Competition Authority did not see a violation of the Competition Act in AS Eesti Post’s activities relating to parcel terminals

On 16.11.2011, Itella SmartPOST OÜ (SmartPOST) filed a complaint with Competition Authority, requesting verification of whether the price formation of AS Eesti Post (Eesti Post) in the offer of the Post24 service violates the Competition Act, mostly due to the fact that EP provides the Post24 service for rapaciously low prices.
Since the year 2009, SmartPOST OÜ provides parcel forwarding services through a network of self-service parcel terminals installed throughout Estonia. SmartPOST has 62 parcel terminals in Estonia, allowing customers to send and receive parcels. The parcel terminals of SmartPOST are located in shopping centres.

In August 2011, Eesti Post launched its own network of parcel terminals, called Post24. Eesti Post has installed 50 parcel terminals in most frequently visited locations all around Estonia – the terminals are placed outdoors, making it possible for customers to use them around the clock. In addition, it is possible for customers to combine the parcel terminal channel of Eesti Post with other parcel forwarding channels of the company, such as post offices and couriers, under the Post24 service framework.

On 14.12.2012, Competition Authority made a decision to terminate the administrative proceeding, initiated against Eesti Post based on the complaint of SmartPOST, pursuant to § 634⁴ subsection 1 clause 1 of the Competition Act due to the fact that in the activities of Eesti Post there are no indications of a violation of the Competition Act.

The Authority noted that efficient price competition and the consequent price drops are generally serving the interests of the consumers. Implementation of rapaciously low prices is rather an exception, in the case of which the low prices used by a market dominating undertaking may work against the interests of the consumer by weakening the competition. The harmful effect of rapaciously low prices to customers manifests itself through the fact that once the competitors have left the market, the market dominating undertaking can use the weakened competition to increase prices, grow profits and earn back the losses generated as a result of the lower prices implemented during the previous period. If a competitor’s leaving the market is unlikely then the lower prices cannot be considered a company’s strategy which would potentially harm the customers.

In this case, the administrative proceeding did not reveal any circumstances which would refer to a conquest of the product market by Eesti Post through implementation of rapaciously low prices, even if Eesti Post would have a market dominating position in the product market. Taking into account the development of market shares of SmartPOST and Eesti Post, Competition Authority does not consider the possibility of Eesti Post being able to weaken the position of SmartPOST in the near future to the extent of forcing SmartPOST to leave the market reasonably probable.

The public version of the decision of Competition Authority will be published on the Authority’s website after identification of the undertakings’ business secrets contained in the decision.