Swiss letter delivery monopoly to be lifted
The Swiss cabinet has decided to partially liberalise the country's letter delivery service from April 2006. It is the latest step towards privatising the state–owned company and opening the postal market to other licensed competitors. Swiss Post, which currently holds a monopoly on all letters delivered in the country, will face competition for the delivery of letters over 100 grams from April next year. Companies wishing to offer a delivery service need a licence from the authorities. The communications ministry said the government's decision was based on a report by consultants. In their report, published last month, experts said a partial liberalisation of letter delivery services would not threaten the country's mail service.
The study estimates that competitors would only capture a small part of the letter market and that the measures would apply to one in every ten letters, or 17 per cent of Swiss Post's revenue from mail deliveries.
Calls, notably by the business community, to set the limit at 50 grams or grant unlimited access, were rejected, the statement said.
In 2002 parliament came out in favour of a gradual liberalisation of the delivery of letters.
Further liberalisation?
The cabinet has asked the communications ministry to present a report early next year on ways to further liberalise the letter delivery service.
Trade unions have warned that any further opening of the market should not go beyond what was approved by parliament three years ago.
Swiss Post said the cabinet decision was reasonable. It added that it was examining whether prices will have to be adapted because the liberalised delivery services will be subject to value added tax.
Restrictions for package deliveries were completely lifted in 2004, and letters headed for abroad or express mail can also be sent by other companies since 1998.
The state-owned Post Office, with a 52,000 workforce, became autonomous in the same year.
Competition unlikely to threaten mail service
18 Aug 05
A report commissioned by the Swiss communications ministry says a partial liberalisation of letter delivery services would not threaten the country's mail service.
If the government gives the go-ahead, Swiss Post could see its monopoly on letters limited to those weighing less than 100 grams – a move opposed by unions.
The independent study, released on Thursday, comes ahead of a government debate on the issue next month.
Swiss Post currently holds a monopoly on all letters delivered in Switzerland. Only letters headed abroad or for which the transport costs more than SFr5 ($3.90) can be delivered by other companies.
Under the report's proposals, this monopoly would be curtailed to letters under 100 grams. The measures would apply to one in every ten letters, or 17 per cent of Swiss Post's revenue from mail deliveries.
But according to German consultants WIK-Consult, the company which compiled the study, Swiss Post would not be too adversely affected by the proposals.
It said that previous experiences in Europe have shown that competition only develops slowly in countries where liberalisation has occurred. In Sweden, the national postal service still delivers 90 per cent of all letters despite operating on an open market for the past ten years.
Competitors
The study estimates that competitors would only snare five to ten per cent of the market for letters over 100 grams, or up to one per cent of all mail deliveries.
It found that companies already delivering packages or newspapers and with their own infrastructure were likely to be the first competitors for Swiss Post.
But any potential competitor would have to put in a request for a concession and would not have a distribution network comparable to Swiss Post's, driving up costs.
The authors said that Swiss Post already benefited from widespread brand recognition and a good reputation as well a certain privileges such as simplified customs procedures.
A partial liberalisation of letter deliveries would not threaten Swiss Post's funding of its universal service, they said.
Mixed reactions
Swiss Post said in a statement it could accept a partial liberalisation of letter deliveries, adding that it should be able to respond to market conditions in a "socially acceptable" manner.
The unions were less satisfied with the study. The Communication Union said the report only pleaded in favour of more liberalisation and did not consider working conditions or possible price increases for services.
The public services union, Transfair, warned that any future liberalisation should not go beyond what was approved by parliament in 2002.
Meanwhile, the Swiss Business Federation, economiesuisse, said it was pleased with the report's findings, adding that its goal was a complete opening of the postal market.
Package deliveries were liberalised in 2004. Swiss Post remains the market leader, with private companies grabbing a 17 per cent share of business.
