Letter monopoly

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The Letter monopoly (German: Briefmonopol) was enshrined in the German Postgesetz law, and until the end of 2005 it granted an exclusive license to the German post office, Deutsche Post, for the transport of letters and catalog deliveries of up to 100 grams. For the period 2005--2007 this limit was reduced to 50 grams. In this way it provided a monopoly situation, even though only over a part of the postal market. The letter monopoly was often justified in connection with the provision of universal service by the state.

1 Abolition of the letter monopoly
2 Minimum wages for postal employees
3 Chronology of events
4 See also
5 References
6 External links

[edit] Abolition of the letter monopoly

Since 1998, the German Federal Network Agency for Electricity, Gas, Telecommunications, Postal Service and Railways (Bundesnetzagentur, BNetzA) has licensed the professional transport of letters and mail, to which no restriction of weight applies. However the relevant providers were obliged to provide, by 31 December 2007, so-called "higher-valued services", such as same-day express delivery or collection from the sender by the post office. Thus additional costs, which make it usually impossible for the licensees, resulted in letters to set more favorably than the German post office AG in the "normal delivery" in the comparison to the usual letter dispatch. With the cessation of the postal monopoly on 1 January 2008 the requirement to provide "higher-valued services" also fell away for post office competitors.

Problems for competitiors under the new arrangements include that Deutsche Post is exempt from the value added tax, while its competitors are not. Furthermore the post office does not have to pay accident insurance for its employees. Some possible competitors have lodged complaints with the German Federal Constitutional Court and/or the Federal Finance Court. The Hermes logistics group requested abolition of the value added tax obligation on 12 December 2007 with the Federal Department of Finance starting from 1 January 2008. The decision of the Ministry is still pending.

There are estimated to be 1000 enterprises in Germany which offer the delivery of letters. Many of these are small, and may be threatened by the new arrangements. In the long-term, as in other countries in which the letter market was liberalized and/or completely opened, the former state enterprise Deutsche Post can expect to maintain a market share of over 90%. It is questionable whether a close oligopoly can develop, in which a few different, well-financed enterprises can take part alongside Deutsche Post .

[edit] Minimum wages for postal employees

In September 2007 ferocious debate surrounded a minimum wage for post office enterprises in Germany. After the trade union ver.di came to an agreement with the postal services employers' association for a collective agreement specifying a minimum wage of 8.00 - 9.80 euro per hour, this was sharply criticized by the private post office enterprises. Deutsche Post used its leadership in the employers' association of postal services to dictate high minimum wages for the private post office enterprises, which no longer allowed them to fairly compete. The private post office enterprises organized themselves in the employers' association new letter and delivery services (NBZ), which demanded significantly smaller wages of 6.00 - 7.50 euro per hour. The Federal Government chose not to interfere into this controversy of the post office enterprises. ^[1]

[edit] Chronology of events

In 2002 on the initiative of Federal Minister Werner Mueller the Federal Government amends the Postgesetz, so that the termination of the letter monopoly is delayed from the end of 2002, until the end of 2007. The agreement between the CDU opposition at that time and the Red-Green coalition government came just two minutes before the end of the period for the extension of the monopoly, at 11:58 p.m.
12 November 2003: The German Federal Constitutional Court rules Deutsche Post's letter monopoly to be constitutional. Thus it remains, with a restriction to the period 2005--2007.
13 December 2004: The Hessian minister of economics Alois Rhiel (CDU) and the minister of economics of Lower Saxony Walter Hirche (FDP) announce an initiative in the German upper house Bundesrat to abolish the letter monopoly by 2006.
21 March 2007: Ministers of Finance Peer Steinbrück places the abolishment of the letter monopoly in doubt, since other European Union countries refuse to allow foreign enterprises the right to deliver mail.^[2]

24 April 2007: The Grand Coalition (SPD/CDU) agrees not to seek change to § 51 of the Postgesetz again. The monopoly on letters under 50 gram thereby lapses on 1 January 2008.