Internal market, industry, entrepreneurship, SMEs and statistics

← Internal market, industry, entrepreneurship, SMEs and statistics

Postal Services

Summary
Evaluation
Commission Proposal
Legal Act
Implementation

Overall State of Play:

Evaluation: Finalised, COM(2021) 674 final, Commission report adopted on 8 November 2021, accompanied by SWD(2021) 309 final, Evaluation of the Postal Services Directive

State of play, main conclusions, outlook

On 8 November 2021, the Commission adopted the Report from the Commission to the European Parliament and the Council on the application of the Postal Services Directive (Directive 97/67/EC as amended by Directive 2002/39/EC and 2008/6/EC).

The report shows that the directive has been successful in ensuring that all EU citizens have access to essential letter and parcel services. It also highlights how digitalisation has changed the Single Market for post and parcels, changing consumers' needs and expectations, and creating new opportunities and challenges for postal operators. Because of these developments, many Member States have reduced (or are in the process of doing so) certain features and scope of their universal postal service obligation. The report concludes that maintaining some form of universal postal service for all EU citizens is justified, although with an appropriate level of flexibility for Member States to design postal policies at national level.

At the same time, the directive has been only marginally effective in the achievement of the internal market for post and parcels and in stimulating effective competition in the letter mail segment, either within, or among Member States. The main reasons include high entry costs and the need for substantial economies of scale and scope, while the market experienced diminishing volumes. Nevertheless, the absence of harmonised measures for access to the postal network and procedural access rules may also have contributed to the low uptake of competition in the letter mail segment.

The report concludes that, building on the evaluation, it is desirable to further explore the potential adaptation of the regulatory framework to ensure that postal operators and users fully benefit from technological developments, innovation and e-commerce, while securing the continued provision of an affordable, high quality universal service and providing the necessary conditions for the EU postal service to continue to play its role effectively in the economy.

Estimated savings and benefits

The cost-benefit analysis could not provide monetary values or estimates of any potential modifications, because of the complexity, number and dynamics of the factors involved and the impossibility to quantify the societal benefits of postal universal service.

State of Play

Finalised: SWD(2021) 309, Evaluation of the Postal Services Directive adopted on 8 November 2021

Scope

Postal Services Directive (Directive 97/67/EC as amended by Directive 2002/39/EC and 2008/6/EC)

Evaluation findings

Based on available evidence, this evaluation shows that not all of the expectations set out in 2008 were met and that the directive has only partly delivered on its objectives. The requirements of the directive are overall coherent, relevant, and have brought EU value added. Nonetheless, a number of issues relating to changes in users’ needs and to the design of certain provisions limit the effectiveness and efficiency of the directive. Changing users’ needs (also stemming from new opportunities brought by innovation and developments of technology) also calls into question whether certain specific provisions of the directive are still relevant.

Specifically, the benefits of universal postal services to society have been declining while universal service provision has become increasingly costly. The achievement of an internal market and stimulating effective competition in the letter mail segment has not taken place in the scope envisaged. Technical standards are insufficiently used, which reduces legal certainty and may lead to interoperability issues. In addition, while the focus of the regulatory intervention was traditionally on letter mail services, the digitalization of the society and growth of e-commerce have increasingly made parcel delivery services the point of attention of market operators and policy makers. Within this context, the large price differentials between tariffs for domestic and cross-border parcel deliveries deserve particular attention, as they may undermine the functioning of the internal market and up-take of cross-border e-commerce.

Estimated savings and benefits

The evaluation suggests that the directive is not fully efficient. The universal postal service obligation continues to protect a fundamental means of communication and economic participation (including social and territorial cohesion) throughout the EU. However, in light of the available, sometimes limited evidence, changes in users’ needs suggest that benefits of the directive’s quality of services requirements have been declining in recent years. The same applies to the broader benefits to society of universal service provision. In parallel, some of the costs of providing universal service have been increasing over the last five to ten years. The assessment also has identified a number of provisions of the directive, which appear to generate unnecessary cost and burden for universal service providers and postal users and therefore reduce the directive’s efficiency. This concerns, in particular complaint handling and certain aspects related to the financing of the universal service obligation.

Estimated monetisation and quantification

The analysis indicates that, in principle, the reduction of the universal service obligation (by making it more flexible and allowing Member States to adapt it to their specific needs) could reduce the State Aid that the majority of national postal operators receive. However, a cost-benefit analysis that would have evidenced potential savings could not be provided because of the heterogeneity of the Member States’ situations, the varied composition of the universal service obligation (guaranteed products and features) and net cost. In addition, the societal benefits of ensuring the universal service cannot be quantified (or translated in monetary values).

Any such analysis would have had to take into account too many factors (such as the varied levels of digitalisation and vulnerable user groups in each Member State, the composition of the universal service obligation, the efficiency of the universal service provider, average wages and cost of living etc.) Also, it would have had to draw on incomplete or unreliable information and it would have been jeopardized by the rapid developments in the sector.