PROPOSALS TO DEREGULATE the market for postal services in Europe go before the European Parliament in October. If adopted, they would allow free competition within each country for all mail weighing more than 50 grams. Outgoing mail between European countries would be a completely open market.
But there are strong indications that France’s La Poste may use its political clout to block the changes. Even the U.K.’s Post Office has indicated its opposition. “It is an extremely political situation,” says Alastair Tempest, director general of the Federation of European Direct Marketing Associations (FEDMA).
He points out that La Poste employs 400,000 staff for a population of 55 million. This compares with the 140,000 employed in the United Kingdom to serve 44 million. “To liberalize, there would have to be redundancies at high cost and with rising unemployment. It was La Poste that stopped things happening last time around,” Tempest notes.
FEDMA itself is disappointed with the proposals for two reasons. When deregulation was first discussed in 1992, all direct mail items were to be opened up for competition. This has been dropped from the current proposals. The time scale also calls for liberalization by Jan. 1, 2003, with a review of the impact on postal services during 2004 before any more changes are made.
“We are very disappointed with the new proposals. We believe there is a need for greater liberalization now, not in four years’ time,” says Tempest. While many of the post offices across Europe would probably prefer that deregulation never happens, most recognize it’s inevitable.
Some markets, such as Sweden and the Netherlands, have already opened up their domestic services for competition. Even countries with less well-developed postal services, such as Spain and Italy, are in the process of liberalizing. With the privatization of many postal authorities, including Germany’s Bundespost in September, commercial reality is dawning.
But this is also tempered by social demands. In particular, the European Union is keen to preserve universal service – access to the same postal services within a country for everybody at the same price. This is why the U.K.’s Post Office is objecting to the proposals.
“The European Commission [members] are taking a leap of faith. They are going too far too quickly. The proposals run the very real risk of damaging postal services throughout the European Union, and the losers will be customers everywhere in the European community,” says its chief executive John Roberts.
It wants the weight step for competition to be set at 150 grams, which would preserve its monopoly on almost all but the heaviest bulk mail. Not surprisingly, the DM industry is pushing for greater, rather than less, freedom to choose between carriers. While supporting the public service, it believes direct mailers should be able to benefit from competition.
The worst-case scenario is where some countries proceed to deregulate domestically, but international competition is still not permitted.
“Our view is that the situation we could face in 2004 is a dangerous one where half of Europe’s postal markets are liberalized and postal services have been privatized, and the other half have not. That would create distortions between the two and difficulties for our members,” says Tempest. The danger is that the French will use this same risk as an excuse for not proceeding, rather than freeing up the market.
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