TNT, Deutsche Post Competitors Topple Minimum-Wage in Court

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Jan. 28 (Bloomberg) -- TNT NV and other Deutsche Post AG competitors won a German high court ruling toppling a government regulation that extended a minimum-wage deal for some postal workers to the entire industry.

The Federal Administrative Court in Leipzig, Germany, backed two lower court rulings won by BdKEP, an industry group comprised of Deutsche Post competitors including TNT and PIN AG. The judges rejected an appeal brought by the German government.

Germany’s Federal Labor Ministry issued a regulation in 2007 extending a minimum-pay rate of 8 euros ($11.19) to 9.80 euros an hour to about 200,000 postal workers. The ministry declared terms of a wage accord between Deutsche Post and Germany’s Verdi union applicable to all postal workers.

The government had argued the rules are aimed at protecting workers. Germany holds about 30 percent of Deutsche Post through its KfW Group development bank.

BdKEP members have been paying their workers a minimum of 7.50 euros an hour, according to Rudolf Pfeiffer, the group’s spokesman.

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LEIPZIG, Germany, Jan 28 (Reuters) - A German court shot down a minimum wage for postal workers in Europe's largest economy, ending a dispute between local top dog Deutsche Post DHL and Dutch rival TNT.

The ruling by the Federal Administrative Court on Thursday lowers entry barriers for competitors to Deutsche Post, but analysts have said it was unlikely to shake up the German postal market.

The court said the decree by the former German government violated the rights of Post competitors and was not legally binding for them.

Shares of Deutsche Post were up 0.8 percent by 1407 GMT, little changed on the news. TNT shares rose 1.3 percent.

"A positive ruling on minimum wages...will not change the name of the game; i.e. it will remain very difficult to create value in the German mail market," Oppenheim Research analyst Markus Hesse had said ahead of the decision.

In a bid to stave off competition, both Deutsche Post and TNT have been fighting to uphold minimum wage requirements and social welfare standards in their home markets while challenging them in their neighbouring countries.

Last month, Selekt Mail, a unit of Deutsche Post's DHL division, and Dutch competitor Sandd successfully challenged in a Dutch court a move to switch to fixed contracts instead of paying workers based on the number of items they deliver.

The Dutch government, which is backing the switch and had the support of TNT, has said it will appeal.

In Germany, the government introduced a minimum wage of up to 9.80 euros ($13.76) per hour for the country's roughly 220,000 postal workers in early 2008. TNT wants to be allowed to pay its workers the minimum 7.60 euros per hour.

"The difference in those figures translates into margins being 5 to 10 percent on the one hand, and 0 to -5 percent on the other," said Petercam analyst Thijs Berkelder.

TNT has itself said the ruling will play a key role in informing its German strategy.

Other analysts said that the ruling will not revolutionise the German postal market as TNT and other competitors have not adhered to the minimum wage so far. Oppenheim's Hesse said he estimates that TNT has been paying 6.50-7.50 euros per hour.

Still, TNT has so far been unable to make a profit in Germany and reportedly posts about 50 million euros of losses before interest and tax there every year. The company has said it would consider exiting Germany if its labour costs rise.

LBBW analyst Per-Ola Hellgren said it was unlikely that any company would invest in setting up a nationwide mail network in Germany right now to compete with Deutsche Post.

"But the market still could offer lucrative opportunities for competitors of Deutsche Post on a limited and local scale," he said. (Reporting by Sven Heitkamp; Writing by Maria Sheahan)