On December 3, 2019, the Monopoly Commission, an advisory board of the German Government, published its eleventh sector report on postal markets. The Monopoly Commission’s findings correspond to a great extent to those of its 2017 report.
Deutsche Post still dominates all significant national postal markets with market shares of about 86% on the licensed letter-post market and 44% on the (oligopolistic) parcels market.
Competition has been increasing in the parcels market and may intensify further by vertical- integrated companies such as Amazon establishing their own delivery network.
In contrast, in the slowly declining letter- post market, competitors still are virtually exclusively active in the business customer segment with the next largest competitor being Postcon holding only 5-10% of the market shares.
The Monopoly Commission does not expect significant changes to the competitive landscape at least in the licensed letter-post market in the medium term.
Therefore, and as Deutsche Post has been facing several complaints both by competitors about predatory pricing and by consumers about damaged, delayed or lost postal items, the Monopoly Commission once again concludes that Postal Law needs to be amended significantly. The key aspects of an amendment of the Postal Act meanwhile published by the Ministry for Economic Affairs and Energy would, however, not go far enough. In particular the Monopoly Commission recommends to additionally strengthen the Federal Network Agency’s powers in abuse control, inter alia by enacting higher fines, profit disgorgement and more extensive information rights. In addition, while it would be essential to keep the cost-oriented price regulation, it should be based on costs of a hypothetical efficient company instead of currently used Deutsche Post’s actual costs. Further, the Monopoly Commission recommends eliminating Deutsche Post’s privileges as universal postal service provider such as its value-added tax exemption. Finally, to improve consumer protection, the Monopoly Commission suggests to oblige postal service providers to participate in dispute resolution procedures.
Monopoly Commission Publishes 11th Sector Report Into Telecommunication
On December 3, 2019, the Monopoly Commission published the eleventh edition of its biennial sector report on telecommunications markets. The report observes that the state has to intervene increasingly in the telecommunications markets because investments of private telecommunication companies do not meet the political networks development targets in Germany. The Monopoly Commission advises that subsidies should be moderate and targeted to areas where development by private parties is insufficient in order to minimize crowding out of private investments.
With respect to the deployment of gigabit networks, the Monopoly Commission notes that developments are hampered by the lack of profitability in many places, bureaucratic hurdles and scarce engineering capacities. It advocates for the systematic removal of bureaucratic hurdles, the creation of an investment friendly regulatory framework and the imposition of non-discrimination obligations to reduce access regulation for fiber-optic networks. In particular, Deutsche Telekom as the still dominant provider should be obliged to grant competitors the same network access as it grants its own end-customer.
The Monopoly Commission cautions against the extension of subsidies for networks in areas where a fast infrastructure already exists to avoid a suppression of private investments. To direct funding into areas that need it most, minimum bandwidth thresholds should be established below which an area becomes eligible for funding.
With respect to mobile networks, the Monopoly Commission advocates for a continuation of auctions for spectrum. It takes a critical view of the Federal Government’s considerations to extend usage rights in return for deployment commitments or without an auction. The Monopoly Commission identifies voluntary infrastructure sharing as an instrument to facilitate private investments under certain conditions. It suggests to award subsidies for the development of mobile networks in currently unsupplied areas at local level or to organize reverse auctions (awarding subsidies to the companies with the lowest subsidy needs).
Working Group On Competition Law Discussed Changes To The European Vertical Block Exemption Regulation
On October 10, 2019, the Working Group on Competition Law held its annual meeting in Bonn. The FCO and more than 120 competition law experts discussed revisions to the European Vertical Block Exemption Regulation (“VBER”) in light of the digital transformation of the economy. In preparation for this meeting, the FCO had published a comprehensive background paper, setting out the need for adaption and possible adjustments to the VBER to address online distribution and other challenges posed by the digital transformation of the economy.
The VBER (in its current version) and the corresponding Guidelines will expire on May 31, 2022. Already in October 2018, the European Commission initiated an extensive evaluation including, in particular, a public consultation to gather evidence on the functioning of the VBER (and the relevant Guidelines) and to determine adequate revisions in light of the new market developments. As part of the evaluation, the European Commission will also consult with the national competition authorities, including the FCO.
The FCO traditionally has a relatively strict position towards vertical restraints (e.g., with regard to the assessment of best price clauses, selective distribution, or online distribution). It remains to be seen whether, and to what extent, the FCO’s proposed amendments and revisions, as set out in its background paper, will find their way into the new version of the VBER.
 Monopoly Commission, “11th Sector Report Post (2019): The Amendment to the Postal Act: New Opportunities for Competition”, November 14, 2019, only available in German here. See also Press Release, December 3, 2019, available here.
 Monopoly Commission, “10th Sector Report Post (2017): Eliminate privileges, design regulation effectively!”, only available in German here. See also Press Release, December 4, 2017, available here.
 Monopoly Commission, “11th Sector Report on Competition in Telecommunications Markets: Governmental Restraint in Network Deployment”, December 2019, only available in German here. A Press Release in English is available here.
 Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices.
 Commission Notice – Guidelines on Vertical Restraints, OJ C 130, May 19, 2010, pp. 1-46.