France to weigh up “intangible benefits” in post office funding
French regulators have launched a public consultation on the intangible benefits that La Poste enjoys in having a national network of 17,000 post offices. The French postal service receives support from the national government to help with its national obligations to provide universal postal services and run a network of post offices that contribute to the development of the national economy.
However, the Electronic Communications and Postal Regulatory Authority (ARCEP) said it has not previously included in its calculations the benefits La Poste gets from its national post office network such as the presence of such an extensive retail network, the brand image from its post offices and the advertising opportunities in the infrastructure.
The recalculation could directly affect how much state aid La Poste can receive from the French government and still comply with European Union competition laws.
The European Commission gave consent in January to the French government providing EUR 1.9bn in state aid for La Poste from the period 2008 to 2012 to support its public service mission.
“In its Communication about European Union regulations on State Aid in the form of public service compensation, the European Commission specifies that the net cost that allows the discharge of public-service obligations is calculated as the difference between the net cost for the provider of operating with the public-service obligation and the net cost or profit for the same provider operating without that obligation,” ARCEP explained.
“The net cost calculation should assess the benefits, including intangible benefits as far as possible, to the services of general economic interest provider.”
Intangible benefits
ARCEP said La Poste would want a network of just 2,800 post offices if it had no public service duty at all, and if it only needed to meet its universal postal service responsibility it would need only an additional 4,500 retail outlets.
The full 17,000 postal outlets are required to fulfill the mandate to contribute to national planning and development, which include more than 10,000 owned and run by La Poste, providing a full range of services.
The regulator said La Poste was able to tap into “substantial demand” for its services thanks to the extensive network, while its presence also means a “better image with the general public”. Advertising postal products through post offices also “clearly represents an advantage for La Poste”, the regulator said in its consultation document.
The report also highlighted other possible intangible benefits, related to La Poste’s universal service provider status, such as exemptions from licensing and customs obligations and benefits from economies of scale in the network.
However, ARCEP proposed that it would take account of only the impacts of the network presence, brand image and advertising infrastructure in future calculations regarding the post office network.
The consultation runs until 13th July.
