France, Italy Resist Postal Liberalization

The two countries have come out strongly against the European Commission's plan to open the $118 billion sector to full competition within two years

France and Italy have emerged as the strongest opponents of the European Commission's plan to open up the remaining bulk of postal services to competition, questioning both the 2009 deadline and the liberalisation of public services such as press and light-weight letters distribution.

In the first debate on the postal liberalisation proposal held in Brussels on Monday (11 December), several EU transport ministers voiced their concerns over how to fund and keep the quality of services currently provided by state or semi-state companies.

Brussels recommends that the €90 billion postal sector should move to the final stage of liberalisation in two years' time at the latest, suggesting national postal operators would lose monopoly over the distribution of any type of mail, including letters weighing less than 50 grammes.

Britain and Sweden have already completed the liberalisation of their postal markets while Germany, the Netherlands and Finland are en route to doing so - their ministers backed the commission during the first council debate.

But in countries where a public company still has a full or partial monopoly to deliver these services - such as France's La Poste or Italy's Poste Italiane, the liberalisation move could lead to considerable job losses.

French industry minister Francois Loos said on Monday that Paris would insist that some services - such as press distribution - be kept in the public sector while stressing that the commission's 2009 full liberalisation target should be treated as "an indicative date and under no circumstances a firm deadline."

His timetable-related concerns were echoed by Poland, Hungary and Cyprus who argued that some of the new member states are not yet ready to complete liberalisation with the Polish minister Jerzy Polaczek asking for a special transition period for them to get prepared.

Slovak minister Lubomir Vazny however said Warsaw's move was not indicative of the whole "new Europe" bloc, adding that Bratislava would oppose special conditions for the new member states.

Who will pay for universal services?

Under the commission's proposal, the so-called universal service obligation - stating that mail delivery should be provided across a country for the same price, with at least one delivery and one collection five days a week - should not be affected by the liberalisation.

However, several ministers - from France, Italy, Greece and Luxembourg - raised doubts over whether this can be achieved.

Italy's Alessandro Bianchi argued that high quality service should be safeguarded as well as the regular delivery of mail to disadvantaged areas.

"It would be quite a paradox if - in the name of Europe - we ended up with worse services in some poorer parts of our countries," he said.

Along with several of his colleagues, Mr Bianchi maintained that Brussels needs to clarify more precisely how the universal service obligation should be funded and compensated.

The commission says member states will be allowed to choose their own model for financing these services - either through state aid, compensation funds, cost sharing or other means.

But Irish minister Noel Dempsey commented later to journalists that the EU executive should put more concrete ideas on the paper so that member states do not get a green light from the internal market commissioner only to end up being penalised by the EU's competition regulator.