned  about  90  billion  EUR  or  approximately  1%  of  EU  GDP6.  The  postal  services 
sector  is  also  an  important  employer  with  around  1.6  million  people  employed  directly  by 
operators in 20067. 

At  the  crossroads  between  communications,  advertising  and  transport,  postal  services  are, 
together with other transport, logistics and communication services, a key industry for the EU 
economy.  

In  addition,  postal  services  provide  social  benefits  which  cannot  be  quantified  in  economic 
terms. They are an important means by which individuals can communicate with each other 
and receive information. Postal services are considered a service of general economic interest.  

The  postal  sector  is  evolving  substantially.  At  the  end  of  the  first  decade  of  the  new 
millennium,  postal  operators  are  facing  fierce  competition  from  electronic  means  of 
communication. This is forcing them to adapt their businesses to better respond to customer 
needs and to improve efficiency. It can be seen from business solutions that postal operators 

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Directive  2008/6/EC  of  the  European  Parliament  and  of  the  Council  of  20  February  2008  amending 
Directive 97/67/EC with regard to the full accomplishment of the internal market of Community postal 
services, OJ L 52, 27.2.2008, p. 3. 
"Main developments in the European postal sector (2004-2006)", WIK-Consult, May 2006. 
"Main developments in the European postal sector (2006-2008)", ECORYS, 2008. 

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are developing (e.g. hybrid mail) that they are rapidly adapting to the changing environment. 
Moreover,  with  the  continuous  opening  of  segments  of  the  postal  services  markets,  the 
incumbent  postal  operators  are  also  facing  increasing  competition  from  new  entrants.  In 
response to these developments, postal operators have substantially improved their efficiency 
by  restructuring  their  operations  thus  resulting  in  cost  control  and  better  quality  of  service. 
The restructuring of mail handling processes in turn has often resulted in or was induced by 
the development of new products and concepts. 

Physical mail is increasingly being supplemented by multi-channel delivery and tailor-made 
solutions  for  customers.  One  example  of  this  is  the  development  of  hybrid  mail  services 
which are now offered by most postal operators. Some postal operators even go a step further 
and  are  entering  adjacent  markets  through  developing  IT  services  for  their  customers.  The 
development of new and value-added services is a reaction to the threat of e-substitution and 
the opportunities arising from the development of technology. 

Postal  services  are  a  crucial  important  element  of  the  EU's  single  market  policy  and  are 
included  in  the  Lisbon  Strategy  for  growth  and  jobs  that  was  fundamentally  re-launched  in 
20058.  The  Commission's  Communication  on  a  single  market  in  the  21st  century  Europe9 
emphasises  that  initiatives  on  network  industries,  including  the  postal  sector  and  other 
liberalized  network  industries,  are  showing  results  on  the  ground  once  they  are  fully 
implemented. Yet more can be done. There is broad consensus that the sustainable provision 
of  services  of  general  economic  interest,  such  as  postal  services,  can  best  be  ensured  in  a 
competitive market and with the development of the European single market. 

1.3. 

Developments 2006-2008 

The following main developments should be highlighted.  

–  Opening up of the postal market in Germany as of 1 January 2008 

Germany is the fourth Member State in the EU to fully liberalise its national postal 
market.  This  is  an  important  step  in  establishing  the  internal  postal  market  as  the 
German postal market is the biggest national postal market in the EU. It is important 
to emphasize in this context that in Germany market forces are providing universal 
postal service. There are however safeguard measures in place in case market forces 
are unable to ensure the provision of these services. 

–  Uncertainty regarding the opening of the postal market in the Netherlands 

The 2006 Application Report indicated that the Netherlands would fully liberalize its 
postal  market  by  1  January  2008.  Full  liberalization  has  now  been  delayed  for  an 
indefinite period because of – according to the government – VAT differences with 
Germany and the UK, developments in Germany as regards employment conditions 
in the postal sector and allegedly unfair employment conditions in the postal sector in 
the  Netherlands.  The  Commission  is  closely  looking  at  these  developments  in  the 

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Presidency Conclusions, Brussels European Council, 22/23 March 2005.  
Communication from the Commission to the European Parliament, the Council, the European 
Economic and Social Committee and the Committee of the regions, A single market for the 21st century 
Europe, COM(2007) 724 final 
http://eur-lex.europa.eu/LexUriServ/site/en/com/2007/com2007_0724en01.pdf 

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context of Article 7 of the Postal Directive and the conditions under which a Member 
State can reserve certain services to a universal service provider. 

–  Regulatory and market developments in the UK 

As one of the largest postal markets in the EU, and one of the first to liberalize its 
postal  market  on  1  January  2006,  developments  in  the  UK  have  a  particular 
significance  for  EU  postal  reform.  Competition  in  postal  services  has  mainly 
emerged through access competition which has resulted in new competitors wining a 
market share of 20% of addressed mail volume. Access competition has resulted in 
lower prices, and more choice for large bulk mailers. 

–  Developments regarding the application of the 6th VAT Directive 

The VAT exemption is still applied in a variety of ways in the Member States. The 
uneven  application  of  the  exemption  and  the  distortions  of  competition  can  be 
considered an important obstacle to the development of effective competition in the 
postal sector. In July 2007, the Commission opened the second stage of infringement 
proceedings  against  the  United  Kingdom,  Germany  and  Sweden  when  it  issued  a 
reasoned  opinion  against  all  three.  It  is  also  expected  that  the  European  Court  of 
Justice will deliver a preliminary ruling, by the end of 2008, on the application of the 
exemption as  laid  down in the 6th VAT Directive when it gives its judgement on a 
case referred by the United Kingdom High Court10. 

–  Terminal dues – REIMS agreement 

The  REIMS  agreement  is  the  instrument  by  which  certain  European  public  postal 
operators  collectively  determine  terminal  dues  rates11.  The  REIMS  agreement  has 
been  granted  individual  exemption  from  antitrust  rules  by  the  Commission  on  two 
occasions.  The  second  exemption  of  the  REIMS  agreement  expired  at  the  end  of 
2006.  Due  to  the  reform  of  antitrust  legislation  and  the  adoption  of  the  Council 
Regulation  (EC)  No.  1/2003  of  16  December  2002  on  the  implementation  of  the 
rules  on  competition  laid  down  in  Articles  81  and  82  of  the  Treaty12,  any  new 
agreement  on  terminal  dues  would  not  require  an  exemption  by  the  European 
Commission ex-ante. Nevertheless, any new agreement would have to comply with 
the conditions of Article 81(3) of the EC Treaty, which is now directly applicable. 

–  Preliminary rulings of the European Court of Justice 

The European Court of Justice (ECJ) delivered two important judgments in 2007 and 
2008. The first judgement, Vedat Deniz13, concerns the application of fifth indent of 
Article  12  of  the  Postal  Directive  on  access  provisions.  The  ECJ  established  that 
different treatment of large mailers and consolidators is not objectively justified and 
is  therefore  discriminatory.  The  second  judgement,  International  Mail  Spain14, 

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Case C-357/07. 
Terminal  dues  are  the  payments  that  postal  operators  are  paying  to  each  other  for  the  delivery  of 
incoming-cross border mail. 
OJ L 1, 04.01.2003, p.1. 
Joined cases C-287/06 to 292/06, Vedat Deniz, not yet reported – reference for a preliminary ruling. 
Case C-162/06, International Mail Spain, [2007], ECR I-9911. 

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concerns the application of Article 7(2) on the scope of the reserved area. The ECJ 
said that Article 7(2) of Directive 97/67/EC must be interpreted as allowing Member 
States to reserve cross-border mail to the universal postal service provider only in so 
far as they establish that, in the absence of such a reservation, achievement of that 
universal service would be precluded or that that reservation is necessary to enable 
that service to be carried out under economically acceptable conditions.  

1.4. 

Approach 

The analysis presented in this Commission Staff Working Paper draws on the recent study by 
ECORYS  on  the  Main  Developments  in  the  Postal  Sector  (2006-2008)  and  builds  upon  a 
series  of  other  studies  commissioned  by  the  Commission15.  Also  a  number  of  other  studies 
have been used and are quoted, where appropriate.  

As in the case of previous Commission Staff  Working Papers, this one is structured around 
two  main  themes:  first,  an  analysis  of  the  transposition  process  of  the  Postal  Directive  into 
national  law  and  regulatory  developments  (chapters  two  and  three).  Second,  the  paper  will 
assess  market  developments  over  the  last  two  years  and  the  influence  of  the  regulatory 
environment on these developments (chapter four).  

Where  appropriate,  the  CSWP  provides  an  evaluation  on  possible  further  regulatory  steps 
would be required I in order facilitate accomplishing the Internal Market for postal services.  

2. 

THE TRANSPOSITION OF THE POSTAL DIRECTIVE 

2.1. 

Aims of the Community regulatory system 

The objective of the Community policy in the postal sector is to complete the internal market 
for postal services and to ensure, through an appropriate regulatory framework, that efficient, 
reliable and good-quality postal services are available throughout the European Union to all 
its citizens and businesses at affordable prices.  

EU  postal  reform  dates  back  to  1992  with  the  publication  of  the  Green  Paper  on  the 
development  of  the  single  market  for  postal  services16.  In  1994,  the  European  Council 
entrusted  the  Commission  with  pursuing  an  ambitious  postal  policy.  The  mandate  was  to 
accomplish  the  internal  postal  services  market  with  its  universal  provision  through 
progressive and gradual market opening. Market opening and the introduction of competition 
were  considered  a  proven  tool  for  creating  jobs  and  achieving  better  results  for  consumers. 
But it was also clear that this competition could not be introduced in the sector over night. 

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"Main developments in the European postal sector (2004-2006)", WIK-Consult, May 2006; 
"The evolution of the regulatory model for European postal services", WIK-Consult, July 2005; 
"The development of competition in the European postal sector", ECORYS, July 2005; 
"Main developments in the European postal sector", WIK-Consult, July 2004; 
"Economics of postal services", NERA, July 2004;  
All studies are available under: http://ec.europa.eu/internal_market/post/studies_en.htm.  
Green Paper on the development of the single market for postal services, 11.06.1992, COM (91) 476 
final. 

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With  the  aim  of  achieving  these  objectives  the  First  Postal  Directive  provided  for  a  limited 
harmonisation  of  EU  postal  services17.  It  established  regulatory  provisions  including  the 
definition  of  a  minimum  universal  service,  a  maximum  reservable  area,  the  conditions 
governing the provision of non-reserved services and access to the network, tariff principles 
and  the  transparency  of  accounts,  quality  of  service  requirements  and  the  harmonisation  of 
technical  standards.  These  provisions,  mainly  focusing  on  principles  and  boundaries, 
established  a  Community  framework  which  Member  States  could  adapt  to  their  national 
context. 

The  Second  Postal  Directive’s  reduction  of  the  maximum  reservable  area  also  pursues  the 
original  key  Community  objective  of  introducing  a  gradual  and  controlled  opening  of  the 
postal market to competition18. 

The Third Postal Directive which has to be implemented by the Member States in the coming 
years  provides  for  the  full  abolishment  of  the  remaining  reserved  areas  and  is  the  last  legal 
step required for full market opening.  

By combining the discipline of harmonised regulation  with the stimulus  of competition, the 
Postal Directive seeks to promote regulatory reforms in the Member States that will result in a 
better, more efficient provision of universal postal services and improvements to the quality 
of service.  

2.2. 

The requirements of the Postal Directive 

The  Community  framework  for  the  regulation  of  the  postal  sector  is  set  out  in  the  Postal 
Directive. As noted above this is a framework directive which gives a considerable degree of 
flexibility to the Member States19. 

The Postal Directive contains the following key elements and requirements: 

–  All Member States are to provide a universal postal service for all users comprising at least 

one delivery and collection five days a week; 

–  The  maximum  size  of  the  reserved  area  which  may  be  reserved  for  the  USP  in  each 
Member  State  is  50g  in  weight  or  two  and  a  half  times  the  basic  tariff  of  an  item  of 
correspondence; 

–  Member  States  may  establish  authorisation  procedures,  which  may  include  individual 

licences and a compensation fund in the universal service area; 

–  Member States should ensure that all users are permanently provided with a postal service 

of specified quality throughout their territory; 

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19 

Directive 97/67/EC of the European Parliament and the Council of 15 December 1997 on common rules 
for  the  development  of  the  internal  market  of  Community  postal  services  and  the  improvement  of 
quality of service, OJ L 15, 21.01.1998, p. 14. 
Directive  2002/39/EC  of  the  European  Parliament  and  of  the  Council  of  10  June  2002  amending 
Directive 97/67/EC with regard to the further opening to competition of Community postal services, OJ 
L 176, 5.7.2002, p. 21.  
Recital 10 of Directive 97/67/EC. 

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–  Member States must ensure that tariffs, including special tariffs, for universal services are 
cost-based, transparent and non-discriminatory and that cross-subsidies from the reserved 
area to the competitive area are limited to the fulfilment of universal service obligations; 

–  Member  States  must  ensure  that  universal  service  providers  (USPs)  consistently  apply 
transparent  and  separated  cost  accounting  principles,  and  provide  separate  accounts  for 
reserved and non-reserved universal services and non-universal services; 

–  The Postal Directive sets quality of service targets for intra-Community cross-border mail 
(85%  for  D+3,  97%  for  D+5  for  the  fastest  standard  category  of  service)  and  requires 
Member States to define, measure and enforce compatible national targets; 

–  Member  States  are  to  ensure  that  adequate  consumer  protection  measures  are  in  place, 

particularly with regard to complaints and redress procedures; 

–  The  Postal  Directive  aims  to  promote  greater  inter-connectivity  between  postal  networks 

through greater technical standardisation; 

–  Member  States  have  to  establish  National  Regulatory  Authorities  (NRAs)  independent 

from the postal operators. 

