Norway Post open to competition, but on equal terms

Norway Post supports the Ministry of Transport and Communications’ proposal to open up for full competition in the postal market from 1 January 2007, provided that Norway Post is given the opportunity to compete on the same terms as other players in the market. This means that Norway Post must be free to fix its prices. Uniform postage rates can only be maintained if the Norwegian state is willing to pay the additional costs.

Three fourths of Norway Post’s revenues already come from the competitive market. Norway Post’s monopoly is limited to addressed letters weighing less than 100 grams.

– Free competition in all areas ensures favourable conditions for further development of the company, and thus for creating good solutions for our customers. We have implemented extensive efficiency measures in recent years, and are now ready to face full competition,” says Norway Post chief executive Kaare Frydenberg.

Free pricing
To be able to meet the competition, Norway Post must be free to fix its prices without any regulatory intervention.

When the monopoly is broken up, other players will take the lion’s share in the attractive parts of the market – where mail distribution is cheapest. Here, Norway Post must be able to meet the competition – also in terms of prices.

”If the politicians want to maintain the principle of uniform postage, in order to offer the lowest prices throughout the country, the only possibility is that the Norwegian state covers the additional costs through increased government procurements. Norway Post must be allowed to compete without a handicap,” Frydenberg says.

Government procurements, which currently make up two per cent of Norway Post’s revenues, are determined in the government budget. Norway Post would prefer future government procurements to be regulated by a business agreement in order to ensure predictability and correspondence between services and payment.

Strict regulation
In Norway Post’s opinion strict regulation of the company is unnecessary and disadvantageous for competition. The new competition act which came into effect on 1 May this year, is sufficient to ensure competition in the postal market.

It would be advantageous for Norwegian industry to have a strong Norwegian partner who is able to compete with the international players.

”A competitive Norway Post is the best guarantee for maintaining high-level nationwide postal services and acceptable costs also in the future,” Frydenberg says.