Poste Italiane back under Antitrust Authority scrutiny

Competition authorities in Italy have launched a fresh probe into prices being offered by Poste Italiane to its major customers. The new investigation, which will take until February 2013 to complete, comes just three months after the country’s Antitrust Authority (AGCM) fined Poste Italiane EUR 40m for its “predatory” pricing from 2007 to the end of 2010.

The Authority is now looking into whether the national postal service failed to include VAT in the final price offered to major customers through individual contract negotiations, apparently in response to complaints from an unnamed rival operator.

The regulators decided at a meeting earlier this month to launch the investigation to see whether Poste Italiane abused its dominant position in the liberalised Italian postal market by effectively offering below-cost pricing to maintain market share to the detriment of competitors.

“While all postal operators must apply value-added tax on their prices, Poste Italiane would benefit from a significant competitive advantage being able to exempt contracts from VAT,” said the Authority in a statement issued following the meeting.

With Italy’s VAT at around the 20% mark, the Authority said the state-owned postal service would be able to offer prices much lower than competitors’ best efforts – and not because Poste Italiane’s services are more efficient.

The actions would mean hindering demand for bulk mail, priority and registered mail as well as parcel services in the Italian postal market, said the Authority.

Investigation

The investigation will look at the actions of Poste Italiane in the light of European Union rulings, including the 2009 ruling by the EU Court of Justice over a VAT dispute between TNT Post UK and Royal Mail.

That particular ruling noted that VAT exemptions are offered in European law to help support the provision of universal postal services, so that an essential public service could continue to be provided.

However, it said contracts negotiated with individual mail customers were not part of the essential public postal service, stating: “Supplies of services for which the terms have been individually negotiated are excluded from the exemption”.

Poste Italiane was appointed last year to a 15-year term running the universal postal service in Italy.

The Antitrust Authority said documents was provided by an organisation, which it did not name, showing that Poste Italiane has been providing postal services via individually negotiated contracts free of VAT.

The Authority noted in its meeting that around 10-15% of Poste Italiane’s mail income is generated by individually-negotiated contracts, with bulk mail services as a whole accounting for about 30% of the operator’s revenue.

“Poste Italiane, the dominant operator with market power from the area of its universal postal services, would seem to be making commercial offers to customers, including those resulting from individual negotiations, without the application of VAT, thus offering lower prices than competitors that are instead required to charge VAT,” said the regulators.

Poste Italiane has not yet responded to a request from Post&Parcel for comment on the case.

The last case in which the Authority fined Poste Italiane for anticompetitive practices was the result of complaints by rival TNT Post.