Ending EU postal monopolies

Brussels will have a chance this Autumn to finish the job with the postal sector, an industry that has fought market liberalisation all too successfully, says the Wall Street Journal. The European Commission's soon-to-be-released postal directive will call for ending lingering national monopolies by 2009.

The idea has been gestating for a while:

Postal deregulation was launched in 1997, as part of the European Union's (EU) aim to create a competitive common market for services.

But while telephone companies, utilities and other state-owned businesses have been largely privatised and opened to competition, postal carriers have hung on to lucrative exclusivity – if their governments let them – in delivering letters, defined as mail that weigh less than 50 grams.

On this score, Europe is already far ahead of the United States, where no one talks seriously about ending the U.S. Postal Service's monopoly. There's no logic to keeping postal monopolies in place, says the Journal:

For one thing, business now accounts for some 80 per cent of all letters delivered in Europe.

Subsidising postal operators, while defended as a service to ordinary citizens, amounts to a taxpayer subsidy of business.

More important, though, the private sector delivers the mail more efficiently than the old state-owned companies, says the Journal:

In Britain, where full postal competition came into effect at the beginning of this year, business mailers are already seeing cheaper and better service.

A study published last year by Ecorys Research and Consulting found that with postal liberalisation in Europe, the price for delivering bulk mail in urban areas could drop by as much as 20 per cent to 25 per cent.

Source: Editorial, Free Mail, Wall Street Journal, October 4, 2006.

For text (subscription required): http://online.wsj.com/article/SB115991150781781627.html

For more on Privatization Issues: http://www.ncpa.org/sub/dpd/index.php?Article_Category=37

FMF Policy Bulletin/ 10 October 2006