Post Office threatens to quit licence negotiations
The Post Office has rejected a draft licence published by its new regulator and raised the prospect of its withdrawal from licence negotiations before the legal deadline in three weeks’ time.
In a strong response to the draft licence, the Post Office accuses Graham Corbett, the regulator, of seeking to diminish confidence in the postal service and to undermine its uniform national pricing system.
It says Mr Corbett’s proposals require more significant changes than those imposed on any other regu lated industry, and claims he is taking an “unprecedented” approach to the introduction of competition.
The draft licence imposes a two-year price freeze on a wide range of letters and parcels, threatens large fines if service standards are not met, and allows the regulator to set prices for competitors to use Post Office infrastructure.
The Post Office refused to comment on its response, which was sent to the Office of Postal Communications on Friday. However, the response makes clear that withdrawing its application for a licence is emerging as an option.
“The Post Office has no right of appeal to the draft licence – it can only accept it or reject it, with the obvious consequences that a rejection of the licence would bring,” the response warns the regulator.
Industry observers said intensive negotiations were expected in the run-up to March 26, after which it will be illegal for any company to collect or deliver letters without a licence from Postcomm, of which Mr Corbett is chairman.
If an agreement is not reached, Mr Corbett could decide not to enforce the law, or he could impose either a temporary or permanent licence. Any of these options could open the way for the Post Office to seek judicial review.
Few observers think the government would allow the Post Office to stop delivering the mail. However, refusing to accept a licence would cause confusion, and focus attention on Mr Corbett’s plans to license competitors.
In its response, the Post Office makes clear its concern about suggestions that local competition will be allowed in many cities, and that it might be forced to allow access to its infrastructure at prices below its costs.
The Post Office says it could compete with city competitors only by cutting local prices. This would end uniform national pricing, and lead to above-inflation price rises for small businesses and rural customers.
It says that accepting the draft licence would allow Postcomm to “micro- manage” its business, including directing that integrated activities should be separated. It says this “unprecedented” condition is “unacceptable”.
It also argues that prices should be allowed to rise in line with the retail prices index.