2.3. 

Transposition by Member States 

All Member States have transposed the Directives 1997/67/EC and 2002/39/EC into national 
law.  Nevertheless,  the  Commission  will  continue  to  monitor  the  application  of  the  Postal 
Directive as transposed.  

Regarding the transposition process in general, the focus over the next two to three years will 
now have to turn to the transposition of the Third Postal Directive. 

During  the  reference  period  and  up  to  2008  one  infringement  procedure  had  been  opened. 
This was against Greece and concerned national measures which may undermine the proper 
application of Article 9 of the Postal Directive. 

Other issues regarding different aspects of the Postal Directive have also been discussed with 
Member States in recent years. These have however been solved without recourse to formal 
procedures.  This  approach  often  provides  more  rapid  solutions  and  can  help  to  avoid  and 
prevent problems in the future. 

2.4. 

Transposition of the Postal Directive by the EFTA -EEA States  

The  Postal  Directive  is  part  of  the  Agreement  on  the  European  Economic  Area  (EEA 
Agreement) and is referred to in point 5d of Annex XI to the Agreement. The Directive was 
incorporated into the EEA Agreement on 25 September 1998 by Decision 91/98 of the EEA 
Joint  Committee  and  entered  into  force  on  1  May  1999.  Directive  2002/39/EC  of  10  June 
2002  amending  the  Postal  Directive,  has  also  been  incorporated  into  the  EEA  Agreement. 
That was achieved through the adoption of Decision No 168/200220. The compliance date was 
1  August  2003.  The  three  EEA  states,  Iceland,  Liechtenstein  and  Norway,  were  obliged  to 

20 

OJ L 38, 13.2.2003, p. 30 and EEA Supplement No 9, 13.2.2003, p. 21. 

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have  the  amending  Directive  transposed  by  that  date  and  to  notify  the  EFTA  Surveillance 
Authority (ESA) thereof.  

The  Directive  as  amended  is  implemented  in  Norway,21  Iceland22  and  Lichtenstein23.  The 
ESA  has  initiated  a  conformity  assessment  to  evaluate  the  implementation  of  the  Directive 
and concluded without any infringement proceedings being initiated.  

2.5. 

Transposition of the Postal Directive by the Candidate Countries 

The Candidate Countries, Turkey and Croatia are at very different stages in the transposition 
process of the postal acquis. While it can be observed that Turkey is only at the first stage of 
the transposition and has to implement the main provisions of the Postal Directive, Croatia is 
quite advanced. The national postal legislation in Croatia is to a large extent aligned with the 
postal  acquis  and  has  also  been  recently  amended  in  order  to  provide  a  legal  basis  for  the 
National  Postal  Council,  which  is  acting  as  the  NRA,  to  become  part  of  a  larger  NRA  for 
telecommunications and post. It is expected that Croatia will fully liberalize its postal market 
by 2013. 

As  regards  the  third  Candidate  Country,  the  Former  Yugoslavian  Republic  of  Macedonia 
(FYROM),  negotiations  for  accession  to  the  EU  have  not  yet  been  opened.  Nevertheless, 
FYROM is already very active regarding the postal sector and is aligning its legislation with 
the Postal Directive. Through their attendance as an observer in the Committee established by 
the  Postal  Directive  (Article  21  of  the  Postal  Directive)  Candidate  Countries  are  closely 
associated with the transposition and implementation of the Postal Directive and are in contact 
with Member States so that, where appropriate, they can benefit from best practices. 

3. 

THE APPLICATION OF THE POSTAL DIRECTIVE 

3.1. 

A quality universal service for EU citizens 

According to Article 3(1) of the Postal Directive Member States shall ensure that users enjoy 
the  right  to  a  universal  service  involving  the  permanent  provision  of  a  postal  service  of 
specified quality at all points in their territory at affordable prices for all users. 

The Postal Directive sets out minimum standards of this service: 

–  One  delivery  and  one  clearance  per  working  day  at  least  5  days  a  week  (Article  3, 

paragraph 3), 

–  Density of access points taking account of the needs of users (Article 3, paragraph 2). 

21 

22 
23 

Act  No  73  of  29  November  1996  relating  to  the  provision  of  universal  postal  services  (The  Postal 
Service Act); Amendments by Acts No 5 of 9 January 1998, No 24 of 30 April 1999. Regulation No 
313/2005 on accounting and cost separation for postal operators. The latter was a consequence of the 
identification of a lack of a cost accounting principles and accounting separation in the framework of 
the conformity assessment. 
Postal Services Act No 19/2002, as later amended by Acts No 136/2002 and No 129/2004. 
Postal Act of 18 December 1998, Law Gazette 1999 No. 35, as last amended by Act of 10 March 2004, 
Law Gazette 2004 No 106. 

EN 

11 

   EN 

 
                                                 
The scope of the universal services comprises postal items of up to 10 kg/20 kg for national 
and 20kg for cross-border items as well as services for registered and insured items. 

Whilst  the  Directive  defines  the  minimum  requirements  to  be  met  in  all  Member  States,  in 
certain  exceptional  locations  and  circumstances,  NRAs  may  allow  derogations  from  these 
requirements. 

The scope of universal services differs among Member States. This will become even more 
important  in  the  future  if  the  provision  of  these  services  will  have  to  be  financed  in  a 
liberalized  market  and  in  case  that  funding  will  be  provided  to  cover  the  cost  of  meeting 
universal service obligations. 

Collection and delivery 

All Member States comply with the minimum requirements for the number of collections and 
deliveries, obliging the USP to collect and deliver at least five days a week. 

Table 1– Compliance with delivery requirements  

MS 

Deliveries  
per week 
required 

Deliveries  
per week in 
practice 

Exceptions from 
required delivery 
frequency possible

Exceptions from 
delivery at the 
premises of the 
addressee 

AT 

BE 

BG 

CY 

CZ 

DE 

DK 

EE 

ES 

FI 

FR 

GR 

HU 

IE 

IT 

LT 

LU 

LV 

MT 

NL 

PL 

PT 

RO 

5 

5 

5 

5 

5 

6 

6 

5 

5 

5 

6 

5 

5 

5 

5 

5 

5 

5 

5 

6 

5 

5 

5 

5 

5 

5 

5 

5 

6 

6 

6 

5 - 6 

5 

6 

5 

5 

5 

6 

5 - 6 

5 

5 - 6 

6 

6 

5 

5 

5 

No 

No 

Yes 

No 

No 

No 

Yes 

Yes 

No 

Yes 

No 

Yes 

No  

Yes 

n.a. 

No 

No 

No 

No 

No 

No 

No 

n.a. 

Yes 

No 

n.a. 

No 

Yes 

No 

Yes 

Yes 

Yes 

No 

No 

Yes 

Yes 

No 

n.a. 

No 

No 

No 

No 

n.a. 

No 

No 

n.a. 

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12 

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MS 

Deliveries  
per week 
required 

Deliveries  
per week in 
practice 

Exceptions from 
required delivery 
frequency possible

Exceptions from 
delivery at the 
premises of the 
addressee 

SE 

SI 

SK 

UK 

5 

5 

5 

6 

5 

5 - 6  

5 

6 

Yes 

No 

Yes 

Yes 

Yes  

Yes  

Yes 

Yes 

n.a. = no information available 

Based on ECORYS, 2008 

Five  Member  States  (DE,  DK,  FR,  NL,  UK)  have  exceeded  the  minimum  of  the  Postal 
Directive  and  are  obliging  the  USPs  to  collect  and  deliver  six  days  per  week.  Also  several 
USPs in EE, ES, IT, LT, LV, MT, SI, mostly for commercial reasons, exceed the number of 
delivery days on a voluntary basis.  

The  Postal  Directive  allows  for  an  exception  to  or  a  derogation  from  the  collection  and 
delivery requirements in exceptional circumstance. Several Member States make use of this 
possibility. Exceptions to the daily delivery, and conditions for applying to them, are defined 
by national postal legislations of respective Member States and are limited to remote areas, to 
addresses with accessibility problems or to cases of exceptional circumstances (mainly force 
majeure or public holidays).  

The  envisaged  exceptions  defined  by  national  postal  legislations  are,  with  one  exception 
mentioned  below,  applied  only  to  a  limited  extent  and  do  not  cover  more  than  1%  of  the 
households  in  the  respective  Member  State  applying  them.  The  Commission  is  closely 
looking at these developments and reports on them to Member States via the Postal Directive 
Committee. 

The  2006  Application  Report  from  the  Commission  concluded  that,  with  the  possible 
exception  of  Greece,  where  some  7%  of  the  population  are  exempt  from  the  Directive's 
requirement  for  daily  postal  delivery,  the  remaining  exceptions  that  exist  in  Member  States 
are very insignificant. No changes have occurred since the 2006 Application Report.  

The basic requirements laid down in Article 3 of the Postal Directive are thus fully respected, 
while at the same time the flexibility given to Member States enables them to adapt the scope 
of  the  universal  service  to  their  circumstances  and  needs.  It  should  be  emphasized  that 
requirement for exceptions are not always fully clear. National Regulators should, therefore, 
make sure that the exceptional circumstances that may give rise to a reduced level of home 
delivery  are  clear  and  fully  understood  by  mail  users.  The  application  and  effects  of 
derogations under Article 3(3) of the Postal Directive will continue to be carefully monitored 
by the Commission in the future. 

The postal network 

Article  3(2)  of  the  Postal  Directive  requires  Member  State  to  ensure  that  the  density  of  the 
points  of  contact  and  of  the  access  points  takes  account  of  the  needs  of  users.  The  Postal 
Directive does not set out any specific requirements for USP networks.  

EN 

13 

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Member States thus have the liberty to formulate their own standards. They can transpose the 
to  provide  a  sufficiently  dense  network  without  establishing  additional 
obligation 
requirements. In those Member States that have established more detailed requirements, three 
categories of standards can be observed. 

EN 

14 

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Table 2 – Requirements for the Postal Network 

Requirements 

MS 

No specific requirements 

CY, ES, GR, IT, LU, MT, RO, SE 

Minimum number of access points 

CZ, DE, DK, FR, LV, NL, PL, SI 

One access point per municipality  

BE, BG, DE, FI, HU, LT, LV, SK 

Maximum distance to an access point 

DE, DK, EE, HU, IE, LT, NL, SK, UK, AT, CZ, FR 

Postal products in the universal service 

The  composition  and  scope  of  the  universal  service  varies  considerably  between  Member 
States. The majority of the Member States extends the scope of the universal service beyond 
regular letter mail and  parcel  mail  to  cover among  others  courier services, counter services, 
newspapers,  printed  matters,  addressed  direct  mail,  bulk  mail  etc.  For  example,  twenty-one 
Member States (exceptions are AT, CZ, LV, LU, NL and PL) include addressed direct mail in 
the  universal  service.  In  Bulgaria,  Poland,  Portugal,  the  Slovak  Republic  and  Spain,  money 
orders are part of the universal service. All Member States except Germany have made special 
provisions for mail and literature for the blind.  

As regards parcels, eighteen Member States (exceptions are BE, ES, FI, LT, LU, LV, NL, PL, 
RO)  have  broadened  the  universal  service  by  adding  domestic  postal  packages  above  10 
kilograms to the universal service.  

Conclusions 

Although  universal  service  requirements  vary  widely  among  Member  States  within  the 
framework set by the Postal Directive, the minimum requirements set out in Article 3 of the 
Postal Directive are fully respected. The provisions of the Postal Directive give the Member 
States enough flexibility to adapt the universal services to the specific national situation, i.e. 
the  specific  economic  and  geographic  situation  of  the  Member  States  and  the  needs  of 
customers.  

3.2. 

Reserved area 

The Postal Directive (Article 7) allows Member States to reserve services to domestic service 
providers to the extent necessary to ensure the maintenance of the universal service. As a rule, 
the reserved services have to be limited to items of domestic correspondence weighting less 
than  50  grams  and  with  a  price  less  than  two  and  a  half  times  the  tariff  of  an  item  of 
correspondence in the first weight step.  

Direct mail and (inbound and/or outbound) cross-border mail may, to the extent necessary to 
ensure the provision of universal service, continue to be reserved within the same weight and 
price limits.  

EN 

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In  2007  the  European  Court  of  Justice  delivered  a  judgement,  International  Mail  Spain24, 
concerning  the  application  of  Article  7(2)  and  laying  down  the  test  of  necessity  and 
proportionality of reserved area. The ECJ states that Article 7(2) of Directive 97/67/EC must 
be interpreted as allowing Member States to reserve cross-border mail to the universal postal 
service  provider  only  in  so  far  as  they  establish  that,  in  the  absence  of  such  a  reservation, 
achievement of that universal service would be precluded or that that reservation is necessary 
to enable that service to be carried out under economically acceptable conditions. 

At present, all Member States have limited their reserved areas to the weight and price limits 
of the Postal Directive. As of 1 January 2008 Germany abolished the remaining reserved area 
bringing the number of Member States that have fully liberalised their postal market to four 
(DE, FI, SE, UK).  

