France, Germany Clash Over EU Proposal for Competition.

[NEWS]

June 7 (Bloomberg) -- European Union countries clashed over postal competition as France opposed a plan to end local monopolies by 2009 and let companies such as Deutsche Post AG challenge incumbents including the French mail service La Poste.

Jean-Louis Borloo, who became French finance minister last month, dismissed as unrealistic the 2009 date pushed by German Economy Minister Michael Glos. The plan needs detailed proposals on how to guarantee delivery to all homes, Borloo said today.

``We want universal service and for it to be solidly financed,'' Borloo told journalists before a debate at a meeting of EU ministers in Luxembourg. ``It's an important question of social and territorial justice.''

The discord may delay plans to end national monopolies in most of the EU's 88 billion-euro ($119 billion) postal industry. Local letter handling attracts companies such as TNT NV of the Netherlands and Deutsche Post of Germany with twice the profit margin of packages and express mail, according to the European Commission, which proposed the new law in October.

``It just means European postal companies have some more time to prepare themselves,'' Philip Scholte, a Rabo Securities analyst in Amsterdam with a ``reduce'' rating on TNT shares, said in a telephone interview today.

Standard Letter Monopoly

The EU already has deregulated bulk mail, package-handling and other services, apart from letters that weigh as much as 50 grams (1.8 ounces). The current law, including the right to maintain monopolies on standard letters, expires at the end of 2009. That raises the prospect of court fights over the monopolies even if governments don't agree to lift them.

Governments are under pressure ``because at the end of 2009 there is a sunset clause, which means that general competition rules will apply,'' Glos, the German minister, said today. Germany is running the meeting as the holder of the EU's rotating presidency for the first half of this year.

The proposal needs approval from a majority of the countries, each voting proportionally by size. The European Parliament also would have to approve in a vote that could come as soon as next month.

TNT already can compete in countries including the U.K. and may soon be able to enter Germany, which plans to open its market Jan. 1, said Scholte, the Rabo analyst.

Hoofddorp, Netherlands-based TNT stands to lose its hold on local mail at home next year, as long as European neighbors follow suit, under a law approved by the Dutch parliament two days ago.

[F0zziebear]

You see in FRance where the unions are very strong the government know that any move to liberalisation could bring the government down with all out strike. However, I beleive that most post is now 'business' related rather than a public service for social and communicative reasons. With direct mail making up the bulk of the market I don't see that as a public service. However, the USO has to maintained and any regulations/liberalisation has to be formed within that framework, be it contributions from all private companies with licences or some form of penalty if they only to cherry-pick urban mail for delivery as is the case in the UK.

Interesting how Germany are leading on this, as their own privatised market is coming under sustained attack!

No word from the UK, keeping surprisingly quiet on the matter!

F0zz