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Regulatory and Competition Law Remedies in the Postal Sector

45 Pages Posted: 2 Jun 2004  

Damien Geradin

Tilburg Law & Economics Center (TILEC); University College London - Faculty of Laws

David Henry

University of Liege

Date Written: February 6, 2003

Abstract

European Community law has played a pivotal role in opening to competition economic sectors previously under the control of public monopolies. As with other sectors such as telecommunications, air transport, electricity, gas, and rail, the postal sector has succumbed to the wave of liberalisation. Liberalisation in the postal sector has forced stagnant state-owned monopolies to modernise themselves in order to compete with new entrants which are nibbling at the fringes with innovative business strategies.

As is the case in network industries, the postal sector is subject to market failures. It finds itself in a position whereby the postal incumbents for letter mail usually remain protected by exclusive rights while the same entities are increasingly competing on the international mail, parcel and logistics markets. This situation has the potential to have a detrimental effect on consumer welfare. In order to prevent the postal incumbents using their market power, remedial action is necessary to allay such fears. Another market failure requiring intervention relates to universal service. There are indeed areas in which postal services will not be provided by the market because they are not profitable. Hence, universal services need to be defined and mechanisms have to be developed to fund these obligations without, however, distorting competition. In this paper, we will focus on the first category of market failures, i.e. the bottlenecks that may prevent competition in the postal sector. There are two regulatory instruments to impose remedies in network industries, sector-specific regulation and competition law. In this paper, we explore how these two approaches have been used to facilitate the arrival of competition in the postal sector. Until recently, the Community institutions have been reluctant to use regulatory intervention and competition law to challenge the public monopoly models. Regulatory requirements have, however, been imposed through Directive 97/67 and, over the last few years, competition rules have been applied much more rigorously in the postal sector, with the result that there is an increasing corpus of case law.

Keywords: Postal, antitrust, competition, regulation, EU

JEL Classification: K21, K23, K32, L40, L44, L50

Suggested Citation

Geradin, Damien and Henry, David, Regulatory and Competition Law Remedies in the Postal Sector (February 6, 2003). Available at SSRN: https://ssrn.com/abstract=500002 or http://dx.doi.org/10.2139/ssrn.500002

Damien Geradin (Contact Author)

Tilburg Law & Economics Center (TILEC)

Tilburg, 5000 LE
Netherlands

University College London - Faculty of Laws ( email )

Gower St
London WC1E OEG, WC1E 6BT
United Kingdom

David Henry

University of Liege ( email )

B-4000 Liege
Belgium

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