Another Member State, the Netherlands, plans to liberalise in advance of the timetable set by 
the Third Postal Directive, but the initial date of April 2007 for full market opening has been 
repeatedly postponed. Currently, no new date has been set. The reasons for the postponement, 
according  to  the  Dutch  government  relate  to  VAT  differences  with  Germany  and  the  UK, 
developments in Germany as regards employment conditions in the postal sector and (unfair) 
employment conditions in the postal sector in the Netherlands. The Commission is analysing 
the  situation  in  the  Netherlands  and  its  compliance  with  Article  7  of  the  Postal  Directive, 
which  allows  Member  States  to  reserve  services  to  domestic  service  providers  only  to  the 
extent necessary to ensure the maintenance of the universal service  

No other changes occurred since the 2006 Application Report.  

Table 3 – Services reserved for the USP in the Member States: 

MS 

Domestic  &  inbound 
cross border  

Direct mail 

Outgoing 
border 

cross 

DE, FI, SE, UK 

AT, CZ, EE, NL, SI 

BG, IT, ES 

BE, DK, FR, IE, LT 

X 

X 

X 

CY, GR, HU, LU, LV MT, 
PL, PT, RO, SK 

X 

Liberalised 

X 

X 

X 

X 

NB: Reservable areas in the weight and price limits of Article 7(1) of the Postal Directive. 

Based on ECORYS, 2008 

As  can  be  seen  in  the  above  table  the  majority  of  the  Member  States  have  a  reserved  area 
which is substantially smaller than the maximum limit set by the Postal Directive. The most 
important  reason  for  this  seems  to  be  the  liberalisation  of  direct  mail  which  forms  a 
substantial part of the modern letter post. Eight Member States (AT, BG, CZ, EE, ES, IT, NL, 
SI)  have  taken  the  step  to  liberalised  direct  mail  while  four  Member  States  have  fully 
abolished  the  reserved  area  (DE,  FI,  SE  and  UK).  The  liberalisation  of  direct  mail  is 
conducive  to  the  creation  of  competition  as  it  provides  new  entrants  in  the  postal  services 

24 

See footnote 14. 

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16 

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market with the possibility to generate more volumes and therefore to benefit from economies 
of scale.  

As confirmed by several studies25 and as already mentioned in the 2006 Application Report, 
the reserved area per se is increasingly no longer seen as being necessary for the maintenance 
of  the  universal  service.  The  practical  experience  in  the  Member  States  without  a  reserved 
area confirms this assessment.  

Conclusions 

All Member States fully respect the requirements of the Postal Directive as regards the weight 
and  price  limits  of  the  reserved  area.  The  majority  of  the  Member  States  exceed  the 
requirements of the Postal Directive and have opened up a larger part of their postal markets. 
In  the  reporting  period,  one  further  Member  State,  Germany,  fully  liberalized  its  postal 
market. This  should give  an  incentive  to Member States still maintaining  a reserved area to 
fully open up their postal markets even ahead of the deadline set of 31 December 2010 set by 
the Third Postal Directive.  

3.3. 

Licensing and authorisation 

Article 9 of the Postal Directive permits Member States to introduce authorisations for postal 
services  provided  by  public  and  private  operators.  Postal  services  refer  to  the  collection, 
transport, and delivery of correspondence, printed matter, and packages.  

–  The  Postal  Directives  allows  in  principle  two  different  levels  of  regulatory  controls 
depending on whether the postal activities fall outside or within the scope of the universal 
service.  

–  General authorisation: no approval before starting activity; 

–  Individual license: approval before starting activity. 

–  For postal activities outside the scope of the universal service, general authorisations may 
be  introduced  to  the  extent  necessary  to  guarantee  the  compliance  with  the  “essential 
requirements”.  For  postal  activities  within  the  scope  of  the  universal  service,  but  outside 
the  reserved  area,  authorisations  or  individual  licences  may  be  introduced  to  the  extent 
necessary  to  guarantee  the  compliance  with  the  “essential  requirements  and  to  safeguard 
the universal service”. Under the Postal Directive a Member State might also refrain from 
establishing authorisation procedures altogether.  

–  As  regards  the  application  of  this  provision  by  the  Member  States,  four  approaches  to 
authorization of postal operators inside the universal services area can be distinguished: 

–  No authorisation procedure; 

–  General authorisation procedure; 

25 

"An assessment of the cost and benefits of Consignia's current Universal Service Provision", Postcomm, 
June 2001; "Analysis of costs of universal services in the postal sector", Öhrlings, Coopers & Lybrand, 
October  1996;  Committee  report  of  the  development  of  the  Swedish  postal  market,  January  2005, 
[http://www.pts.se/en-gb/News/Post/2005]. 

EN 

17 

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–  Individual licences for some or all letter post services; 

–  Individual licences for all universal services. 

–  An overview on the application of the licensing and authorisation regimes in  the  various 

Member States is provided in the table below.  

Table 4 – Overview of licensing and authorisation insider the universal service area 

Type of authorisation 

No authorisation procedure 

MS 

CZ, NL 

General authorisation 

AT, DK, IE, SK 

Individual license for some or all letter post services   DE, FR, PL, SE, UK 

Individual license for all universal services 

BE, BG, CY, EE, ES, FI, GR, HU, IT, LT, LU, LV, 
MT, PT, RO, SI 

Based on ECORYS, 2008 

The majority of the Member States make use of the possibility to require an individual license 
for  all  services  within  universal  services.  This  is  the  strictest  possible  approach  under  the 
Postal Directive. However, several of the larger Member States, such as Germany, France and 
the UK, only require an individual license for (part of the) letter post services. Two Member 
States (CZ and NL) do not apply any authorisation procedure. There has been no substantive 
development in terms of authorisation and licensing procedures in the reference period.  

As  regards  Slovenia,  it  should  be  clarified,  in  relation  to  the  2006  Application  Report,  that 
Slovenia has a system of individual licence for services inside the scope of universal service. 
However  this  difference  is  for  the  purposes  of  clarification  and  should  not  be  seen  as  a 
material change as the licensing system was not changed from the 2006 Application Report. 

As noted above, within the universal service area authorisation procedures can be applied to 
the  extent  necessary  to  guarantee  the  essential  requirements  and  to  safeguard  the  universal 
service. The granting of an authorisation can only be made subject to certain obligations. 

It can be observed that obligations imposed on postal operator in order to be able to operate 
within  the  universal  service  area  differ  significantly  among  the  Member  States.  Whereas  in 
some Member States, such as the Czech Republic and the Netherlands, they do not have any 
specific  obligation,  in  other  Member  States  they  are  subject  to  obligations  related  to  the 
safeguard  of  the  universal  service  for  example,  the  obligation  to  provide  all  or  part  of  the 
universal service.  

As already stated in the 2006 Application Report, the large divergences in the authorisation 
procedures and related obligations for obtaining an authorisation may prove problematic from 
an Internal Market perspective. There is also the risk that the obligations which are imposed 
on  new  entrants  may  constitute  a  market  barrier  and  hinder  competition.  With  the  further 
opening  up  of  the  markets  and  full  market  opening  by  31  December  2010,  the  issue  of 
licensing and authorisation procedures and related obligations will become more important.  

Compensation Funds 

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18 

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Article 9(4) of the Postal Directive states that "[I]n order to ensure that the universal service 
is  safeguarded,  where  a  Member  State  determines  that  the  universal  service  obligations,  as 
provided for by this Directive, represent an unfair financial burden for the universal service 
provider,  it  may  establish  a  compensation  fund  administered  for  this  purpose  by  a  body 
independent  of  the  beneficiary  or  beneficiaries.  In  this  case,  it  may  make  the  granting  of 
authorisation subject to an obligation to make a financial contribution to that fund. […]" 

The  aim  of  such  a  fund  is  to  cover  any  uneconomic  cost  of  the  provision  of  the  universal 
service  obligation  incurred  by  the  USP.  An  authorisation  or  licence,  for  services  within  the 
scope of the universal service, may therefore be granted to an operator subject to an obligation 
to  contribute  to  a  universal  service  compensation  fund.  A  compensation  fund  may  only  be 
used to finance those activities falling within the scope of the universal service. 

Several Member States have made provisions for setting up compensation fund arrangements 
to ensure the financing of the universal services obligation but so far only Italy has actually 
established  one.  With  the  reserved  area  to  be  abolished  by  31  December  2010  and  thus  no 
longer  available  finance  the  universal  service,  the  issue  of  compensation  fund  will  become 
more  important.  Some  Member  States  are  already  preparing  legislation  for  a  compensation 
fund.  

Conclusions 

There are large divergences in the authorisation and licensing procedures as well as regards 
the related obligations for obtaining an authorisation or license. This may prove problematic 
for the Internal Market. More transparency on the obligations and their effect on new entrants 
is  desirable.  Obligations  must  not  lead  to  market  entry  barriers  and  thereby  undermine  the 
objectives of the EU postal reform.  

The practical use of compensation funds has so far been limited. However, with full market 
opening, further consideration may be needed in the future to see how to make this optional 
tool more operational. 

3.4. 

Access to postal networks  

Access refers to access by third parties to the postal network usually owned by the incumbent 
postal operator. It concern access to the postal delivery network, in  particular  to the sorting 
and delivery facilities, as well as access to the postal infrastructure, such as the letterboxes of 
individual consumers and businesses, P.O. boxes, the address database, the postal code system 
and the possibility to redirect (wrongly addressed or returned) mail. 

The  Postal  Directive  does  not  impose  specific  access  rules,  although  it  empowers  the 
Parliament  and  the  Council,  acting  on  a  proposal  from  the  Commission,  to  adopt 
harmonisation  measures  in  the  field  of  access  to  the  public  postal  network,  whenever 
necessary (Article 11 of the Postal Directive). 

In addition, Article 12 on tariff principles, fifth indent, of the Postal Directive already states 
that whenever USPs apply special tariffs, they shall apply the principles of transparency and 
non-discrimination  with  regard  both  to  tariffs  and  to  the  associated  conditions.  The  tariffs 
shall take account of the avoided costs and shall apply equally both as between different third 
parties as between the third parties and USPs supplying equivalent services. Any such tariffs 
shall also be available to private customers who post under similar conditions. 

EN 

19 

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In  March  2008,  the  European  Court  of  Justice  has  delivered  an  important  judgment,  Vedat 
Deniz26, concerning the application of the fifth indent of Article 12 of the Postal Directive and 
the test of non-discrimination as laid down in this provision. The ECJ clearly established that 
different  treatment  of  large  mailers  and  consolidators  is  not  objectively  justified  and  is 
therefore discriminatory. 

Access to the postal delivery network ("Downstream access") 

A common issue as regards access is "downstream access" to the physical network. As postal 
markets  become  more  competitive,  some  private  operators  and  their  customers  have  sought 
access to portions of the public postal network without paying for the use of the entire system. 
Downstream access can take place at different points of the postal supply chain. It can consist 
of access to inward or outward sorting centres or delivery offices (see figure below).  

Figure 1 – Access to the postal supply chain: 

Processes 

Collection 

Outward
Sorting

Transport

Inward
Sorting

Delivery 

Facilities 
of USP 

Street letter boxes 
Postal outlets 

Outward
Sorting facilities

Inward

Sorting facilities

Delivery 
Offices 

P.O. 
Boxes 

Public access 
points

Downstream access points

WIK, 2006 

It  is  argued  that  notably  downstream  access  could  help  facilitate  market  entry  for  upstream 
consolidators.  New  competitors  who  want  to  establish  a  delivery  network  could  also  use 
access for a transitional period to build up customer relationships and volumes, before being 
able to compete end to end with the incumbent.  

Using this model, consolidators and competitors, as well as major business customers could 
already deliver part of the value chain process before handing mail over to the incumbent.  

The special tariffs  mentioned  in  Article 12, fifth indent,  may be  considered as applicable to 
downstream  access  and  the  principles  of  transparency  and  non-discrimination  have  been 
specifically enshrined in the Postal Directive.  

As  the  Postal  Directive  does  not  determine  how  access  should  be  provided,  Member  States 
have different policies on whether market dominant operators (incumbents) should be obliged 
to provide access to third parties.  

Three  (main)  kinds  of  downstream  access  and  downstream  access  regulation  can  be 
distinguished in practice: 

–  Mandatory  access  with  ex-ante  regulation  of  the  access  conditions  (access  points,  terms, 

prices); 

26 

See footnote 13.  

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20 

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–  Mandatory  access  with  market  participants  negotiating  the  terms  and  conditions  and 

potential interference of the NRA if no access agreement can be reached; 

–  Freely negotiated access. 

–  Currently,  ten  Member  States  (BG,  DE,  DK,  ES,  FR,  HU,  MT,  PT,  SI  and  UK)  have 
granted  the  NRA  authority  to  require  downstream  access  to  the  public  postal  network 
under  appropriate  circumstances.  Compared  to  the  situation  described  in  the  2006 
Application Report two years ago, the following changes have occurred: 

–  Germany switched from ex ante regulation of access conditions to ex post regulation since 

2008. Germany was the only Member State to regulate the access prices ex ante. 

–  Mandatory access regimes have been instituted in Bulgaria, Malta and Spain.  

–  In the Netherlands, access will be mandatory under the (not yet enacted) new postal law.  

The UK NRA Postcomm has particularly been active on access arrangements and developing 
a licensing regime for new entrants. Postcomm was heavily influential in encouraging Royal 
Mail to agree access arrangements with new operators and large customers.  

–  Access to the postal infrastructure  

–  Another important access issue concerns access to key elements of the postal infrastructure 
such  as  post  office  boxes,  address  databases,  buildings  and  letter  boxes  as  well  as  to  the 
determination  of  postal  codes  and  to  redirection  and  return-to-send  services.  Access  to 
such infrastructure will be of increasing importance in a multi-operator environment. If no 
appropriate  access  to  the  postal  infrastructure  is  provided  for  third  parties,  this  can 
constitute a market entry barrier.  

