In the digital age, letters are becoming less important, but some mailboxes are still full of advertising. This is a profitable business for Deutsche Post. A federal agency is now taking a closer look.
The Federal Network Agency is considering forcing Deutsche Post to increase certain prices for business customer mail. The Bonn authorities announced on Tuesday that proceedings had been initiated against Deutsche Post InHaus Services GmbH (DPIHS) due to possible price dumping. DPIHS is a subsidiary of the Bonn group and provides “consolidation services”. This means that, for example, she collects, franks and sorts insurance letters and advertising letters from companies. The letters are later delivered by postmen from Deutsche Post – this area of work is not the subject of the procedure.
The supervisory authority suspects that the Post subsidiary is charging prices that are too low. According to the authority, it can be assumed that the fees “fall below the costs of efficient service provision and therefore contain discounts that improperly affect the competitive opportunities of other companies in a market for postal services.” The supervisory authority is now examining more than 2,000 individual DPIHS charges; around 250 customers of the postal subsidiary are affected.
The company now has the opportunity to comment. The 12 procedures based on the DPIHS service centers must be completed in two months. The network agency could then impose a cease and desist order and the postal subsidiary would have to raise its prices.
A Post spokesman said they had taken note of the initiation of the proceedings. “We will of course provide the authority with all the necessary documents and demonstrate that the fees charged by Deutsche Post InHaus Service GmbH do not violate the Postal Act.”
Deutsche Post does an estimated 85 percent of its mail business with larger corporate customers; the rest comes from private customers and small companies who buy normal stamps for mailing. Government regulations apply to the amount of this postage, but not to corporate customer postage.
Although the volume of shipments has been shrinking for a long time in the digital age, the niche market is still considered quite lucrative. The Swiss Post has small competitors here, but they have a difficult time competing with the market leader. If the post office has to raise the aforementioned consolidation prices, this could improve the position of its competitors.
“We have long expressed doubts about the legality of the pricing of Deutsche Post and its subsidiary,” says Walther Otremba from the Federal Association of Letter Services (BBD), which represents the interests of postal competitors. These include the regionally active companies Citypost from Hanover, PostModern from Dresden and Pin AG from Berlin. “With the lowest margins for its consolidation services, the Post Group has long tried, unfortunately partly successfully, to eliminate annoying competition from alternative providers and thus restore its old monopoly position,” says the association chairman.