Deutsche Post wants to keep its letter competition at bay with new business customer discounts.

While private individuals have to dig deeper into their pockets for the letter postage, according to information from the FAZ, large mailing companies even have a small price reduction in store.

This emerges from a presentation in which the Bonn letter giant presents a new price system.

Helmut Buender

Business correspondent in Düsseldorf.

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It should apply from next year.

For 2022, after the postage increase to 85 cents for a standard letter, Swiss Post had already increased its discounts for major customers, so that the shipping prices in the business customer segment have remained practically unchanged.

Among other things, Swiss Post is now offering an additional discount if major mailers accept longer transit times.

Then only half of the letters would have to arrive the next day, instead of the 80 percent that the company usually promises.

With the two new discounts, Swiss Post wants to "set incentives for greater use of digital services and sustainable solutions," said a spokesman for the FAZ. For customers who use both options, there is "a total reduction in fees," he confirmed.

Unlike postage for private customers, Swiss Post does not have to have its business customer rates approved by the Federal Network Agency.

However, as a dominant company, it is subject to abuse control, which is intended to prevent it from undermining its competitors.

Price-squeeze scissors are prohibited

Therefore, the new postal law prohibits so-called price-cost squeezes (PCS).

This means that the postal prices must allow efficient competitors adequate margins.

Because most competitors are dependent on advance services from Swiss Post.

They collect letters from authorities and companies, pre-sort them according to destination regions and then feed them into the postal delivery network.

For these preparatory “partial services”, Swiss Post grants discounts of up to more than 50 percent on the standard price.

However, it also offers the partial service itself and thus competes directly with alternative letter services.

It's a huge market.

More than eighty percent of all letters are in the business customer segment.

"We want to remain a reliable partner for our partial service customers," said Post.

However, even their current prices arouse the suspicions of market surveillance: The network agency had initiated an investigation because there could be "indications" of a prohibited restriction of competition denied by the post office (FAZ of January 13).

"We expect the result here in the middle of the year," said Walther Otremba, chairman of the Federal Association of Letter Services.

The fact that Swiss Post is promising even higher discounts in the middle of the ongoing process causes astonishment in the industry.

Competitors suspect a "circumvention strategy" in which the post office justifies discounts differently and tries to justify them objectively.

However, the Post spokesman said the new incentives allow for further cost reductions that can be passed on to customers.

The term discount helps to make better use of the letter network.

The post office has also suggested relaxing the legal requirements for mail transport because it would then be able to do without several night flights.

The spokesman said that this goal could not be achieved solely through the higher business customer discount.

Reservation of the network agency

Whether the new discount structure comes depends on how the review by the network agency turns out.

At the end of the process, Thomas Brach suspects, there should be a minimum price that Swiss Post and associated group companies would have to respect.

The lawyer, who specializes in postal law and public procurement law, warns that this legal uncertainty may have consequences if major mailers award new orders for letter delivery.

Whether municipalities, health insurance companies, authorities or pension insurance: Huge volumes of mail, according to industry information more than two billion letters a year, are allotted to public clients, who have to put the orders out to tender and usually conclude contracts with terms of several years.

“Until the network agency makes a decision, the award is associated with a high risk.

Clients run the risk of having to repeat tenders at great expense,” says procurement specialist Brach.

Under certain circumstances, they would also have to be blamed for incorrect contract awards - up to the possibility of claims for damages.

"Public clients are therefore required to examine the framework conditions for tenders very carefully," says Otremba, head of the association.

The postal competitors would prefer if current contracts were temporarily extended and if new contracts were only decided after the price control had been completed.