The European Union (EU) has reached a provisional agreement on a proposed new Regulation on EU cross-border parcel delivery services. The European Commission’s aim is to make pricing and tariffs more transparent and give national regulators increased monitoring rights over the cross-border parcel delivery market.
This reform is part of the EU’s Digital Single Market (DSM) strategy designed to accelerate the creation of a digital single market across the EU. The DSM strategy is having a significant impact on sectors such as e-commerce, media and entertainment, telecoms and the provision of online services.
The Commission considers that efficient operation of the cross-border parcel delivery market is essential to ensure that the entire EU-wide e-commerce system operates effectively.
In a market survey, the European Commission found that consumers in the EU usually prefer to order goods only from their own Member State, citing high delivery charges as the main deterrent to buying goods from other countries. And the Commission claims that small businesses report that problems with parcel delivery, especially in terms of pricing, prevent them from selling more goods outside their home Member State.
The new proposed Regulation on cross-border parcel delivery services (the “Regulation”) is designed to tackle this problem, to make consumers and e-retailers better informed of possible delivery alternatives and to incentivise delivery companies to improve the quality of their service and price offering.
The Regulation is intended to boost e-commerce sales across the EU – especially between different Member States – which is a primary goal of the EU Digital Single Market strategy. Reform of the parcel delivery market is Key Action 3 of the DSM strategy. The draft Regulation is also in line with the European Commission’s 2018 Work Programme and its proposed e-commerce reforms.
Who is affected by the Regulation?
The Regulation will apply to any “parcel delivery company” that provides services involving the clearance, sorting, transport or distribution of postal items (other than correspondence items) that weigh less than 31.5kg.
What does the Regulation cover?
The Regulation covers three main areas, with a particular emphasis on disclosure and price transparency:
Once the Regulation comes into force, all affected parcel delivery companies must submit certain information to the national regulator, including their general conditions of sale and a detailed description of their complaints procedure. Any changes to this information must also be provided to the national regulator.
By 31 March of each year, parcel delivery companies will also need to submit:
- the annual turnover in parcel delivery services for the previous calendar year, broken down between national, incoming and outgoing cross-border postal items;
- the number of people working for the company; and
- the number of postal items handled in the previous year in the EU countries in which the company is established, again broken down into national, incoming and outgoing cross-border categories.
Parcel delivery companies employing fewer than 50 persons and which are only based in one Member State will be exempt from providing these details.
Improved price transparency
In addition to the information relating to their services, parcel delivery companies must provide their national regulator with the public list of tariffs applicable as of the start of each year, as well as the terminal rates applicable to items originating from other Member States. It will be up to each individual national regulator to publish these rates on a dedicated website and keep them updated.
The Commission currently does not plan to impose a cap on delivery prices, although it has commented that it may look to introduce price regulation in the future.
Transparent and non-discriminatory cross-border access
The Regulation will require parcel delivery companies to offer non-discriminatory access to cross-border multilateral agreements, particularly on terminal rates, to foster competition across Member States. To increase transparency, these companies will also have to publish a reference offer, containing all the relevant legal terms and prices, which must first be approved by the national regulator (which can impose changes if necessary).
What happens if parcel delivery companies don’t comply?
It will be up to individual Member States to enforce penalties on any companies that don’t comply with the Regulation, meaning that companies may find that a breach in one Member State could prove more costly than in other Member States.
What are the next steps?
Now that the provisional agreement has been received by the tripartite European agencies, formal approval is required from the European Parliament and Council. Upon approval, the Regulation will enter into force and, if on schedule, apply across all Member States from 2019.