–  Access to letterboxes was, and partly still is, a problem in a number of Member States (AT, 
FR,  PL,  SK  and  to  a  less  extent  DE).  For  example,  in  Austria,  Austrian  Post  is  the  only 
provider  that  holds  the  key  that  is  required  to  obtain  access  to  private  letter  boxes.  In 
Germany, the same problem with in-hose letterboxes that are not publicly accessible can be 
observed,  albeit  for  a  relatively  small  number  of  delivery  addresses.  A  similar  problem 
existed in France. However, a public consultation has been conducted by the French NRA 
ARCEP, resulting in a compromise solution by which all licensees will be given access to 
the access codes (managed by La Poste) in order to be able to deliver to letterboxes.  

Conclusions 

Arrangements  for  downstream  access  vary  significantly  among  Member  States.  A  trend 
towards mandatory access can be observed. NRAs play an important role in this context. In 
particular,  they  have  to  ensure  that  access  conditions  to  the  postal  infrastructure  do  not 
constitute a market entry barrier.  

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3.5. 

Tariff principles 

3.5.1.  Tariff regulation and USP tariffs 

Tariff regulation 

Article  12  of  the  Postal  Directive  requires  each  tariff  for  universal  service  to  be  affordable, 
geared to costs, transparent, and non-discriminatory. 

Special  tariffs  with  individual  customers  are  permitted  but  should  conform  to  the  same 
principles. In particular, specials tariffs must: 

–  take account of the avoided costs; 

–  apply  equally  between  third  parties  and  be  open  to  private  customers  who  use  postal 

services under similar conditions. 

Cross-subsidisation  of  universal  services  outside  the  reserved  sector  using  revenues  from 
services in the reserved sector shall be prohibited except to the extent to which it is shown to 
be  strictly  necessary  in  order  to  fulfil  specific  universal  service  obligations  imposed  in  the 
competitive area. 

In  principle,  all  Member  States  have  adopted  procedures  and  standards  for  regulating  the 
prices for key universal services so that they comply with the general standards of the Postal 
Directive.  

The Commission's 2005 and 2006 Application Report already observed a fragmented picture 
in terms of the actual degree of price control across the Community. In effect, Member State 
have developed a variety of price control mechanisms.  

There are three basic procedures applied by Member States:  "ex ante" requiring the USP to 
obtain approval of the NRA before implementing a price change; "price cap" permitting the 
USP to change prices according to a pre-approved level or formula and "ex post" allowing the 
USP to change prices but with the possibility for the NRA to modify any changes.  

A distinction based on which categories of services are covered by price regulation: reserved 
services, universal services, other postal services, can also be made. 

Finally there are also different forms of how NRAs set benchmark prices for determining USP 
prices. These are RPI (retail price index),"minus costs" and RPI plus" costs. An RPI regime 
means that price increases by the USP are limited to the increase of the retail price index. An 
RPI minus X regime means that price increases by the USP are limited to the increase of the 
retail price index minus a factor of X which provides for efficiency improvements. This type 
of regime stimulates an USP to improve its productivity. An RPI plus regime means that price 
increases by the USP are limited to the increase of the retail price index plus a factor of X. 
This regime is rarely used. If the form of control is based on costs, the NRA sets the tariffs on 
the basis of costs using past costs, efficient costs or future costs as a benchmark. 

Price regulation of reserved services 

All  Member  States  with  a  reserved  area  have  a  price  regulation  scheme  in  place.  Where  a 
reserved area is retained, all but five Member States (BE, BG, LT, NL) require "pre-approval" 

EN 

22 

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(ex ante) by the NRA before implementing any price changes. Belgium has a price cap regime 
of the reserved area, with prices reviewed ex post. Of the Member State with a reserved area, 
only Portugal applies a RPI minus regime.  

Price regulation of universal services 

All  Member  States  except  Luxembourg  have  a  price  control  on  their  universal  service 
provider.  It  should  be  recognized  that  the  definition  of  universal  service  obligation  services 
varies  from  Member  State  to  Member  States.  Sweden  appears  to  have  just  one  control,  this 
being a cap in the form of RPI on the single first class items up tot 50 grams.  

Price regulation of other postal services 

Four Member States (BE, CY, DE, and the UK) have price regulation on postal services that 
are neither reserved nor universal service. Cyprus has ex-post price reviews of those services 
provided by the USP that are outside the USO definition and Belgium has maximum tariffs or 
tariff formulas for non-USO products. In Germany, incidental services have to be verified ex-
ante by the NRA whilst in the UK the majority of the bulk mail services (non-USO) are price 
regulated via a product “basket” with an RPI-minus formula. 

As  regards  price  regulation  in  the  Member  States  where  postal  services  have  been  fully 
liberalized, the USP within the UK has a complicated form of RPI minus price regulation that 
extends beyond the USO area and includes access services. This contrasts significantly with 
the other liberalized markets. In Finland, the USP is free to set its own prices, subject to ex 
post  review  and  in  Sweden  it  is  only  the  first  class  single  item  mail  that  is  subject  to  price 
control. In Germany, since January 2008 the price of bulk mail services (≥ 50 items) does not 
have to be approved ex-ante, but is subject to ex-post price control. Until the end of 2007, the 
access tariffs were regulated ex ante in Germany. 

Only three Member States, DE, PT and the UK, stimulate efficiency improvements through 
using an RPI minus regime for (part of) the prices that are regulated. The fact that many USPs 
have a price cap linked to RPI or face cost based price regulation has as a consequence that in 
most  Member  States  price  regulation  provides  little  or  no  incentive  for  the  USPs  to  reduce 
costs. Uniform tariffs remain the norm across Member States for USO.  

To conclude, putting the pricing principles of the Postal Directive and particularly the aim of 
affordable, transparent prices geared to costs into practice will require further attention from 
Member  States.  Price  control  constitutes  a  complex  issue  that  is  not  only  dependent  on  the 
modalities  of  how  it  is  carried  out  but  is  also  dependent  of  the  appropriate  price  data 
collection.  Price  control  is  therefore  one  of  the  issues  where  enhanced  administrative 
cooperation between NRAs could be of particular value. 

USP tariffs 

Tariffs  vary  significantly  among  Member  States.  The  figure  below  gives  an  overview  of 
prices in form of the USP tariff at the first weight step for letter post. Where a choice of class 
(first or second) exists, it is the first class mail product that is included here. 

EN 

23 

   EN 

 
Figure 2 – USP Tariffs for first weight step (in EUR) in 2007 

1,00

0,90

0,80

0,70

0,60

R
U
E

0,50

0,40

0,30

0,20

0,10

0,00

AT BE BG CY CZ DE DK EE ES

FI

FR GR HU IE

IT

LT

LU LV MT NL PL PT RO SI SK SE UK

Note: Figures for Spain for second class tariff; Figures for Romania and Sweden for 2008. 

Based on ECORYS, 2008 

Tariffs vary significantly from below 0.20 EUR in Malta to 0.70 in Finland. In general, tariffs 
tend to be lower in the new Member States (EU12) than in the old Member States (EU15).  

Tariffs  measured  in  EUR  may  not  always  provide  good  information  on  the  affordability  of 
prices of postal  services  for  consumers and businesses, as they do not take into account the 
general  price  level  and  wage  level  in  the  Member  States  concerned.  With  respect  to 
affordability,  the  tariffs  measured  in  purchasing  price  standards  (PPS),  i.e.  tariffs  in  EUR 
converted using Purchasing Power Parities, provide a different comparison. 

EN 

24 

   EN 

 
Figure 3 – USP Tariffs for first weight step (in PPS) in 2006 and 2007 

1,00

0,90

0,80

0,70

0,60

S
P
P

0,50

0,40

0,30

0,20

0,10

0,00

2006
2007

AT BE BG CY CZ DE DK EE ES FI FR GR HU IE

IT

LT LU LV MT NL PL PT RO SI SK SE UK

Note: Figures for Spain for second class tariff; Figures for Romania and Sweden for 2008. 

Based on ECORYS, 2008 

The  data  presented  above  suggest  that  postal  services  are  relatively  costly  for  consumers  in 
Poland,  Lithuania  and  Slovakia.  On  the  other  hand,  postal  services  are  relatively  cheap  for 
consumers in Malta and Slovenia.  

The tariff for a postal item in the lowest weight step transmitted by fasted standard category 
can be considered the most basic measurement for the price of postal services. But it should 
be kept in mind that several factors mitigate against a useful comparison for example, in some 
Member States second class priority service is also offered. Also postal tariffs including VAT 
are not fully comparable due to different VAT rates in the Member States. In addition, large 
users may enjoy significant discounts. Finally, it should be borne in mind that the service that 
customers  get  for  this  tariff  may  differ  among  Member  States,  due  for  example  to  different 
delivery frequencies.  

As  regards  consumers'  perception  of  the  affordability  of  postal  services,  according  to  the 
Special Eurobarometer of July 200727, 87% of EU-25 considered postal services affordable, 
while  6%  considered  them  not  affordable.  In  Greece,  99%  of  citizens  considered  postal 
services affordable compared to a 72% in Finland.  

The marked differences between the perceptions in the Member States can partly be explained 
by objective developments such as price changes but some developments might well not be 
related to the real price levels. In addition, it should be borne in mind that the Eurobarometer 

27 
[http://ec.europa.eu/public_opinion/archives/ebs/ebs_260_en.pdf] 

Special Eurobarometer 260 Services of general interest, July 2007  

EN 

25 

   EN 

 
                                                 
only  covers  individual  citizens  while  a  large  part  of  users  of  postal  services  are  businesses. 
Also it should be recalled that spending on postal services only constitutes a small percentage 
of a household's budget.  

3.5.2.  Terminal Dues 

Terminal  dues  are  the  remuneration  postal  operators  pay  to  each  other  for  the  delivery  of 
cross-border  mail  in  the  country  of  destination.  Article  13  of  Postal  Directive  requires 
Member States to encourage their USPs to arrange that in their agreements on terminal dues 
for intra-Community cross-border mail, three main principles are respected:  

–  The terminal dues shall be fixed in relation to costs of processing and delivering incoming 

cross-border mail; 

–  The level of remuneration shall be related to the level quality of service achieved; 

–  Terminal dues shall be transparent and non-discriminatory. 

The REIMS agreement28 is the instrument used by certain European public postal operators to 
collectively  determine  terminal  dues  rates.  The  REIMS  agreement  has  obtained  individual 
exemption  from  antitrust  rules  twice  as  the  Commission  determined  that  conditions  for 
individual exemptions as laid down in Article 81(3) of the EC Treaty were satisfied. 

The  second  exemption  of  the  REIMS  agreement  expired  by  the  end  of  2006.  Due  to  the 
reform of antitrust legislation and the adoption of the Council Regulation (EC) No. 1/2003 of 
16 December 2002 on the implementation of the rules on competition laid down in Articles 81 
and 82 of the Treaty29, any new agreement on terminal dues would not require an exemption 
by  the  European  Commission  ex-ante.  Nevertheless,  it  would  have  to  comply  with  the 
conditions of Article 81(3) of the EC Treaty, which is now directly applicable 

At the same time parties to this kind of an agreement have to comply with the requirements of 
Article  13  of  the  Postal  Directive,  which  are:  cost  orientation  of  terminal  dues,  link  to  the 
quality of service and transparency and non-discrimination of the agreed system. 

3.5.3.  Value Added Tax 

Under  the  VAT  Directive  (Directive  2006/112/EC  ,  Articles  132(a)  and  135(1)(h))  the 
provision of certain services by public postal services and the supply at face value of postage 
stamps  for  use  for  postal  services  are  exempt  from  VAT.  Since  the  1970s  when  these 
provisions  originally  were  adopted30  the  Community  legal  framework  as  regards  postal 
services has fundamentally changed following the Postal Directive in 1997 (and amended in 
2002 and 2008). Meanwhile, the postal VAT exemption has remained in force. 

28 
29 
30 

Until now there were two REIMS agreements concluded: REIMS II and renewed REIMS II.  
OJ L 1, 04.01.2003, p.1. 
Sixth Council Directive 77/388/EEC of 17 May 1977 of the harmonization of the laws of the Member 
States relating to turnover taxes – Common system of value added tax: uniform basis of assessment, OJ 
1977 L 145, p.1, which was replaced as from 1 January 2007 by Council Directive 2006/112/EC of 28 
November  2006,  on  the  Common  system  of  value  added  tax,  OJ  L  347,  11.12.2006.  p.  1.  The  latter 
Directive is effectively a recast of the Sixth Council Directive of 1977 as amended over the years. 

EN 

26 

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The  VAT  exemption  is  applied  in  a  variety  of  ways  by  Member  States:  some  exempt  all 
postal services supplied by the USP; others exempt all services comprised within the universal 
service obligation; yet others exempt those services which have been reserved to the USP, and 
lastly, three Member States levy VAT on all postal services.  

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27 

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Table 5 – Postal services exempted from VAT  

Postal services 
exempted from VAT 

Member States 

No services 

FI, SE, SI 

Reserved services 

ES, LV 

Universal services 

BE,  BG,  CZ,  DE,  DK,  EE, 
FR,  GR,  LT,  LU,  MT,  NL, 
SK 

All 
postal 
provided by USP 

services 

AT,  CY,  HU,  IE,  IT,  PL, 
PT, RO, UK 

The  vast  majority  of  USPs  benefits  from  a  VAT  exemption.  Such  an  exemption  gives  the 
USPs a competitive advantage over other postal operators vis-à-vis customers which cannot 
recover  the  VAT  they  have  been  charged,  e.g.  final  consumers  or  traders  engaged  in  VAT 
exempt activities. The scope of the application of the VAT exemption varies however widely. 
The  uneven  application  of  the  exemption  and  the  distortions  of  competition  occurring 
between UPSs that benefit from the exemption and other operators that do not, are considered 
an  important  obstacle  to  achieving  effective  and  non-distorted  competition  in  the  postal 
sector.  

