Regulating Access to Stimulate Competition in Postal Markets?

Abstract

With the postal sector moving to a one-way distribution market and the abolition of legal barriers to entry (the reserved sector) in postal markets, the possibilities for competition increase. In this paper, we investigate whether effective competition is likely to develop on its own, or whether specific access regulation is necessary or desirable in attaining this end. We argue that in a liberalized postal market, besides legal and regulatory entry barriers, there are no significant natural entry barriers that could ultimately prevent profitable entry. We thus conclude that, as a result of the absence of monopolistic bottlenecks, a large section of the postal market will be accessible after full liberalization. Focusing on downstream access (competitors inserting mail at a point further down in the network of the Universal Service Provider (USP)), we argue that specific mandatory access regulation, on top of generic non-discrimination principles found in competition law and strengthened if necessary in sector-specific regulation, is not needed to facilitate competition and may be counterproductive. Indeed, it may bias entry strategies towards a specific entry mode, thereby possibly limiting innovation.

Keywords: Post, Access regulation, Downstream access, Barriers to entry, European Law, Law and economics

JEL Classification: K21, K23, L43, L9