In an earlier blog we already addressed the (wide-ranging) developments in the post and parcel sector. As a result of the ever-increasing popularity of web shops (e-commerce), the number of parcels to be delivered is increasing by the day. Those parcels increasingly come from abroad. In other words, national borders are fading in online deliveries. In that regard there is a Digital Single Market (as the European Union intended). Nevertheless, there are still significant trade barriers between Member States. There are major differences between Member States, for instance, in parcel delivery tariffs. Those differences are particularly apparent in cross-border parcel delivery. This has been reason for the European Commission to present a proposal to regulate cross-border parcel delivery services.
The objective of the Commission’s proposal is twofold. On the one hand the Commission intends by means of the proposal to ensure transparency of prices for parcel delivery services within Europe. On the other hand the Commission hopes to regulate the prices the universal postal service (UPS) provider charges for cross-border parcel services to ensure that the prices are not unreasonably high. That should ultimately benefit consumers and small and medium-sized businesses, because the price transparency should make it easier for them to compare prices of parcel delivery service providers.
The Commission’s proposal has now been adopted. That has resulted in Regulation 2018/644 of 18 April 2018 on cross-border parcel delivery services (the Regulation), which entered into force on 22 May 2018. The Regulation is binding and is directly applicable in the Member States. High time therefore to take a closer look at the Regulation and its consequences.
What obligations apply?
The Regulation obligates cross-border parcel delivery service providers to inform the national regulatory authorities (in the Netherlands the Authority for Consumers and Markets (ACM)) of their single-piece tariffs for both domestic and cross-border parcel delivery services, on 31 January of every year at the latest. The national regulatory authorities then send the lists of tariffs of the various cross-border parcel delivery service providers that operate in its Member State to the European Commission, which publishes the lists of tariffs of the various service providers in the European Union on a website.
It furthermore applies to universal service providers that the cross-border tariffs that they send the national regulatory authorities are subjected to a test of reasonableness. In the Netherlands this means that ACM tests the cross-border tariffs of which it is informed by PostNL (as the designated universal service provider). The purpose of the test is to establish whether or not the cross-border tariffs charged by PostNL are unreasonably high.
To whom do the obligations apply?
To answer this question, a distinction must be made between the transparency obligation and the assessment by the national regulatory authorities of the reasonableness of the tariffs for cross-border parcel delivery services.
The obligation to publish tariffs applies to all parcel delivery service providers, provided that they offer at least one of the links in the parcel delivery chain (collection, sorting or distribution). This obligation does not apply to parcel delivery service providers that have registered offices in only one Member State and that have only domestic in-house delivery networks. The transparency obligation also does not apply to a parcel delivery service provider that employs fewer than 50 persons, unless that provider has registered offices in more than one Member State.
The tariffs for cross-border parcel delivery services are assessed by the national regulatory authorities only insofar as the tariffs of the universal service providers are concerned. The tariffs of other parcel delivery service providers are therefore not submitted to a reasonableness test, but are published nevertheless.
In the Netherlands, ACM supervises compliance with these obligations. In the event of breach of the obligations under the Regulation, ACM has the option of imposing an order subject to a penalty under the Postwet (Postal Act).
What added value does the Regulation offer?
The key question is of course whether the effects proposed by the Regulation, namely lower prices for private individuals and for small and medium-sized businesses, are actually achieved. In other words, does the Regulation actually give rise to changes for the Digital Single Market and cross-border parcel delivery services? A healthy dose of scepticism would seem appropriate for the time being. The Regulation does create a certain degree of price transparency, since the domestic and cross-border tariffs of parcel delivery service providers are being published. That increased degree of transparency may lead to a drop in tariffs. On the other hand, this obligation applies only to the public (single-piece) tariffs, not to (special) discounts given by a service provider on the basis of volumes. For small or medium-sized web shops, the Regulation will therefore most likely offer little added value on this point, since their larger volumes of parcels usually allow them to profit from lower tariffs than the public (single-piece) tariffs. The Regulation will therefore not put an end to possibly anti-competitive pricing behaviour of (usually) dominant providers of parcel delivery services.
The same scepticism applies to the assessment of the cross-border universal postal service tariffs prescribed under the Regulations. Although the Regulation leads to assessment of the tariffs of the UPS providers and describes the elements that must be taken into account in assessing the tariffs, it should also be noted that the UPS tariffs had been subject to a test for many years: Article 12 of the Postal Services Directive (Directive 97/67) provides that the tariffs for the universal services must be geared to costs.
The actual consequences of the Regulations will therefore most likely be limited for the time being. But that may change. The Regulation provides for an evaluation by the Commission by 23 May 2020 at the latest. The Commission must evaluate the impact of the Regulation on cross-border parcel delivery levels, among other things. The Regulation expressly provides for the possibility for the Commission “where necessary” to propose new rules. In light of the European Commission’s ambition to play a leading role in the further development of the Digital Single Market, it is therefore possible that the Regulation in its current form is merely the prelude to a further, more drastic regulation of the parcel delivery sector.