To  counter  this  situation  the  Commission  proposed  already  in  2003  to  remove  the  current 
VAT  exemption  on  public  postal  services  and  postage  stamps  while  introducing  and  option 
for Member States to apply a reduced VAT rate to a wide range of postal services in order to 
limit the impact of the tax on final consumers31. Despite its obvious significance for a level 
playing  field  in  a  liberalised  market  for  postal  services,  there  has  been  no  progress  in  the 
Council  on  this  proposal.  In  fact,  the  proposal  has  not  been  discussed  in  the  Council  since 
2004. Its adoption is now more pressing since the Third Postal Directive sets a definite date 
for  the  full  liberalization  of  the  national  postal  markets.  As  to  further  discussions  in  the 
Council,  it  is  very  much  in  the  hands  of  the  Council  to  decide  whether  or  not  to  resume 
negotiations.  The  Commission  has  repeatedly  signalled  its  interest  and  readiness  to  resume 
negotiations and to contribute in a constructive manner for a common solution. 

In the meantime the Commission needs to ensure the uniform application of the existing VAT 
postal  exemption  across  the  Community.  It  is  the  Commission's  understanding  that  the 
exemption should apply only within the limits of the strict discharge of the universal service 
obligation and not in other areas. For this reason, the Commission has sent letters of formal 
notice to the UK, Germany and Sweden in April 200632 about the unsatisfactory way in which 
the  current  provisions  are  being  implemented  in  those  Member  States.  In  July  2007,  the 
Commission  opened  the  second  stage  of  infringement  proceedings  against  these  Member 

31 

32 

COM (2003) 234 as amended by COM (2004) 468 Proposal for a Council Directive amending Directive 
77/388/EEC as regards value added tax on services provided in the postal sector. 
Commission  Press  Release  IP/06/484  of  10  April  2006.  As  explained  there,  the  Commission  regards 
these cases are test cases which show the negative effects non-harmonized application of VAT rules has 
for the internal market.  

EN 

28 

   EN 

 
 
 
 
 
 
 
                                                 
States  by  sending  a  reasoned  opinion33  to  them.  It  is  important  to  add  that  a  referral  for  a 
preliminary ruling regarding the scope of the VAT exemption for postal services is currently 
pending before the ECJ (Case C-357/07). 

33 

Commission Press Release IP/07/1164 of 24 July 2007. 

EN 

29 

   EN 

 
                                                 
Conclusions 

The  Postal  Directive  can  be  considered  as  having  been  largely  transposed.  However,  the 
Postal Directive provides the Member States with significant flexibility as how to apply tariff 
principles.  Consequently,  the  application  of  the  Postal  Directive  in  this  field  varies  widely 
among Member States. 

Given  the  importance  of  tariff  regulation,  tariffs,  terminal  dues  and  VAT  in  a  liberalized 
market and for the creation of competition, this area should be closer looked at in the future.  

3.6. 

Transparency of accounts 

Article 14 of the  Postal Directive requires the  following  with respect to the transparency of 
accounts of the USPs: 

–  Separation  of  USP  accounts  (reserved  and  non-reserved  services,  universal  services  and 

non-universal services);  

–  Allocation of costs according to accounting systems as defined in this Article of the Postal 

Directive; 

–  Statement of compliance by a competent independent body;  

–  USPs to disclose detailed accounting data to NRA and Commission on request. 

In  addition,  Article  15  requires  the  publication  of  USPs  financial  accounts  after  these  are 
reviewed by an independent auditor. 

All  Member  States  have  transposed  the  accounting  obligations  resulting  from  the  Postal 
Directive.  However,  as  already  pointed  out  in  past  application  reports,  the  level  of 
transparency of USPs costs data an accounting is extremely varied among Member States and 
therefore  very  inconsistent.  This  concerns  the  level  of  accounting  detail,  as  well  as  which 
separate  accounts  are  required  and  the  way  of  allocating  costs.  It  has  to  be  repeated  again, 
that,  in  practice,  transparency  of  accounts  is  still  only  being  partially  implemented  in  most 
Member States. 

Cooperation between NRAs is important in this area to exchange best practices.  

It  is  worth  noting  the  efforts  undertaken  by  the  European  Committee  for  Postal  Regulation 
(CERP) to devise guidelines for the implementation of cost allocation principles. 

Conclusions 

The  Postal  Directive's  objective  on  a  transparent  cost  allocation  system  of  the  universal 
services providers still needs to be fully reached. This conclusion already drawn in the 2006 
Application Report still remains valid.  

EN 

30 

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3.7. 

National Regulatory Authorities (NRAs)  

Article 2 (18) of the Postal Directive defines NRAs as “the body or bodies, in each Member 
State,  to  which  the  Member  State  entrusts,  inter  alia,  the  regulatory  functions  falling  within 
the scope of this Directive.” Article 22 of the Postal Directive requires each Member State to 
designate  one  or  more  NRAs  for  the  postal  sector  that  are  “legally  separate  from  and 
operationally  independent  of  the  postal  operators”.  According  to  the  same  Article,  NRAs 
“shall  have  as  a  particular  task  ensuring  compliance  with  the  obligations  arising  from  this 
Directive  and  shall,  where  appropriate,  establish  controls  and  specific  procedures  to  ensure 
that the reserved services are respected”. 

The effective operation of the (competition and) regulatory authorities is crucial for the proper 
functioning  of  the  postal  markets.  Whereas  the  independence  of  the  NRAs  is  a  key 
requirement  of  the  Postal  Directive  and  a  pre-requisite  for  its  effective  operation,  there  are 
further  issues  of  significant  importance  such  as  the  mandate  of  as  well  as,  the  powers  and 
resources attributed to the NRAs.  

All Member States have some form of NRA all of which are formally independent from the 
postal  operator.  However,  some  NRAs  may  still  be  under  ministerial  control.  However,  it 
seems that this formal independence is not always fully respected when it comes to the daily 
operations of the NRA in some Member States.  

of 

the  Austrian  Regulatory  Authority 

Compared to the situation described in the 2006 Application Report, the main changes are the 
and 
establishment 
Telecommunications  (Rundfunk  und  Telekom  Regulierungs-GmbH  (RTR-GmbH))  as  NRA 
for  postal  affairs  in  Austria  as  of  1  January  2008.  Before  2008,  the  regulatory  tasks  in  the 
Austrian  postal  market  were  governed  by  the  Ministry  of  Transport,  Innovation,  and 
Technology. 

for  Broadcasting 

As in almost all other cases the Austrian NRA is also a multi-sector regulator. Apart from the 
postal  sector,  most  European  NRAs  regulate  electronic  communications  services, 
broadcasting,  road  transport  or  energy  and  gas.  This  might  help  to  take  into  account 
experiences gained in other network industries.  

In Estonia, there was a reorganisation of a number of regulatory institutions in January 2008 
and currently the NRA for posts is the Estonian Competition Authority (Konkurentsiamet).  

The resources of postal NRAs vary enormously among Member States even among Member 
State  of  roughly  the  same  size.  This  can  be  seen  by  the  number  of  staff  employed  or 
responsible for the postal market especially in case of multi-sector regulators. Whereas in the 
UK the number of staff regulating the postal market amounts to 60 FTE (full time equivalent), 
some smaller Member States only have 1-3 FTE.  

The powers of the NRAs also vary  among Member States. This concerns the data  that they 
can require from USPs incl. requiring specific accounting systems, enforcement powers such 
as  cancelling  unlawful  rate  or  levy  fines  and  other  powers,  such  as  for  example  the 
competence to require downstream access (see chapter 3.4. above on downstream access).  

NRAs  have  a  substantial  role  to  play  in  the  European  postal  sector  in  order  to  preserve  a 
universal  service  in  line  with  the  Postal  Directive  and  to  enable  the  development  of 
competition. It appears that by the far the vast majority of the NRAs currently still focus on 

EN 

31 

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ensuring the provision of the USO. With postal markets opening up and the road set for full 
market  opening,  the  role  of  the  NRA  will  increase.  The  inequality  in  the  overall  level  of 
resources attributed to them and the divergences of the mandates of the NRAs thus gives rise 
to concern. It seems doubtful that all NRAs are adequately equipped to fulfil their tasks. 

Conclusions 

All Member States have independent NRAs but it seems that this is not always respected in 
the daily operation of the NRA in all Member States. The mandate, resources and powers of 
the NRAs also vary significantly among Member States. The importance of the role of NRAs 
and  their  competencies  under  the  Postal  Directive  should  oblige  Member  States  to  allocate 
necessary  resources  to  these  independent  sectoral  regulators  in  order  to preserve  benefits  of 
the full market opening and at the same time safeguard the provision of the universal postal 
service.  Member  States  should  further  strengthen  the  position  of  National  Regulatory 
Authorities  and  to  ensure  the  allocation  of  the  necessary  resources.  Administrative 
cooperation  among  NRAs  should  be  promoted  to  allow  exchange  of  best  practices  and 
benchmarking.  

3.8. 

Quality of services – Routing time 

One of the key aims of the Postal Directive and a core objective of EU Postal Reform is to 
improve the quality of Community postal services. In order to establish whether this objective 
is indeed realised, Article 16 of the Postal Directive requires Member States to “ensure that 
quality-of service standards are set and published in relation to universal service in order to 
guarantee a postal service of good quality”. 

Each NRA is required to monitor the performance of the USPs in order to ensure they comply 
with the prescribed standards. Whilst the Postal Directive does not prescribe penalties when 
quality targets are not met, each NRA is required to take corrective action.  

In  terms  of  setting  the  quality  of  service  standards,  Article  16  of  the  Postal  Directive  states 
that  quality  standards  are  to  focus,  in  particular,  on  routing  times  and  on  the  regularity  and 
reliability  of  service.  Each  NRA  has  discretion  under  certain  circumstances  such  as 
infrastructural difficulties or geography, to allow derogations from adopted quality standards. 
Whilst  the  Directive  does  not  prescribe  the  method  for  measuring  quality  standards,  it  does 
require adequate measuring of quality, and that an evaluation procedure is put in place. 

As to the scope of the application of quality of service standards, Article 16 requires Member 
States  to  set  quality  of  service  targets  for  all  universal  services,  including  services  for 
correspondence,  newspapers,  magazines  and  parcels.  In  reality,  however,  the  coverage  of 
transit  time  targets,  which  is  the  most  important  category  of  quality  of  service  standards, 
varies widely across Member States.  

Domestic transit times 

Standards for domestic transit time are usually set as D + n (D+1,  D+2 and D+3), where D 
represents the date of deposit and n the number of working days which elapse between that 
date  and  the  date  of  delivery  to  the  addressee.  The  table  below  indicates  the  transit  time 
targets for domestic priority mail as set by the different Member States as well as information 
on the actual transit times realised by the USPs in 2006.  

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32 

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Table 6 – Regulation and performance of routing times of domestic priority mail (2006) 

MS 

Regulation 

Performance 

D+1 

D+2 

D+3 

D+1 

D+2 

D+3 

AT 

BE 

BG (2) 

CY 

CZ 

DE 

DK 

EE 

ES 

FI 

FR 

GR 

HU (3) 

IE 

IT 

LT 

LU 

LV 

MT 

NL 

PL 

PT 

RO 

SE 

SI 

SK 

UK 

95 

95 

78 

90 

90 

80 

93 

90 

unknown 

85 

85 

86 

95 

94 

88 

85 

95 

97 

92 

95 

82 

93.5 

85 

85 

95 

96 

93 

98

97

90

97

95

93

98

95

97

99

90

97

99.5

100 (1)

95

99

98

99.5

97

94

97

96.1

92.0

88.7

63.6

94.1

unknown

94.0

90.5

56.1

95.7

81.2

80.0

91.8

77

88.1

67.8

97.3

95.6

94.9

96.6

68.0

94.7

unknown 

Unknown

98.3 

98.0 

93.6 

95.9 

89.9 

99.2 

97.2 

99.6 

99.9 

99.8

Unknown

97.4

97

97.6

87.0 

94.4

unknown

unknown 

Unknown

99.4 

95.4

88.0

96.5

94

  Notes: 
  (1) D+4 
  (2) Bulgaria has different standards for different mail items [see p. 63 ECORY] 
  (3) Hungary has different standards for different mail items [see p. 63 ECORY] 

Based on ECORYS, 2008 

The above table shows that all Member States have set quality of service (transit time targets 
D+1)  except  Spain.  The  majority  of  the  Member  State  also  has  transit  time  targets  for  D+2 
and several Member States have in addition transit time targets fro D+3.  

Targets vary significantly ranging for D+1 for example from 78% in Poland to 97% in Latvia. 
Also  the  actual  performance  of a  transit  time  of  D+1  sees  a large  variation  among  Member 
States.  

EN 

33 

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Several Member States have difficulties reaching the D+1 transit time target, however in these 
Member  States  only  the  standard  for  the  fastest  transit  time  is  not  met,  while  all  other 
standards (for D+2 or D+3) are met.  

Cross-border transit times 

Minimum standards for intra-community cross-border services are set by the Postal Directive. 
Annex 1 of the Postal Directive provides that for cross-border postal items sent by the fastest 
standard  category,  85  percent  of  the  mail  must  be  delivered  by  the  third  working  day  after 
posting. A second requirement is that 97 percent of such mail must be delivered by the fifth 
day  after  posting.  These  targets  should  be  achieved  both  as  an  overall  average  and  in  each 
bilateral exchange between Member States. 

