One logistics for all
Through territorial agreements, direct marketers are driving competitors out of the market
By Markus Knöpfli The continuing cost pressure in the direct mail business has led Direct Mail Company, Epsilon and Swissmail to cooperate. The three companies, which distribute unaddressed advertising throughout Switzerland, have divided up their territories so well that a joint nationwide logistics system with 18 partners could be created by 2002.
Swiss Post, SwissMail (SM), a network consisting of 16 distribution organizations, and the 50 percent-owned Swiss Post subsidiary Direct Mail Company (DMC), together with its French sister company Epsilon, in which the yellow giant holds a 66 percent stake, distribute unaddressed advertising.
For three years now, DMC, Epsilon and the SM members have been working on dividing up areas with low litter density for cost reasons, so that only one distribution company is active in each area and then also takes on orders from the competition.
For the past year, however, these "territorial consolidations" have had an even more far-reaching dimension: in addition to Swiss Post, only one other "distribution organization" is to be active throughout Switzerland. A joint company, in which Swiss Post itself would be directly involved alongside the Swiss Post subsidiaries and the SM members (WW 46/00), was put on the table last year. However, this first model was rejected by the Competition Commission (Weko).
Only Basel and Geneva are still "unadjusted" areas
A second model without direct Post involvement is now on the table. According to this model, the territorial consolidations that have already begun are to be accelerated in order to at least realize joint logistics between SM, DMC and Epsilon - allegedly also with price agreements. However, there has already been resistance to territorial agreements in particular from the ranks of those SM members who, as publishers, need their organization for the distribution of their own newspapers and do not want to cede certain territories.
However, there is also a driving force on the SM side: René Bill, Managing Director of AWZ Bern and also President of the AWZ Group, which, with six members within SM, is a kind of state within the state. According to reports, he has given some recalcitrant SM members a choice in recent months: Expulsion or "territorial adjustments".
This brought grudging success. Apparently, only two areas are currently still "unadjusted": Basel and Geneva. In Basel, the Basler Mediengruppe (BMG) is looking for a solution for its Baslerstab distributor Distriba, but according to BMG board member Ruth Ludwig, this is imminent. In Geneva, it is likely to take longer because AWZ Genève is allegedly in financial difficulties and is also embroiled in legal problems with Epsilon. However, René Bill does not want to know anything about this; the director could not be reached at Epsilon.
Bill's whip has thus overcome the greatest resistance. At the SM General Assembly on June 22 in Valais, the ground was reportedly prepared for further cooperation with DMC and Epsilon. DMC apparently also had until June 30 to sign the relevant contracts. It is unclear whether this has happened. DMC director Markus F. Hof did not want to comment, and Bill once again does not want to know anything about it. He says that cooperation with DMC and Epsilon was not an issue at the AGM and that there is no cooperation model beyond the "territorial adjustments". He is particularly dismissive of price fixing. However, Bill did not know about the first cooperation model six months ago, but now confirms that there was one at the time.
One thing is certain: At least there are almost no more obstacles to joint logistics for the 16 SM members and the two Swiss Post subsidiaries at the beginning of 2002. It remains to be seen how this will be organized. And what the Competition Commission will say about it. However, Patrik Ducrey, Deputy Director of the Competition Commission, has stated that territorial agreements are not a priori inadmissible. If the go-ahead comes from Bern, it should only be a small step before DMC and Epsilon become SM members. DMC was already a member of the predecessor organization - until Swiss Post joined DMC. But time and cost pressure make some things possible.
Swiss Post, SwissMail (SM), a network consisting of 16 distribution organizations, and the 50 percent-owned Swiss Post subsidiary Direct Mail Company (DMC), together with its French sister company Epsilon, in which the yellow giant holds a 66 percent stake, distribute unaddressed advertising.
For three years now, DMC, Epsilon and the SM members have been working on dividing up areas with low litter density for cost reasons, so that only one distribution company is active in each area and then also takes on orders from the competition.
For the past year, however, these "territorial consolidations" have had an even more far-reaching dimension: in addition to Swiss Post, only one other "distribution organization" is to be active throughout Switzerland. A joint company, in which Swiss Post itself would be directly involved alongside the Swiss Post subsidiaries and the SM members (WW 46/00), was put on the table last year. However, this first model was rejected by the Competition Commission (Weko).
Only Basel and Geneva are still "unadjusted" areas
A second model without direct Post involvement is now on the table. According to this model, the territorial consolidations that have already begun are to be accelerated in order to at least realize joint logistics between SM, DMC and Epsilon - allegedly also with price agreements. However, there has already been resistance to territorial agreements in particular from the ranks of those SM members who, as publishers, need their organization for the distribution of their own newspapers and do not want to cede certain territories.
However, there is also a driving force on the SM side: René Bill, Managing Director of AWZ Bern and also President of the AWZ Group, which, with six members within SM, is a kind of state within the state. According to reports, he has given some recalcitrant SM members a choice in recent months: Expulsion or "territorial adjustments".
This brought grudging success. Apparently, only two areas are currently still "unadjusted": Basel and Geneva. In Basel, the Basler Mediengruppe (BMG) is looking for a solution for its Baslerstab distributor Distriba, but according to BMG board member Ruth Ludwig, this is imminent. In Geneva, it is likely to take longer because AWZ Genève is allegedly in financial difficulties and is also embroiled in legal problems with Epsilon. However, René Bill does not want to know anything about this; the director could not be reached at Epsilon.
Bill's whip has thus overcome the greatest resistance. At the SM General Assembly on June 22 in Valais, the ground was reportedly prepared for further cooperation with DMC and Epsilon. DMC apparently also had until June 30 to sign the relevant contracts. It is unclear whether this has happened. DMC director Markus F. Hof did not want to comment, and Bill once again does not want to know anything about it. He says that cooperation with DMC and Epsilon was not an issue at the AGM and that there is no cooperation model beyond the "territorial adjustments". He is particularly dismissive of price fixing. However, Bill did not know about the first cooperation model six months ago, but now confirms that there was one at the time.
One thing is certain: At least there are almost no more obstacles to joint logistics for the 16 SM members and the two Swiss Post subsidiaries at the beginning of 2002. It remains to be seen how this will be organized. And what the Competition Commission will say about it. However, Patrik Ducrey, Deputy Director of the Competition Commission, has stated that territorial agreements are not a priori inadmissible. If the go-ahead comes from Bern, it should only be a small step before DMC and Epsilon become SM members. DMC was already a member of the predecessor organization - until Swiss Post joined DMC. But time and cost pressure make some things possible.
