In the context of the up-coming review of the Postal Services Directive, the European Regulators Group for Postal Services (ERGP) has called for a shift of regulatory focus from universal service provision to the promotion of competition.
In this context, the ERGP suggests that national regulators should (i) have the competence to impose regulatory obligations such as access to the network and its components at cost-oriented prices, (ii) be able to impose a reference offer, and to (iii) conduct margin squeeze tests. Regulators should (iv) obtain powers to define, monitor, and analyse markets (including adjacent markets like logistics and transport). Based on the market analysis and identification of one or more operators with Significant Market Power (SMP), national regulators should (v) have specific powers in determining how the access to the network should be provided (e.g. defining access prices, processes, interfaces, and formats).
In this paper, we investigate whether the additional regulatory powers suggested by the ERGP are justified or not. We do this by first looking at the basic principles for when and why to introduce regulation. We thereafter take a specific look at the postal sector to assess whether the criteria for when to regulate are fulfilled there.
Our analysis indicates that there is no need to, and benefit from, extending the EU-wide postal regulation beyond what is already in place. The main reasons for this are that:
In order to reduce the risk of regulatory failure (particularly relevant to dynamic markets such as those for letter and parcel delivery), any regulatory intervention should be (i) based on a clear theory of harm and evidence of market failure, (ii) preceded by a strategic review of its long-term impact and (iii) subject to a judicial review process. Without these steps there is a high risk of regulatory failure where regulatory intervention harms market dynamics, brings USO sustainability at risk or cause other unfavourable outcomes.
The study is commissioned by Deutsche Post.Download