A system to measure the cross-border transit times is the UNEX system for measuring letter 
service performance which was introduced by IPC (International Post Corporation) in 1994. 
Until  2004  the  UNEX  monitoring  system  included  the  EU15  plus  Iceland,  Norway  and 
Switzerland. Since 2005 it the UNEX system includes all EU27 expect Bulgaria, which will 
be included from 2008 onwards, as well as Iceland, Norway and Switzerland.  

The  figure  below  shows  the  overall  trend  in  transit  time  performance  over  the  last  years 
measured in terms of D+3.  

Figure 4 - Cross border intra-community D+3 in EU 15 and EU29  

93,7

93,1

92,5

94,2

94,1

%

95

90

85

80

85,6

1998

2000

2004

2005

2006

2007

IPC34 

34 

Results 2002-2005 based on UNEX-18 (EU15 + Iceland, Norway, Switzerland); 2005 -2007 based on 
UNEX-29 (EU27 without Bulgaria + Iceland, Norway, Switzerland). 

EN 

34 

   EN 

 
 
                                                 
The above figure shows that on average cross-border services of postal operators continued to 
be  performed  to  a  high  level  in  2007.  94%  of  cross-border  mail  was  delivered  within  three 
working days, thus exceeding significantly the target of 85% set by the Postal Directive.  

The improvements registered since the implementation of the first Postal Directive 97/37/EC 
can be seen in the following figure which compares the cumulative performance in 1994 and 
2007 for EU15 plus Iceland, Norway and Switzerland, which are the countries monitored by 
UNEX since 1994. 

Figure 5 – Cumulative performance in 1994 and 2007 for EU15 plus ICE, NO, CH35  

97,9

98,9

99,3

92,4

96,2

84,3

99,5

98

94,9

69,1

82,3

43,5

100

90

80

70

60

%

50

40

30

20

10

0

15,8

7,7

D+1

D+2

D+3

D+4

D+5

D+6

D+7

2007 UNEX-18

1994 UNEX-18

IPC, 2006 

D+3  performance  for  UNEX-18  went  up  from  69.1%  in  1994  to  94.9%  in  2007.  D+5 
performance increased from 84.3% to 97.9%.  

While the overall picture is positive, individual results for bilateral flows between a number of 
Member States are less so and some performances may give rise to concern. 

Conclusions 

Overall,  quality  in  terms  of  transit  time  has  further  improved  at  both  the  national  and 
European  level.  However,  as  regards  cross-border  transit  times,  the  situation  differs  among 
Member States and developments should be closely followed.  

35 

http://www.ipc.be/index.php?option=com_content&task=view&id=43&Itemid=152.  Results  are  for 
UNEX-18i.e. EU-15 plus Switzerland, Iceland and Norway. 

EN 

35 

   EN 

 
 
 
                                                 
3.9. 

Complaint and redress procedures 

Article  19  of  the  Postal  Directive  requires  Member  States  to  ensure  that  there  are  adequate 
consumer  protection  measures  in  place  and  that  complaints  about  poor  universal  postal 
service are handled through transparent, simple and inexpensive procedure. This concerns in 
particular  cases  involving  loss,  theft,  damage  or  non-compliance  with  service  quality 
standards. 

The Postal Directive lays down two key procedural requirements to ensure that there is clarity 
in complaint handling. The first is for Member States to ensure that USPs publish details on 
the number  of  complaints  received and how these  complaints  were  dealt  with  and  resolved. 
The  second  is  for  Member  States  to  ensure  there  is  an  appeal  mechanism  which  allows 
complaints  to  be  brought  before  “the  competent  national  authority”  in  cases  where 
grievances were not adequately resolved by the USP. 

Despite the establishment of complaint procedures – which have in part also been extended to 
competitors  –  in  practice  there  seems  to  be  still  dissatisfaction  among  citizens  about  the 
handling  of  complaints36.  According  to  the  Special  Eurobarometer  200737  43%  of  the 
respondents say that their complaints have been dealt with badly and 53% state that they have 
been  dealt  with  well.  It  should  however  be  noted  that  figures  improved  compared  to  the 
situation two years earlier when 53% of the respondents said that their complaints have been 
dealt with badly and 44% state that they have been dealt with well. 

The  adoption  and  enforcement  of  the  CEN  standard  on  measurement  of  complaints  and 
redress procedures38 should considerably contribute to improving the current situation. 

Conclusions 

Although  consumer  satisfaction  as  regards  the  handling  of  complaint  procedures  has 
improved, the implementation of the provisions in the Postal Directive relating to complaint 
and redress cannot yet be considered to be fully satisfactory for all consumers. Complaint and 
redress  procedures  are  particularly  important  for  end  consumers  and  SMEs,  both  of  which 
have very limited or no bargaining power and the role of NRAs is of particular importance in 
this regard. 

3.10.  Technical standards 

In  line  with  Article  20  of  the  Postal  Directive,  the  harmonisation  of  technical  standards 
continues  and  shall  in  particular  take  into  account  the  interests  of  users.  The  European 
Committee  for  Standardisation  (CEN)  is  entrusted  with  drawing  up  the  technical  standards 
applicable to the postal sector. The Commission entrusts CEN through issuing standardisation 
mandates.  

CEN  has  focused  its  work  on  technical  harmonisation  and  aims  to  “increase  the 
interoperability  of  postal  networks  in  Member  States39  and  to  improve  the  availability  of 

36 

37 
38 
39 

According to Special Eurobarometer (2005) 53% of the respondents say that their complaints have been 
dealt with badly and 44% state that they have been dealt with well. 
See footnote 27.  
Standard EN 14012: Measurement of complaints and redress procedures. 
See Recital 36 of the Postal Directive. 

EN 

36 

   EN 

 
                                                 
services offered to users.” The Postal Directive also requires the Postal Directive Committee 
to assist the Commission in developing measures on technical standardisation (Article 20 and 
21 of the Postal Directive). 

NRAs  must  ensure  that  the  implementation  of  the  mandatory  technical  standards  (by  the 
organisations  concerned)  is  completed  in  compliance  with  agreed  principles,  within  the 
regulatory deadlines and in a transparent and non-discriminatory manner. 

As regards quality of service, CEN has adopted a number of standards, notably: 

–  EN13850: Measurement of transit time of end-to-end services for single piece priority 

mail and first class mail. 

–  This key standard has been developed in order to provide a standardised technique 
that  can  be  used  throughout  Europe  to  measure  the  transit  time  for  priority  and 
first  class  mail  through  samples  representing  real  mail  flows.  It  specifies 
conditions  for  independent  measurements  of  end-to-end  transit  times  with  a 
unique method at the European level which is valid for both national and cross-
border mail. It facilitates the full auditing of the results obtained.  

–  EN14012:  Measurement  of  complaints  and  redress  procedures  (measurement  of  the 

number of complaints and the speed with which they are handled). 

–  As  noted  above,  this  is  a  very  important  standard  for  consumers.  It  will  help  to 
ensure that information is collected, analysed, and reported in a consistent manner 
so  that  it  can  be  used  for  quality  control  and  audit  purposes.  It  provides  a 
classification system for complaints and  some  indications  on  minimum  handling 
requirements for redress procedures. 

Overall, CEN has adopted 27 standards. 8 standards are under development. 

Currently  a  new  standardisation  mandate  for  CEN  is  under  preparation.  The  proposal  for  a 
new  mandate  has  been  discussed  in  the  Postal  Directive  Committee  meeting  in  November 
2007. In the negotiations on the new mandate the Commission will particularly insist on the 
following  points:  (a)  standards  should  be  used,  (b)  they  should  be  simplified,  (c)  standards 
should be made clearer and consumers/users should be better involved. 

Conclusions 

In  a  multi-operator  environment  the  use  of  technical  standards  –  developed  by  the  postal 
experts  –  will  become  even  more  important.  It  is  essential  that  interoperability  of  various 
postal networks is achieved and that consumers can benefit from high quality postal services, 
which can be provided by different operators. 

3.11.  Conclusions on regulatory developments 

All Member States have transposed Directive 97/67/EC as amended by Directive 2002/39/EC 
through  a  series  of  primary  and  secondary  national  postal  law.  Compared  to  the  situation 
described  in  the  2006  Application  Report,  Estonia,  where  transposition  had  been  underway, 
has  now  also  transposed  both  Directives.  However,  formal  transposition  is  merely  the  first 
step in the full implementation of the Community framework. The practical application of the 

EN 

37 

   EN 

 
provisions of the Postal Directive and their impact on postal service operators and the sector 
are of equal importance. 

During  the  reporting  period,  one  further  Member  State,  Germany,  fully  opened  its  postal 
market  as  of  1  January 2008.  To  date  four  Member States  have thus  abolished  the reserved 
area before the date foreseen in the Postal Directive (Germany, Finland,  Sweden,  UK). The 
liberalisation  of  the  German  postal  market  coincided  with  the  introduction  of  a  statutory 
minimum wage in the postal sector in Germany. According to ECORYS the minimum wage 
is significantly higher than the wages currently paid by alternative postal operator(s) and its 
introduction could well have an adverse effect on the development of competition. 

However, there seems to be a certain slowdown as far as further market opening is concerned. 
The Netherlands, where full market opening was envisaged has now postponed liberalisation 
without setting any concrete date for full market opening. A number of arguments have been 
put forward for this indefinite postponement. These include the labour conditions of the main 
competitors of the Dutch postal incumbent operator, the absence of a level playing field for 
postal operators due to VAT exemptions for the incumbent postal operators in Germany and 
the UK and the introduction of a minimum wage in the postal sector in Germany thus raising 
costs for new entrants in the postal market. It is clear that these arguments need to be subject 
to a legal evaluation and set in the context of the existing acquis and, in particular, Article 7 
of  the  Postal  Directive.  This  Article  states  that  Member  States  may  continue  to  reserve 
services  to  the  universal  service  provider(s)  only  to  the  extent  necessary  to  ensure  the 
maintenance of the universal service.  

As regards access to the postal infrastructure, a trend towards mandatory access regimes to the 
delivery  network  by  competitors  can  be  observed.  In  the  majority  of  Member  States  the 
incumbent  postal  operator  has  the  obligation  to  provide  access  subject  to  appropriate  terms 
and conditions, where these are in first instance determined through negotiations and, if these 
fail, they can (or have to) be determined by the National Regulatory Authority. 

Progress  towards  reducing  legal  barriers  to  entry  and  levelling  the  playing  field  has  been 
mixed.  The  distortive  effect  of  VAT  exemptions  for  the  incumbent  postal  operators  on 
competition  has  largely  remained.  The  lack  of  access  to  letterboxes  by  competitor  postal 
operators  is  still  a  crucial  issue  in  some  Member  States.  The  definition  of  the  Universal 
Service  Obligation  and  its  future  financing  also  could  lead  to  uncertainties  for  postal 
operators.  Authorisation  and  licensing  procedures  and  related  conditions  are  not  always 
conducive  to  the  development  of  competition.  In  some  cases  conditions  attached  to  an 
authorisation  or  license  might  even  be  considered  prohibitive,  as  for  example  in  Finland 
where  a  postal  operator  wishing  to  obtain  a  license  is  obliged  to  provide  a  full  universal 
service or to pay special "tax", which can amount from 5 to 20 % of its yearly turnover.  

The  level  of  transparency  of  USPs'  cost  data  and  accounting  is  still  extremely  varied  and 
therefore  very  inconsistent  across  Member  States.  It  seems  that  the  main  requirements  of 
Article 14 of the Postal Directive are being met (separate accounts for each for the services 
within  the  reserved  area  on  the  one  hand  and  for  the  non-reserved  services  on  the  other). 
However, it is less certain whether the requirements of Article 12, in particular ensuring that 
tariffs for each service under the universal service obligation are geared to cost, are being met. 

It has been confirmed by the Community legislator that well-functioning NRAs are crucial for 
the  accomplishment  of  an  internal  market  for  postal  services.  Whereas  all  Member  States 
have established formally independent NRAs, it can be observed that the mandate, resources 

EN 

38 

   EN 

 
and  powers  of  the  NRAs  vary  significantly  among  Member  States  and  there  are  justified 
doubts on whether all NRAs are adequately equipped to (efficiently) fulfil their tasks. 

4. 

MARKET DEVELOPMENTS 

4.1. 

Evolution of the postal market in a wider communications market 

The  postal  sector  has  undergone  a  remarkable  transformation  in  the  last  decade.  Driven  by 
technological  change  and  increasing  indirect  competition  as  well  as  by  the  gradual  market 
opening  and  the  threat  of  competition,  incumbent  postal  operators  have  undertaken  major 
restructuring efforts to better serve their customers' needs and increase efficiency.  

Postal  operators  have  moved  towards  more  market-driven  provision  of  postal  services,  in 
some cases accompanied by partial or full privatisation. Changes have been made to sorting 
and  delivery  networks  to  increase  efficiency.  Postal  operators  increasingly  diversify  their 
portfolio by entering areas outside universal service provision.  

Despite a decline in its relative size to EU GDP, the postal sector continues to be an important 
part  of  the  EU  economy  both  by  virtue  of  its  size  as  well  as  employment  levels.  The 
modernization  of  its  operations  plays  a  key-role  in  ensuring  a  sustainable  future  for  postal 
services.  

