Postal Liberalisation

A 1997 Directive on the application of competition rules to the postal service required the opening of  the market to competition. Limited services can be reserved for the universal service provider.  The first directive provides for

• common rules in relation to universal postal service
• reserved services to the universal service provider,
•  tariff principles and transparency for accounts
• quality standards,
• harmonisation of technical standards and
• the creation of independent national regulators.

The later directives provided for the gradual opening of  markets and the reduction of the reserved area. Full market opening took place in 2011. Prior to 2011, An post had a monopoly in relation to a weight below 50 kg and price up to 2.5 times is the standard basic rate.

Regulation

The Communications Regulation Postal Services Act 2011 transposed the third postal Directive into Irish law.  It provides a regulatory framework to safeguard the permanent provision of a universal postal service and to encourage competition in a liberalised market.  The general principles of regulation are set out. The Commission for Communications Regulation is to flesh out the principles of regulation in the Act.

There is provision for the designation of the universal postal service provider, financial support for the UPS provider, authorisation procedures, the imposition of conditions for postal service and enforcement. The objectives, powers and functions of the Commission in the postal sector are extended. The Act makes provision for the establishment and maintenances of postcode systems.

The Commission is the national regulatory authority for the purpose of the Postal Services Directive.  Where it is required to consult publicly in performing its functions in relation to postal services, it is to establish a postal public consultation procedure and allow persons to make representations.

Universal Service Provider I

The EU directive requires states to ensure that postal users have the right to universal service throughout the territory at affordable prices.  There is an exception where there are exceptional geographic conditions as may be permitted.

The Commission is to ensure the provision of a universal postal system in compliance with the principles of the legislation.  It is to promote the interests of users and enable competition and innovation.  The Commission has information-gathering powers and powers of enforcement.

The essential element of the universal postal service is the collection and delivery of mail to every household on a working day.  The Commission is obliged to ensure that the reasonable needs of end-users are met.  It is to specify the services to be provided by the universal postal service provider. Document exchange and express courier services are not within the scope of the universal service.

An Post is designated universal postal service provider for seven years.  It must continue to provide a universal service.   The Commission is to review its designation prior to the end of this period.

It may re-designate An Post or designate another universal postal service provider.  It may decide no designation is necessary if the market is meeting users’ reasonable needs. The designation of An Post is subject to compliance with obligations in the 2011 Act and with conditions agreed with the Commission.

Universal Service Provider II

Every working day and at least five days a week and not less than five days a week, there must be one clearance of postal items in letterboxes and one delivery to the premises of legal businesses and persons.  It must provide clearance sorting transport and distribution of postal packages of up to two kilograms and packages up to 10 kilograms (which may be increased to 20).

There are standards of service required of the postal operator.  These include targets for percentage deliveries of mail within certain limits.  The rationale for the reserved area is to ensure that the provider can provide universal service obligations at affordable rates to prevent selective competition in more profitable areas to the detriment of the loss-making area.

Pricing for universal services must be non-discriminatory and transparent.  States impose a uniform tariff.  This is not favoured from a competition law perspective.  The imposition of uniform tariffs does not permit individual negotiation with customers provided they do not breach the principles of transparency and non-discrimination.

Rates for post are fixed by

• inland post warrant as amended
•  foreign post warrant has amended
•  foreign parcel post warrant is amended,

USPs must keep a separate account for the reserved area and non-reserved areas. The EU courts have held that it is impermissible to use surpluses from the reserved area to subsidise non-reserved area services.  This may breach EU Competition Law the abuse of a dominant position.

Tariffs and Costs to Others

Under the postal directive where the universal service provider gives access to its network by providing a service of less than a complete range of services for postal items, for example, to bulk mailers and businesses, it may set tariffs to take account of costs avoided compared with the provision of full services.

Tariffs and conditions must be non-discriminatory, transparent and must apply equally between different third-parties supplying and as between third-parties and providers supplying equivalent services. It must be available to private users who post under similar conditions.

The third postal directive contemplates direct compensation and sharing of cost between providers of services in respect of universal service financing.

Payment of compensation from public funds is permissible under competition law is subject to certain conditions.

Where there is a public service obligation, the basis of payment must be established in an objective and transparent manner which avoids conferring an advantage.  The payment cannot exceed the cost of what is necessary to cover the relevant costs, taking account of a reasonable profit.

The third directive seeks to limit uniform tariff to single piece items. It permits more flexible pricing in respect of other items such as bulk mails.  The obligation to provide a dispute resolution procedure applies to an Post and other postal services providers with a turnover of more than €500,000.

The guidelines issued by an Post to operators are legally binding. The scheme must be transparent inexpensive and provide for the appropriate form of redress in the event of theft, delay damage and non-compliance with standards.

Direction to USP

The Commission may give directions to the provider in relation to internal accounting.  It may monitor service targets and issue directions in the event of a non-compliance.

The Commission may make directions to the universal postal service provider to grant access to its infrastructure, such as post office boxes and address databases.  The Commission may give a direction requiring agreement between a postal service provider and the universal service provider in relation to access to the latter’s network. Where no agreement is reached, the Commission may resolve the issue and impose terms and conditions for access.

