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Summary of the PostNL-Sandd decision


The Netherlands Authority for Consumers and Markets (ACM) has decided not to grant a license for the acquisition of postal operator Sandd by rival postal operator PostNL. The planned acquisition would create in practice a monopolist in the postal delivery market. This will lead to a significant reduction of competition. The prices for business senders of mail such as banks, hospitals, and government agencies will increase by 30 to 40 percent. And consumers, too, would be expected to pay higher prices for sending mail if the acquisition did go through. The acquisition’s efficiency benefits cited by PostNL and Sandd fail to offset these price increases. Refusing the license does not impede the performance of the universal service obligation, which is the basic set of postal service for consumers, and for which PostNL is statutorily responsible.

License application

On 4 April 2019, ACM received a license application from PostNL N.V. (PostNL) for the acquisition of SBM Beheer II B.V. (Sandd). ACM extensively assessed the effects of the planned acquisition. In its decision, ACM explains how it came to that decision on the basis of a careful consideration of the positive and negative effects of the planned acquisition.

The acquisition leads to the creation of a monopoly in the postal delivery market

Sandd is, in practice, PostNL’s only competitor for postal delivery in the Netherlands. As a result, competitive pressure on PostNL’s postal tariffs was mainly exerted by Sandd. ACM’s investigation reveals that, even though digitalization leads to a decrease in the volume of physical mail, it only has a limited disciplinary effect on postal tariffs. Those tariffs are mostly influenced by other factors, including the competitive pressure exerted by Sandd, which will disappear as a result of the planned acquisition.

Without the acquisition, Sandd continues to exert competitive pressure on PostNL

ACM establishes that the volumes in the various postal markets will decrease over the next few years, but that the annual decline is expected to taper off gradually. Demand for mail will continue to be considerable. In view of this, ACM expects PostNL to be able to continue with its postal activities under economically acceptable conditions, both in the short and long term. Furthermore, the investigation has shown that, if the acquisition by PostNL does not go through, Sandd will want to continue as a postal operator with at least a nationwide delivery network for non-time-critical mail (mail that does not have to be delivered within 24 hours). This means that, without the acquisition, Sandd will continue to exert competitive pressure on PostNL.

The acquisition leads to price increases

ACM has found that, without Sandd’s competitive pressure, PostNL’s prices for business mail of, for example, banks, hospitals, and government agencies are expected to increase by 30 to 40 percent. Business mail makes up more than 90 percent of the total postal volume in the Netherlands. The prices for consumer mail, too, would be expected to rise more if the acquisition did go through than if it did not.

Efficiency benefits of the acquisition do not offset the negative effects

ACM acknowledges that the acquisition creates efficiency benefits, because, after the acquisition, all mail can be delivered using a single network. However, the benefits of the acquisition are not sufficient to offset the consequences of the elimination of competition between PostNL and Sandd.

Effects of the acquisition may be broader than just mail

With the planned acquisition of Sandd, a postal delivery network will disappear, which can also be used for other delivery purposes besides postal delivery, such as letterbox-sized parcels with tracking service and door-to-door leaflets. With the elimination of Sandd’s postal delivery network, the competitive pressure that these delivery services exerted on PostNL will disappear, as well. This can have a negative effect on competition in adjacent markets, such as parcel delivery. ACM does not draw a final conclusion on whether or not these effects will actually occur, considering the significant anticompetitive problems in the postal markets, which have already been established.

Acquisition is not necessary for maintaining the universal service obligation

The Dutch Competition Act stipulates that ACM cannot refuse to grant an acquisition license if such a refusal obstructs the performance of a service of general economic interest. ACM establishes that the universal service obligation is a service of general economic interest. ACM establishes that a refusal of the license does not obstruct the performance of the universal service obligation by PostNL, because PostNL is able to continue to provide this service over the next few years under economically acceptable conditions.

Extensive quantitative and qualitative research

As part of the acquisition’s assessment, ACM carried out extensive quantitative and qualitative economic research. In addition to the information that PostNL and Sandd provided when they notified ACM of the merger and applied for a license, ACM asked both companies for additional information, including internal strategic documents of PostNL and Sandd.

ACM conducted a market investigation by holding interviews with competitors and buyers. A survey was put out among all business costumers of PostNL and Sandd. ACM has received several opinions in writing from interested parties. It also had conversations with these parties. ACM asked for additional information from providers of parcel delivery and unaddressed printed matter. At ACM’s request, economic research agency Frontier Economics has made an analysis of the projected evolution of the universal service obligation with and without the acquisition through 2024.

ACM had its analyses and conclusions reviewed by independent economic advisors. They reviewed ACM’s market definition, the price effects of the acquisition in the merger simulation, and the assessment by ACM of the acquisition’s efficiency benefits as claimed by both parties. All reviewers subscribe to ACM’s analyses.