Although  postal  markets  have  gradually  been  opened  over  the  last  decade,  competition  in 
letter mail is evolving slowly and meaningful competition in this market segment has still to 
develop. It is evident that market opening alone does not lead automatically to competition 

4.2.  Mail Volumes 

Addressed mail volumes have continued to grow during the period 2004 to 2006, although at 
a  moderate  pace.  Volume  growth  has  been  more  pronounced  in  the  Member  States  which 
joined  the  EU  in  2004  and  2007.  In  the  period  from  2004  to  2006,  mail  volumes  grew  by 
6.5% on average in the new Member States compared to a growth of 1.5% in the other fifteen 
Member States. A slight decline in addressed mail volumes can be observed for the EU15 in 
2006 compared to the previous year.  

On average, consumer originating correspondence (C2X) accounts for about 15% of all mail 
volumes in the EU. Business originating mail (B2X) accounts for about 85% of mail volumes 
in the EU40. The development of business originating mail thus has a far larger impact on the 
development  of  total  addressed  mail  volumes  than  consumer  originating  correspondence.  A 
distinction can be made between Business to Consumer (B2C) correspondence and Business 
to Business (B2B) correspondence.  

As regards future trends, in those Member States with a less developed mail market, it is to be 
expected  that  notably  B2C  addressed  mail  volumes  will  continue  to  grow.  This  growth 
potential relates in particular to direct mail as quality of service levels improve but also – to a 
lesser extent – to transactional mail. In Member States with mature postal markets the picture 
is different. Contrary to Germany where there has been moderate growth (1-1.5% annually) in 
addressed  mail  volumes,  the  Netherlands  and  UK  have  already  experienced  declining 

40 

Boston Consulting Group, 2007 

EN 

39 

   EN 

 
                                                 
addressed  mail  volumes  in  the  recent  years.  In  the  coming  years,  the  UK,  Sweden  and  the 
Netherlands expect a decline in the range of 1-3% per annum.  

As regards e-substitution, increased e-substitution in the B2B market and to a lesser extent in 
the B2C market seems likely. For consumer originating mail flows, little further e-substitution 
is expected.  

Transactional mail may be more sensitive to e-substitution and senders are more flexible with 
respect to frequency. It could thus be expected that future growth in transaction mail will be 
lower or decline faster than direct mail.  

Domestic parcel mail increased by 3.5% in the period 2004 to 200641. Contrary to letter mail, 
parcel  mail  does  not  appear  to  be  negatively  affected  by  developments  in  information 
technologies. On the contrary, mail order services parcels and packages benefit from e-selling 
and e-commerce.  

4.3. 

Labour Costs and productivity  

The postal sector has always been a relatively labour intensive sector. According to a study by 
NERA in 2004 on the Economics of Postal Services42 labour costs accounted on average for 
63% of the total costs of USPs. Labour costs are therefore an important item in determining 
the competitiveness of a postal operator.  

Since  the  first  steps  towards  market  opening  and  market  deregulation  in  the  late  1980s, 
incumbent  postal  operators  have  reduced  labour  costs  by  restructuring  mail  processes.  On 
average, the ratio of labour costs as a percentage of total costs has fallen from over 80% for 
most USPs at the beginning of the 1990s to below 55% for some USPs nowadays43.  

Postal incumbent operators can be roughly divided into four categories44: 

–  Postal operators which have been privatised and focus on increasing shareholder value (DE 
and  NL).  These  operators  have  invested  in  mail  processing  with  automated  sorting  and 
have high economies of scale; 

–  Postal  operators  from  Scandinavian  Member  States  which  have  focused  on  the 

modernisation of the postal services and full commercialisation (FI, SE);  

–  Postal operators which are still investing in postal sector technologies (AT, BE, DK, ES, 

FR, PT and UK) including, to a lesser degree, new EU entrants (HU, SI, SK); 

–  Postal  operators  which  are  progressing  more  slowly  due  to  different  market  conditions 
such as  lower volumes, geography and limitations  in  investments  (BG,  CY,  CZ,  GR,  IE, 
IS, LT, LU, LV, MT and RO). 

Relative  wage  costs  are  determined  by  wage  levels  and  productivity.  Productivity  can  be 
measured as letter output per person employed. As with relative labour costs, there are large 

41 
42 

43 
44 

ECORYS, 2008. 
Study  commissioned  by  the  Commission;  http://ec.europa.eu/internal_market/post/doc/studies/2004-
nera-final-postal-report_en.pdf 
ECORYS, 2008. 
ECORYS, 2008. 

EN 

40 

   EN 

 
                                                 
variations  in  productivity  levels  between  Member  States.  High  productivity  is  important  for 
operators as it enables them to compete in the market and with other forms of communication.  

Figure 6 – Number of letter post items (in 1,000) distributed per employee (2004, 2006)  

120

100

80

60

40

20

0

2004
2006

AT BE BG CY CZ DE DK EE ES FI FR GR HU IE IT LT LU LV MT NL PL PT RO SI SK SE UK

Note: Indictor refers to the total letter-post services in relation to the domestic employment.  

Eurostat, 2008 

The  above  figure  shows  that  productivity  levels  vary  significantly.  It  also  shows  that 
productivity levels are generally higher in the older Member States (EU-15) than in the new 
Member States (EU-12).  

It should be kept in mind that part of the variations of productivity is due to the geographical 
and market conditions of the Member State in which the USP is operating. The majority of the 
employees are active in the delivery network. As a delivery network is labour intensive and 
there  are  high  economies  of  scale,  important  factors  such  as  mail  volume  per  capita  and 
population density (letter box density) have an impact on productivity. 

For  example,  in  the  Netherlands  both  mail  volume  per  capita  and  population  density  are 
higher than in Greece, which partly explains the difference in productivity levels.  

As  regards  the  productivity  of  competitor  operators,  only  little  information  is  available. 
However,  it  can  be  expected  that  productivity  in  the  upstream  activities  are  relatively  high 
because of the focus on (pre-sorted) business mail and that productivity in delivery is lower 
than of the USPs because of lower mail volumes and lower economies of scale45.  

45 

ECORYS, 2008. 

EN 

41 

   EN 

 
                                                 
4.4. 

Legal Status of Universal Service Providers (USPs) 

In  the  last  two  years  the  process  of  incorporation  and  privatisation  of  USPs  has  continued, 
albeit at reduced pace. The majority of the USPs remain however State-owned. As regards the 
already  privatised  USPs,  the  German  government  reduced  its  shareholding  in  the  German 
USP  (through  the  public  bank  Kreditanstalt  für  Wiederaufbau  KfW)  from  42%  to  31%  and 
the Dutch government sold its remaining shares of 10% in the Dutch USP TNT and gave up 
its "golden share" in TNT. 

MaltaPost has been fully privatised following the Maltese government selling its 65% share in 
MaltaPost. 100% of the shares of MaltaPost are now listed at the Malta stock exchange. In the 
Czech  Republic  and  Poland  the  process  to  transform  the  State  enterprise  into  a  joint  stock 
company  started  in  2007.  In  Poland,  the  partial  privatisation  of  the  USP  is  under 
consideration.  The  USPs  in  Bulgaria  and  Romania  are  both  public  limited  companies  and 
Romania is currently preparing for privatisation.  

4.5. 

Development of competition in the letter mail market 

Development  of  competition  in  the  addressed  mail  market  has  been  rather  uneven  across 
Member States. In general it can however be considered that development of competition is 
still rather slow across the EU. The table below presents an overview of the development of 
market shares of competitors in the addressed mail segment form 2004 to 2007.  

Table 7 – Market shares of competitors in the addressed mail segment 2004 and 2007 

MS 

Addressed mail 
2004 

Addressed mail 
2007 

Comments 

1.6% 

≤ 2% 

≤ 2%  

≤ 2%  

0%  Unknown (10%)  

0% 

4.5% 

5.3% 

3-5% 

5-6% 

7-11% 

0.5%-1% 

≤ 2% 

≤ 1% 

0% 

0% 

1-2% 

0% 

1-2% 

≤ 1% 

0% 

4.1% 

0%  

5% 2007: excl. newspapers and magazines 

10.4%  

1-5%  2007: non-bulk 

4-5% 2007: Direct mail 8% 

8.2%  

0% 2004: excl. newspapers 

1-2% Exit of Adrexo in 2008 

≤ 1%  

0% 2007: excl. direct mail 

0-1% 2007: B2B 10% 

5-15% 2007: unreliable data 

1%  

1-2%  

≤ 1%  

1%  

14%  

42 

AT 

BE 

BG 

CY 

CZ 

DE 

DK 

EE 

ES 

FI 

FR 

GR 

HU 

IE 

IT 

LT 

LU 

LV 

MT 

NL 

EN 

   EN 

 
MS 

Addressed mail 
2004 

Addressed mail 
2007 

Comments 

PL 

PT 

RO 

SE 

SI 

SK 

UK 

0% 

0%  

≤ 1% 

2% (estimation)  

≤ 5% 

7.0% 

≤ 2% 

0% 

≤ 5%  

9.3%  

0-5%  

1.9%  

≤ 1% E2E 
≤ 5% access 

≤ 1% E2E
20.2% access

2007: 03/2007-03/2008 

Based on ECORYS, 2008 

As can be seen in the table above, in most Member States there is no significant competition 
in  the  addressed  mail  market.  End-to-end  competition  is  developing  in  Spain,  Sweden, 
Germany and the Netherlands with the market share of competitors ranging between 8.2% in 
Spain  and  14%  in  the  Netherlands.  In  the  new  Member  States,  growing  end-to-end 
competition can be observed in Bulgaria, Czech Republic, Estonia and Romania. 

In  the  UK,  competition  has  developed  in  the  upstream  part  of  the  market.  There  are  20 
licensed postal operators other than Royal Mail and access volumes have grown to circa 20% 
of the licensed area in the period 2007/2008 (April 2007 – March 2008). On the other hand, 
end-to-end competition remains almost insignificant despite the fact that the UK market was 
fully liberalised at the beginning of 2006.  

As already stated in the 2006 Application Report, reducing the reserved area - to 50 grams, 
i.e. opening up an additional 7% of the addressed mail market, seems to have made very little 
impact  on  the  development  of  competition.  The  opening  up  of  distinct  segments  of  the 
addressed  mail  market  seems  to  have  been  more  important  for  the  development  of 
competition.  

The liberalisation of direct mail (CZ, EE, IT, NL), intra-city mail (ES), hybrid mail (BG) and 
issuance  of  so-called  D-licenses  (allowing  competitors  in  Germany  to  provide  value  added 
next day delivery services until full market opening) has enabled competition to develop, in 
particular  if  there  are  no  major  barriers  to  the  development  of  competition  other  than  the 
reserved area.  

The  reason  behind  this  is  that  due  to  the  significance  of  economies  of  scale  in  the  postal 
services  businesses,  it  is  crucial  that  competitors  get  enough  volume  in  order  to  be  able  to 
reduce  costs  and  compete  with  the  incumbent  postal  operators.  Opening  up  of  for  example 
direct mail provides more volume than the reduction of the reserved area. 

It can also be seen that the access regime influences the pattern of competition and a number 
of aspects of the access regime and access regulation have been conducive to the development 
of access competition rather than end-to-end competition in the UK.  

EN 

43 

   EN 

 
4.6. 

Business strategies of competitor postal operators  

Competitors are using a variety of business models. 

–  Development of a full service concept; 

–  Development  of  a  low  costs  model  in  certain  market  segments  or  certain  geographical 

areas; 

–  Development of activities in part of the value chain (such as mail preparation upstream or 

delivery without mail preparation downstream); 

–  Development of niche markets.  

The  business  models  are  not  mutually  exclusive  and  some  can  be  combined  Germany  for 
example,  competitors  chose  a  business  model  of  low  costs  end-to-end  delivery  five  or  six 
times  per  week  through  their  own  delivery  and  cooperation  with  many  local  and  regional 
competitors  with  a  focus  on  transactional  mail.  The  models  are  similar  in  Spain  and  the 
Netherlands. In Spain the main competitor to the incumbent operator provides daily end-to-
end delivery of direct mail, intra-city mail and addressed mail above 50 grams through their 
own network. In the Netherlands, two competitor companies apply a low cost model focusing 
on non daily delivery of non-urgent business mail.. 

In  the  UK  on  the  other  hand,  several  companies  focus  on  upstream  activities  in  mail 
preparation  and  collection  and  sorting  with  the  final  mile  delivery  undertaken  by  the 
incumbent operator. Other operators in the UK focus on niche markets like for example B2B 
document exchange. 

4.7. 

Development of competition in the parcels and express market 

The  parcel  and  express  market  in  the  twelve  largest  European  countries  (including  DE,  FR, 
IT, ES, PL, UK and Scandinavian countries) represent a total volume of approximately EUR 
38.4 bn..46 During the period 2004-2006 competition further intensified in the EU market for 
parcels  and  express.  Innovations  in  this  market  segment  include  new  networks  for  parcel 
collection and delivery and automated pick-up by customers.  

There are six main players active in the EU market whose joint market share is close to 70% 
of the total market.  

46 

Datamonitor,  Express  Benchmarking  2008,  press  release  21  November  2007,  quoted  by  ECORYS, 
2008. 

EN 

44 

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Table  8  –  Market  share  in  the  European  parcel  and  express  market  in  2006  (Estimation  by 
DPWN) 

Estimation by Deutsche Post 

DHL (DPWN) 

UPS 

TNT 

Fedex 

La Poste (DPD) 

Royal Mail (GLS) 

Others 

ECORYS, 2008 

24 %

17 %

14 %

7 %

4 %

2 %

32 %

European players remain strong in the parcel and express markets. In this context, UPS and 
Fedex  are  the  only  important  international  providers  in  Europe  which  are  not  backed  by  a 
postal  administration.  The  market  leaders  show  strong  growth  rates  and  are  strengthening 
their position through acquiring local players.  

