Russian Post in blazing row with antitrust chief
A major row has erupted over the last week between Russian Post and Russia’s antitrust regulator, the Federal Antimonopoly Service (FAS), after new proposals were put forward to liberalise the postal market. The FAS filed a new version of its previous liberalisation proposals last Thursday. The bill – titled “On Postal Communication” – seeks to update legislation that has been in place since 1999, and would seek to open up the postal market to private competition.
Similar proposals have been in discussion for a while, but could now be considered by the federal government as early as September.
But Russian Post said this week that the FAS proposals could threaten the very existence of postal services for the 37m Russians living in remote areas.
Particularly in the far north of Russia, the Post said it was the only company providing any deliveries, with transport difficult, and where 3,500 post offices are located in places where no other organisation exists.
Alexander Kiselev, Russian Post’s Director General, said the mail service was serving an important social mission above and beyond the need to make profit.
“In the most remote corners of our country, we deliver mail, periodicals, products, and accept payments and money transfers – not because it is profitable, but because it is necessary for people,” he said.
“Competitors to the mail service are only interested in the big cities – there are not interested, for example, in the far north because our work in those regions is not profitable.”
“Slow dive into a swamp”
The row that has splashed through the Russian press over the past week has seen the FAS chief, Igor Artemyev, accusing Russian Post of resisting attempts at market reform because of its own inefficiency, and suggesting the Post had been seeking to interfere with healthy competition.
Artemyev said unless other companies were allowed to deliver letters in competition with Russian Post, there would be a “slow dive into a swamp” for the postal sector.
In reply, Russian Post suggested the FAS chief was lobbying for private companies – to the detriment of the public interest.
The Post argued that not only had it been a part of the government work group that drafted market reforms ten years ago, but in terms of its service efficiency, it is currently engaged in a major modernisation and improvement programme.
However, Russian Post pointed out that the FAS proposals would allow private competitors to cherry-pick the most profitable routes, which were needed by Russian Post to subsidise deliveries in remote areas, since postal rates are set below-cost by the federal government.
Russia’s Communications Ministry backs Russian Post’s position, believing that bringing competition into the universal service obligation would mean higher postal rates for customers.
The Post also pointed out that its unique position as provider of universal postal services had been tested in court last year, when challenged by private postal company Janzen.
“Strange”
Describing Artemyev’s comments as “strange”, Russian Post said the head of the FAS could not be aware of its major postal modernisation plan, judging by his comments about service efficiency. it explained that the plan involves the systematic upgrade of its entire infrastructure paid for out of Russian Post’s own funds.
The row with the FAS comes just a few weeks after Russian Post was fined 6m Rubles (about $220,000 USD) at the end of July, for abusing its dominant position as a monopoly in the mail market.
That case involved the offer of registered mail services for businesses in one Russian area at a discount to registered mail services offered in other Russian areas. The FAS said of the case that Russian Post should have kept to the published registered mail price as approved by the Federal Tariff Service.
