Postal Services in Poland – Towards More Competitive Market

Photo: Wikimedia Commons

This article is based on the FOR analysis by Kamila Bodo and Dawid Gawinkowski – Postal services in Poland and Germany – competition serves consumers [in Polish: Rynek usług pocztowych w Polsce i w Niemczech – konkurencja służy konsumentom].

It is known that excessive regulations are often costly for consumers, including of course consumers of postal services. During the last few months another debate whether liberalisation of the Polish postal market is necessary took place. It was triggered by the tender for courts’ and prosecutors’ mail delivery and the unsuspected change of a delivery company. Private company Polish Postal Group (PGP) offered better conditions than the state-controlled Polish Post (Polish: Poczta Polska) and won the contract for deliveries.

First of all it is important to present the legal background of the whole situation. After the transformation from the communist state into modern Poland in 1989, Polish postal market was dominated by the state monopolist – the Polish Post. Until 1997 postal markets had not been a subject of interest for the European Union. Along with the growth of the market and the necessity to face new challenges it was decided that de-monopolisation of the state-controlled postal markets was necessary. The EU wanted to gradually allow competition in order to develop and spread the Single Market in this area. Legal framework has been created by the Postal Directives 97/67/EC, 2002/39/EC, 2008/06/EC and decisions on how to design its particular policies were left to the member states. It is important to remember that the European Union precisely circumscribed impermissible resolutions whereas more liberal solutions were completely allowed. It was decided that the postal markets should be opened by 01.01.2011. Temporary regulations were introduced for some of the member states that gave them additional two years for implementation of the directives (including Poland).

Poland along with the other Eastern European countries joined the European Union in 2004. That decision had a significant impact on its postal market. Policymakers had to prepare and implement regulations to fulfil the requirements of the Postal Directives. It was not without major problems and interesting market developments. For example, for a specific period of time some types of letters had been excluded from competition (due to weight criteria as stated in the Postal Directives). It forced private companies to add extra weight inside or outside the envelopes (e.g. small metal plates). It shows that market forces will find its ways around unnecessary regulations but the final costs will encumber the society (metal plates increased the price of the letters but the private companies managed to remain competitive vis-a-vis state-owned Polish Post). The regulatory struggle continued and the final results still face criticism from independent private companies.

Today, Polish Post is a joint-stock company, entire shares of which are owned by the government. It is controlled by the minister responsible for communication – the same minister that is currently supervising the Office of Electronic Communications (UKE). UKE is to organize a high-value contest for a new appointed postal service operators (i.e. an operator responsible for a general postal delivery to the public, currently it is Polish Post) within two years from now. These close connections between the owner of the Polish Post (minister) and the regulator (UKE supervised by the minister) are dangerous for the regulator’s independence and neutrality of the contest. Government should avoid such situations in order to guarantee its impartiality.

When it comes to already mentioned tender for courts’ and prosecutors’ mail delivery, the criticism is concentrated on the new private operator. Nevertheless, it was the government’s duty to perform a fair and transparent tender. Especially when it was known that any disturbance in the continuous delivery of courts’ and prosecutors’ correspondence might result in economic losses. Furthermore, the private company should not be blamed for fulfilling regulatory requirements and preparing a more competitive offer. Because of the fact that the first tender was appeal against the National Appellate Chamber (which agreed with some of the sued points) the final period for organizing the entire undertaking of deliveries by the new operator was very short (in the end it was few working days).

Summing up, our analysis shows that market competition serves consumers. New private companies develop innovative products (and enforce state-owned companies to do the same) allowing consumers to benefit from cheaper and more efficient services. Moreover, although the Polish Post has been constantly cutting jobs, the overall postal market labour force is currently growing. The initial shock and disturbances related to the change of the courts’ and prosecutors’ mail delivery provider are almost over. However, current regulations as well as lack of cooperation between the Polish Post and private providers are under strong criticism from the independent private postal operators. The struggle for a full market liberalization continues so consumers can benefit even more in the future.