On December 16, 2021, the German Monopoly Commission, an advisory board of the German Government, published its 12th Sector Reports on competition in the postal[1] and telecommunications[2] markets.

Postal Services

In its 12th Sector Report Post, the Monopoly Commission finds that the letter-post market still lacks effective competition and continues to be dominated by Deutsche Post AG (“DPAG”) with a market share of 83%.  Similarly, the Monopoly Commission finds that DPAG still has a strong position in the parcel market (market share of >40%), but increasingly faces competition from several other competitors with significant market shares, notably Amazon.

Like in its 2019 report,[3] the Monopoly Commission strongly recommends a fundamental reform to the German Postal Act, which has remained largely unchanged since 1997.  The Monopoly Commission’s chairman, Professor Jürgen Kühling, criticized the legislative changes brought about by the 2021 Amendment to the German Postal Act as insufficient and, moreover, favoring DPAG when it comes to pricing of postal services.  In this vein, the Commission stresses that the comprehensive draft amendment proposed by the Federal Ministry of Economic Affairs already in May 2020 would still form a good basis for the much needed fundamental reform of the German Postal Act.  According to the Commission, key points to strengthen competition in the letter-post market include the following:

  • Revision of the pricing principles;
  • Extension of the partial access to DPAG’s mail centers to include shipments of goods and press items;
  • Requiring DPAG to also submit to the Federal Network Agency its so-called “partial access service contracts” with business customers.

With respect to the parcel market, the Monopoly Commission finds that Amazon’s logistic division has clearly enhanced competition.  Since 2020, Amazon has become one of the six largest parcel service providers in Germany with a market share between 5 and 15%.  Amazon’s high quality standards for parcel delivery encourage innovation and stimulate competition.  However, the Monopoly Commission recommends monitoring to assess whether Amazon could leverage its position as the operator of the largest online marketplace into parcel deliveries by offering other network retailers advantages in exchange for using Amazon’s parcel delivery services.

Telecommunication Services

In its 12th Sector Report Telecommunications, the Monopoly Commission makes fundamental recommendations how to further increase competition at the network and interpersonal telecommunication services levels to the benefit of end users.  These include the following three key aspects:

  • Ensure migration from copper to fiber-optic networks in line with competition law. First, the Monopoly Commission stresses the importance of a migration process that respects competition law and provides for planning security for market participants.  To achieve these two objectives, the Monopoly Commission recommends to keep the copper-based wholesale prices stable until the end of the migration process.  Second, the Monopoly Commission criticizes Deutsche Telekom AG’s practice to conclude long-term purchasing agreements only with large wholesale customers, which permanently deprives smaller fiber-optic network operators outside this “Commitment Model” of demand for network access.  In this vein, the Monopoly Commission points out that it will be even more difficult for smaller operators to expand their fiber-optic networks which may slow down the overall migration process.  To create positive incentives for the migration process, the Monopoly Commission recommends against imposing comprehensive ex-ante price regulation on fiber-optic networks, subject to the imposition of non-discrimination obligations.
  • Maintain auctioning of mobile communication frequencies. The Monopoly Commission further recommends to give auctioning of mobile communications frequencies during times of scarcity priority over tendering mobile communications frequencies.  In the Monopoly Commission‘s view, auctioning is the best way to ensure high-quality mobile communications coverage as well as competition between mobile networks.  Relatedly, it pleas for the reintroduction of the statutory principle of priority of auctioning mobile communication frequencies during times of scarcity which has been abandoned in the most recent amendment to the German Telecommunications Act.
  • Reject interoperability obligation for interpersonal telecommunication services.  Last but not the least, the Monopoly Commission advises to reject the government’s proposal to enable communications across different communication services (such as WhatsApp, Signal, Threema and Wire) via an interoperability obligation.  In the Monopoly Commission’s view, a symmetrical obligation on all communication services providers would disproportionately burden smaller providers and deprive them of the ability to differentiate themselves from larger providers through better functionalities and higher data protection standards.  Similarly, an asymmetrical obligation solely on the large and powerful providers is only justified in the event of market failures, which have yet to be identified.

Editors: Katharina Apel and Anna Lubberger

[1]              The Monopoly Commission’s “12th Sector Report Post (2021): Competition with new momentum!” is only available in German here; a press release dated December 16, 2021, is available in English here.

[2]              The Monopoly Commission’s “12th Sector Report Telecommunications (2021): Competition in transition” is only available in German here; a press release dated December 16, 2021, is available in English here.

[3]              The Monopoly Commission’s “11th Sector Report Post (2019): The amendment to the Postal Act: New opportunities for competition” is only available in German here; a press release dated December 3, 2019 is available in English here.  For more information on the 11th Sector Report on the Postal Market please see our Antitrust Watch blog article of December 3, 2019, available here.