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Business

Will the Postman Ring Twice?

German mail monopolist Deutsche Post is gaining competition in the letter delivery service. The country's large publishing houses plan to form a joint venture to take on the postal behemoth.

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Deutsche Post's monopoly on letter delivery will soon be history

Three German newspaper publishers, Axel Springer, Holtzbrinck and WAZ (Westdeutsche Allgemeine Zeitung), are joining forces with a Luxembourg-based management consultancy firm Rosalia to compete with Deutsche Post in the letter delivery market, they announced Friday.

The four partners said in a joint statement that they were setting up a joint venture -- in which they would each hold a 25-percent stake -- that would compete with the semi-privatized German postal service when it loses its monopoly in the letter delivery sector at the end of 2007.

Head of the joint venture would be Günter Thiel, former chairman of Luxembourg-based Thiel Logistik and most recently head of the central and eastern European activities of TNT Logistics.

Briefkasten der Deutsche Post AG in Frankfurt a. Main

"In the coming years, even before the complete disappearance of the letter-delivery monopoly at the end of 2007, the German postal market is going to grow rapidly," Thiel said. "Not only will consumers benefit in the liberalization, but the market players as well who have the corresponding know-how. Our aim is to become the clear number two in the market behind Deutsche Post," Thiel said.

The joint venture was set to start operations at the beginning of next year. Operations would be based in Berlin, but the company's administrative headquarters would be in Luxembourg.

The venture still has to be approved by antitrust authorities, the statement said.

End in sight for Post monopoly

Deutsche Post has reacted coolly to the joint venture plans.

"That's a normal procedure," a spokesman told the Reuters news agency, adding that the company was convinced "it was well prepared" for the period after the end of its monopoly in 2007.

Deutsche Post

The company, which is a global mail and logistics giant, says the German postal market accounts for 20 percent of its turnover. Last year, Deutsche Post had a turnover of 43.2 billion euros.

According to federal postal law, the Deutsche Post has the sole right to transport letters and catalogues up to 100 grams (3.5 oz).

Starting 2006, Deutsche Post's monopoly will only extend to letters and catalogues up to 50 grams. By the end of 2007, Deutsche Post's monopoly will completely end and the sector will be thrown open to competition.

For many, it's a long-overdue move.

"This crossroads for the entire abolition of the letter monopoly is a welcome step," Elmar Müller, director of the German Federation for Post and Telecommunications (DVPT) told DW-WORLD earlier this year.

Müller pointed to Scandinavia as an example where letter monopolies have been absent for some years, saying increased competition would not pose problems for either Deutsche Post or Germany at large.

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