Funding of USP

The universal postal service provider may apply to the Commission for funding for the universal postal service obligations.  The Commission considers the application and determines whether or not the universal postal service obligation represents a net cost and whether it is an unfair burden.

Where a determination is made, it may require the costs to be shared by other postal service providers who provide postal services within the scope of the universal service.  The Commission is to establish the cost-sharing mechanism and administer the funds. It may appoint an independent person to do so.

Authorisation of Providers I

The Commission may authorise postal service providers. The Commission is to maintain a register of postal service providers.  Postal services provider is to notify the Commission of the services they provide or propose to provide. Failure to do so, or the submission of false and misleading information is an offence. At least three months’ notice of a proposal to withdraw a service must be given, and users must be given prior notice.

Conditions may be applied to authorisations, including in particulars, those set out in the legislation. There must be provision for complaints and redress procedures and for the provision of information to The Commission.  There are provisions for removal of authorisation where there it is serious or repeated noncompliance with conditions of the authorisation.

Every postal service provider must draw up and implement a code of practice for dealing with complaints from users.  The Commission may issue directives in relation to this requirement.  The Commission or an independent person appointed by it, may resolve disputes which remain unresolved after the procedure in the code of practice has been followed.

Authorisation of Providers II

All providers of postal services must obtain an authorisation from ComReg.  ESO obligation refers to the universal service obligation.  There is compensation to the universal service provider.

The granting of authorisation for services that are not reserved to the universal provider may be subject to universal service obligations. Requirements on quality and availability obligations not to infringe the right of the universal service provider.

The third directive required full liberalisation of postage by 2011. There are regulatory obligations on USPs which include the universal service requirements.

Terms and Conditions of Services

The terms and conditions on which services are to be provided are to be submitted to the Commission for approval. Where a postal services provider wishes to amend these terms and conditions, it must give 30 days’ notice to the Commission and seek approval.

The Commission may give directions in relation to the conditions. An Post’s terms and conditions which are set out in schemes under the 1983 Act, are to remain operative until the Commission approves new terms and conditions.

The limitation on liability for loss and damage for failure to maintain and provide the universal postal service in 1983 Act is confirmed.

The universal postal service provider may require ships or aircraft to carry postal packets on commercial terms, so as to ensure the provision of universal postal service. The 2011 Act sets out principles with which the universal postal service provider’s tariffs must comply with.  They must be affordable and costs-orientated.   The cost charge for inbound international mail must reflect the underlying cost.  This reflects the Directive.  The universal postal service provider may recover underpayments in relation to inbound international post.

The Commission is to impose a price cap for five years on services provided by the universal postal services, which are not likely to be subject to competition.  It is to provide incentives for efficiency.  It may be reviewed by the Commission after three years.  While the cap is on place, certain prices for services within the scope of the universal postal service may not be changed.

Enforcement

The Commission may recoup operating costs and expenses from postal service providers. Certain cost may be recouped from those providing services within the scope of universal postal service.

Where the Commission determines that a postal service provider has not complied with a direction, it notifies it and gives it the opportunity to respond. It may apply to the High Court for an order requiring compliance and may seek financial penalties.

The failure to answer a question put by ComReg on oath is an offence subject to a summary conviction of €5,000.  Failure to disclose information pursuant to notice can be subject to a fine of up to €5,000 and daily fines of €1,000 up to a maximum of €5,000,

There is a provision for civil f fines. Compliance notices allow for notification of intention to prosecute and an undertaking in lieu of prosecution.

ComReg may undertake a summary prosecution.  Power to prosecute on indictment rests with the DPP.

ComReg may direct enforcement. Ultimately an authorisation can be granted or withdrawn for failure to comply.

Offences

The regulation of the postal ss sector is also supported by a range of criminal offences.  There are offences of failures to comply with ComReg’s requests, directions and notices.

A number of offences are restated and confirmed.  It is an offence to delay, detain, interfere with or open a postal packet or mail.  There are exemptions.  The offence may be prosecuted summarily or on indictment.

The posting of some items is prohibited under legislation. It is an offence to send by post any item which may damage any other postal packet or injure any person. It is an offence to enclose anything or have on its cover any words or marks that are obscene, grossly offensive or menacing.  This does not apply to items that are expressly permitted under the terms and conditions of the postal service provider concerned.  The offence may be prosecuted summarily or on indictment.

The general inviolability of postal packets and mails is restated.  A postal service provider has the power to open postal packets in certain circumstances.  They have the power to detain a packet and forward it to Revenue Commissioners if it is suspected that it contains contraband or if insufficient duty has been paid. If no contraband is found, Revenue is to return the item to the postal system.

Offences II

It is an offence to obstruct the universal postal service provider in the course of its duties.  A person commits an offence if he does not leave a post office or related premises when required to so by an employee who suspects that the person has interfered with the provision of the service. The offences are subject to summary prosecution.

It is an offence to insert a non-postal item in a post box or interfere with the exterior of a post box. A first offence is subject to summary conviction.  Later offences may be prosecuted on indictment.

The provisions of the Communications Regulation Act are extended to the postal sector by the 2011 Act.  The Commission may prosecute offences summarily.  Indictable offences may be prosecuted by DPP.

There is a provision for free postal service at elections. The postal service provider and the Minister for the Environment is to be consulted in the making of the scheme.