Principles of EU postal regulation and implications for the future

The European Commission has started to evaluate the effectiveness of the current Postal Services Directive, which may possibly lead to a proposal of future changes to the regulatory framework. In the light of the ongoing evaluation, a relevant question for many industry stakeholders is whether the current market reality warrants more sector-specific regulation on top of the existing regulatory framework.

To answer this question, we start with the basic economic principles for when and how to regulate postal and delivery markets. We thereafter provide an overview of the current postal regulatory framework in the EU, its history and underlying motivations. Last, but not least, we present new empirical evidence regarding the competitive landscape of e-commerce delivery markets in Europe. Throughout our analysis, we discuss the implications of our findings for the evaluation of the Postal Services Directive.

Based on our analysis, we find that:

• The dynamic characteristics of postal and delivery markets mean that careful consideration is needed of whether there is any need for additional regulatory remedies and, if so, what remedies would be appropriate.
• Choice and innovation in EU postal and delivery markets seem to eliminate the need for additional regulation of parcel delivery services related to ecommerce purchases.
• In terms of the evaluation of the Postal Services Directive in the EU, policymakers should consider carefully what market failures the regulation aims to address and avoid overlaps and conflicts with other regulatory frameworks.

The study is commissioned by UPS.