Brussels, 08/08/2000 (Agence Europe) - Following several complaints and a ruling from the Court of First instance having established that there were shortcomings on behalf of the European Commission, the Commission began a formal procedure for abuse of a dominant position against Deutsche Post AG ("DPAG"). The Commission sent a statement of objections to DPAG which has two months to present its defence. This procedure targets the pricing policy practised by DPAG in the mail-order business sector in Germany. The preliminary investigation showed that DPAG grants considerable reductions to its large clients in the mail-order parcel services sector when they send all their parcels through DPAG. According to the Commission, such reductions have a "knock-on effect" that is damaging to competition. The investigation also demonstrated that in this sector, DPAG invoices prices below its costs. In such circumstances, no private commercial parcel service for the mail-order business had until now managed the gain a solid foothold in the German market.
In February of this year, while investigating into the mail-order sector continued, the German Association of Postal Service Users ("DVPT") lodged a compliant against what it alleged was an excessive level of postage for the letters service, which does form part of Deutsche Post's monopoly. DPAG is called upon to explain why its clients pay a comparatively higher rate for the postage of letters, even if we take into account the quality of transport and the population density.
The Commission began investigating commercial parcel services in 1994, following complaints lodged by United Parcel Service (UPS) and a number of small and medium-sized carriers grouped in an association known as BIEK. The complainants argued that Deutsche Post was pricing below cost and that this excluded private competitors from the liberalised commercial parcel services business. On the 9 September 1999 the Court of First Instance ruling on an action brought by UPS, found that the Commission ought either to have initiated proceedings against deutsche Post or to have finally rejected the compliant from UPS. A thorough investigation of the parcel services which Deutsche Post provides to mail-order firms has shown that the extent to which it covers its costs here is a great deal more limited than it is in the case of other commercial customers, or even in the case of the extremely high-cost service for parcels handed in at post office counters. This suggests that in the mail-order business DPAG is selling its services below cost. If this is confirmed in the formal proceedings, DPAG's conduct would constitute predatory pricing which infringes the prohibition on abuse in Article 82 of the EC treaty. DPAG's discount agreements would also constitute fidelity rebates incompatible with Article 82.
Other procedures are underway against Deutsche Post. In July 1999, the Commission initiated a formal procedure for State aid that has as aim the cross-subsidisation of a series of acquisitions by DPAG, in Germany and abroad, from revenue from the monopoly sector, as well as the use of this revenue to compensate losses in the parcel sector. In May 2000, the Commission initiated, on the basis of several complaints, a procedure for abuse of dominant position, following the disturbing of international mail traffic: DPAG it reproached for having breached EU competition rules by carrying out, frequently and systematically, the interception of incoming cross-border mail arriving in Germany, by imposing surcharges on the mail and thus delaying its distribution.