German regulator delays decision on Deutsche Post mail price increases
The German postal regulator, the Bundesnetzagentur (Federal Network Agency), is delaying a decision that could lead to higher postal prices next year due to Deutsche Post’s ongoing restructuring of its mail business.
According to German media reports earlier this year, Deutsche Post wants to increase the price of a standard letter from €0.70 to €0.80 from January 2019.
But the Bundesnetzagentur announced on Wednesday that the current postage rates for standard letter products would remain valid for the time being, and beyond the planned expiry date of December 31, 2018, until it could take a decision on new charges, which was now likely in the first half of 2019.
The agency said it needed more information from Deutsche Post about the restructuring of the mail business before it could take a proper decision about any price increases.
Jochen Homann, Bundesnetzagentur president, explained: "We have to take this step because Deutsche Post AG has not provided sufficient proof of its changed costs and savings as a result of the upheaval. Our decision for the coming years can only be relied on if we are able to assess the cost situation and revenue development."
Under a complex decision-making process, the Bundesnetzagentur first has to take a general decision, known as the ‘measurement procedure’, about the scope for possible postage price changes. This takes into account both macro-economic factors, such as inflation, and the company-specific ‘productivity rate’, which covers volume and cost trends.
But the agency said the cost and volume information so far provided by Deutsche Post was not precise enough and did not take sufficient account of the restructuring measures announced in June, technical innovations and personnel measures. It had thus requested more information from the company, adding that it will take a decision as soon as it has “a final picture of the eligible costs for the restructuring measures and the subsequent cost savings resulting from them”.
Once the Bundesnetzagentur has taken and published this ‘measurement’ decision, Deutsche Post, competitors, consumer protection organisations and other interested parties are entitled to make comments. The agency then takes a final decision on the price change specifications. Only then, in the third step, can Deutsche Post AG formally submit specific proposed prices for individual products, such as standard letters, for approval.
A Deutsche Post spokesperson told CEP-Research the company had provided information to the Bundesnetzagentur in May for the decision-making process but the regulator had decided in recent months that the information needed further review. “In the last few days, the Bundesnetzagentur requested Deutsche Post to answer numerous questions and provide additional comprehensive documentation of costs,” he said. This should be provided by the end of November, and the company hoped for a decision before the spring.
Deutsche Post could not apply for new prices until this decision had been taken, and all references to future postage prices were thus "speculation" as the company could not know the potential scope for increases until then, he emphasised.