Recently, the operators who deliver express services face more competition by parcel delivery 
operators. Postal operators are closing the gap between parcel market and the express industry 
by increasing quality and value for money.  

4.8. 

Barriers to the development of competition  

Over the last couple of years, very little progress has been made with regard to resolving the 
VAT issue and progress with regard to some other identified obstacles to market entry as for 
example the access to letterboxes has been mixed.  

In Austria, the problem has been addressed in legislation but this was subsequently annulled 
by  the  Constitutional  Court.  In  Poland  a  start  has  been  made  by  putting  new  letterboxes  in 
place, while in France following a public consultation conducted by the French NRA, ARCEP 
a solution allowing access to letterboxes on equal terms has been found. 

According to ECORYS, the most important main barriers to competition requiring attention at 
EC and/or national level of are:  

The VAT exemption of many of the USPs; 

The access to the letterboxes, most notably in Austria and Poland; 

Strategic  barriers, 
discrimination, loyalty bonuses and bundling and tying; 

in  particular  arising  from  (alleged)  exclusivity  contracts,  price 

Barriers that may arise from collective arrangements of labour conditions; 

EN 

45 

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Barriers that may arise from how the USO will be defined, its net cost established and the cost 
of financing of the USO shared between market participants.  

In  order  to  safeguard  the  full  benefits  of  EU  postal  reform  it  is  essential  that  market 
monitoring  continues  including  during  the  period  of  the  publication  of  the  Third  Postal 
Directive  and  the  date  of  full  market  opening.  It  is  therefore  vital  that  the  Commission 
continues with its close market monitoring and takes necessary actions where and when this is 
necessary to safeguard the objectives of the EU postal reform. 

4.9. 

Social and employment aspects 

Access to postal services 

Access  to  postal  services  is  one  of  the  basic  requirements  of  postal  services  as  a  service  of 
general  economic  interest.  Access  to  universal  service  via  postal  outlets  has  a  particular 
importance  for  consumers  as  well  as  SMEs.  At  the  same  time,  postal  operators  have  been 
restructuring and reorganising their networks often finding innovative solutions in the interest 
of the customer.  

From 2004 to 2006 the number of people served by one post office increased marginally from 
3426 people in 2004 to 3447 in 2006.47 The figure below provides an overview per Member 
State  on  the  number  of  people  served  by  one  post  office  (including  postal  agencies,  postal 
outlets and mobile post offices).  

Figure  7  –  People  served  by  one  post  office  (including  postal  agencies,  postal  outlets  and 
mobile post offices) 

16000

14000

12000

10000

8000

6000

4000

2000

0

2004
2006

AT BE BG CY CZ DE DK EE ES FI

FR GR HU IE

IT

LT LU LV MT NL PL PT RO SI SK SE UK

Eurostat, 2008 

47 

Eurostat, Data in focus 25/2008 – Postal Services in Europe 2006. 

EN 

46 

   EN 

 
                                                 
It  can  be  noted  that  the  average  number  of  people  served  by  one  post  office  varies 
significantly among Members State suggesting an over-provision of access in some Member 
States. While the EU27 average amounts to 3447 people served by one post office, in Cyprus 
and the Czech Republic this rose to 681 and 742 people respectively . On the other end of the 
scale, in Spain 13,668 people are served by one office. One should bear in mind that the mere 
number or density of postal outlets does not necessarily mean the same degree of accessibility 
for individual customers, for whom opening hours are also important and as well as distance 
to the postal office. 

Levels of employment 

Corporate  restructuring  and  the  application  of  new  technologies  has  a  clear  impact  on  the 
employment  levels  of  the  USPs.  As  already  presented  above,  corporate  restructuring  takes 
place at different pace and different periods in time. The development of employment levels 
of USPs thus varies from Member State to Member State and over time. 

ECORYS  estimates  that  USPs  in  EU27  employed  about  1.38  million  people  in  2006 
(headcount). In comparison to 1997, employment decreased by 7.7%. This decline is observed 
in the majority of Member States but it seems larger in the new Member States (EU12) than in 
the  old  Member  States  (EU15).  Employment  remained  relatively  stable  from  2005  to  2006 
experiencing a small decline from 1.40 million to 1.38 million employees.  

The  decrease  in  the  employment  of  USPs  should,  however,  not  mask  the  fact  that  new 
competitors  have  also  created  new  employment.  Data  on  employment  of  competitors  are 
difficult to obtain. ECORYS estimates that employment of competitors amounted to at least 
219 thousand people in 2006 (headcount), which is an 8.2% increase compared to the estimate 
for  the  previous  year.  Nearly  70%  of  the  staff  of  competitors  is  employed  in  Germany  the 
Netherland, France and Poland. In the last years rising employment of competitors appears to 
offset either fully or partially declines in employment of USPs.  

The number of civil servants employed in the sector continues to decline.  

A  complementary  perspective  on  the  importance  of  the  postal  sector  for  EU  employment  is 
provided  in  a  study  carried  out  by  PLS  Ramboll48,  which  assessed  the  number  of  persons 
directly employed in the postal sector, the number of persons employed in services related to 
the  postal  sector  as  well  as  induced  employment,  i.e.  employment  created  due  to 
macroeconomic effects of postal activities. On this basis the study indicated that in 2000, over 
5  million  jobs  were  directly  or  indirectly  associated  with  or  induced  by  the  postal  sector  in 
Europe.  

Employment  in  the  postal  sector  as  a  whole  is  therefore  of  paramount  importance.  Only  an 
efficient  postal  sector  able  to  compete  with  other  means  of  communication  will  allow  the 
maintenance of employment levels.  

48 

"Employment trends in the EU postal sector", Pls Rambøll, October 2002. 

EN 

47 

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4.10.  Technological trends 

Gradual market opening has forced incumbent postal operators to increase efficiency of mail 
processing, which has resulted in cost control and quality of service improvement. It has also 
given  rise  to  major  restructuring  of  mail  handling  and  sorting  operations.  Some  Member 
States have reviewed the mail infrastructure and sorting processes during the early phase of 
market opening, but most have developed their plans in the period after 2004 in anticipation 
of full market opening (which at that time was envisaged fro 2009).  

Restructuring  of  mail  handling  processes  has  often  resulted  in  or  was  induced  by  the 
development of new products and concepts. While physical mail will remain one of the main 
products,  it  will  be  increasingly  supplemented  by  multi-channel  delivery  with  tailor-made 
solutions for different customers. The increasing development and use of hybrid mail services 
by most postal operators is one example of this development. Incumbent postal operators in 
Member States such as Finland and Sweden now go a step further and are entering adjacent 
market through developing IT services for their customers. The development of hybrid mail 
blurs  existing  boundaries  between  telecommunications,  postal  services  and  the  advertising 
and multi-media market.  

Market opening has also induced incumbent postal operators to increase their focus on value 
added services. This has an impact on many areas of activity fields from generating mailings 
and mail processing to transport and delivery options.  

4.11.  Conclusions on market developments 

Conclusions on market trends 

Addressed  mail  volumes  have  continued  to  grow  in  the  postal  market  from  2004  to  200649. 
Volume  growth  was  more  pronounced  in  the  new  Member  States  which  joined  the  EU  in 
2004  and  2007  than  among  the  old  Member  States.  Between  2004  and  2006  mail  volumes 
grew by 6.5% on average in the new Member States compared to an average growth of 1.5% 
in the other fifteen Member States. The postal market is continuing to evolve towards a one 
way distribution market with business originating mail accounting on average for around 85% 
of total mail volumes. 

It  is  expected  that  Member  States  with  a  less  developed  mail  market  will  continue  to  grow 
substantively, with a marked growth potential in particular for direct mail as quality of service 
levels improve. In Member States with mature postal markets the situation is different. Some 
of these Member States can still achieve moderate growth rates whereas other Member States 
such  as  the  UK  and  the  Netherlands  have  already  experienced  declining  addressed  mail 
volumes in recent years.  

Competition  in  the  letter  post  market  is  emerging  but  meaningful  competition  still  has  to 
emerge.  Market  shares  of  competitors,  although  increasing,  remain  at  a  low  level  even  in 
Member  States  that  have  fully  liberalised  their  postal  markets.  End-to-end  competition  is 
being further developed than average in Spain, Sweden, Germany and the Netherlands.  

49 

Latest data available; ECORYS, 2008.  

EN 

48 

   EN 

 
                                                 
In the UK, which fully liberalised its postal market in 2006, end-to-end competition remains 
almost insignificant. In contrast, competition has developed in the upstream part of the market 
with competitors having a market share of around 20% of the total volume of addressed mail. 
The UK NRA Postcomm has been particularly active on access arrangements and developing 
a  licensing  regime  for  new  entrants.  There  are  indications  that  a  number  of  aspects  of  the 
access  regime  and  access  regulation  have  been  conducive  to  the  development  of  access 
competition rather than end-to-end competition in the UK. 

Reducing the reserved area from 100 grams to 50 grams as from 1 January 2006, accounting 
for  the  opening  up  of  an  additional  7%  of  the  addressed  mail  market,  seems  to  have  made 
little  impact  on  the  development  of  competition  as  it  only  opened  up  a  small  share  of  the 
postal market in terms of volume. The opening up of distinct segments of the addressed mail 
market  in  some  Member  States  seems  to  have  been  more  important  for  the  development  of 
competition  as  it  opened  up  bigger  shares  of  the  postal  market  to  competitors,  for  example, 
the  liberalization  of  direct  mail  in  the  Netherlands,  the  so  called  "D  licence"  in  Germany 
(allowing  competitors  to  provide  value-added  next  day  delivery  services  until  full  market 
opening) and the liberalization of hybrid mail in Bulgaria.  

The generally slow development of competition can be attributed to legal barriers, i.e. the fact 
that in most Member State the reserved areas still count for the majority of postal volumes. As 
economies of scale play an important role in postal activities, the reservation of services to the 
incumbent postal operators makes it difficult for new entrants to achieve sufficient volume to 
also benefit from economies of scale and to efficiently compete on the postal market.  

Apart from the reserved area and further legal barriers already mentioned above such as the 
VAT exemption for incumbent postal operators, access to letterboxes or other elements of the 
postal infrastructure in some Member States and authorisation and licensing procedures, there 
are  also  strategic  barriers  which  hinder  the  development  of  competition.  Strategic  barriers 
arise  in  particular  from  (alleged)  exclusivity  contracts,  price  discrimination,  loyalty  bonuses 
and "bundling and tying".  

The market impact of the Postal Directive 

EU  postal  reform  which  started  in  1992  with  the  publication  of  the  Green  Paper  on  the 
development of the single market for postal services has had a very significant impact on the 
provision of postal services and the postal sector. The Postal Directive and its application by 
the Member States have led to an improved quality of service and have secured the provision 
of a universal service accessible for all customers.  

Due to the regulatory and market impact of the provisions of the Postal Directive and gradual 
market  opening,  competition  is  developing  in  the  letter  mail  market.  Market  shares  of 
competitors in the addressed mail segment increased considerably in several Member States 
from  2004  to  2007.  Market  opening  and  the  introduction  of  competition  are  the  key 
instruments  for  creating  jobs  and  achieving  better  services  for  consumers.  However, 
meaningful competition still has to emerge, and identified (or emerging) barriers to entry have 
to be removed.  

EN 

49 

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Driven  by  gradual  market  opening  as  provided  for  by  the  Postal  Directive  and  the  threat  of 
competition,  postal  operators  continued  during  the  reporting  period  to  modernize  their 
operations and to undertake major restructuring efforts to increase efficiency. Postal operators 
are increasingly moving towards a market-driven provision of postal services. 

On  average,  quality  of  service  –  measured  in  delivery  time  –  remained  high  during  the 
reporting  period  and  far  exceeds  the  performance  objectives  set  by  the  Postal  Directive  for 
delivery of 85% of cross-border intra-EU mail within three days and 97% within five days. In 
2007,  94%  of  cross-border  intra-EU  mail  was  delivered  within  three  days,  virtually 
unchanged from 2006. 

EN 

50 

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TABLE OF TABLES 

Table 1– Compliance with delivery requirements ................................................................... 12 

Table 2 – Requirements for the Postal Network ...................................................................... 15 

Table 3 – Services reserved for the USP in the Member States:.............................................. 16 

Table 4 – Overview of licensing and authorisation insider the universal service area ............ 18 

Table 5 – Postal services exempted from VAT........................................................................ 28 

Table 6 – Regulation and performance of routing times of domestic priority mail (2006) ..... 33 

Table 7 – Market shares of competitors in the addressed mail segment 2004 and 2007 ......... 42 

Table 8 – Market share in the European parcel and express market in 2006 (Estimation by 

DPWN)....................................................................................................................... 45 

TABLE OF FIGURES 

Figure 1 – Access to the postal supply chain: .......................................................................... 20 

Figure 2 – USP Tariffs for first weight step (in EUR) in 2007................................................ 24 

Figure 3 – USP Tariffs for first weight step (in PPS) in 2006 and 2007 ................................. 25 

Figure 4 - Cross border intra-community D+3 in EU 15 and EU29 ........................................ 34 

Figure 5 – Cumulative performance in 1994 and 2007 for EU15 plus ICE, NO, CH ............. 35 

Figure 6 – Number of letter post items (in 1,000) distributed per employee (2004, 2006) ..... 41 

Figure 7 – People served by one post office (including postal agencies, postal outlets and 

mobile post offices).................................................................................................... 46 

EN 

51 

   EN