New law ‘will give Jersey Post unfair advantage’
JERSEY Post may have an unfair advantage over competitors under the new Postal Law, according to the Island’s competition watchdog.
In particular, says the Jersey Competition Regulatory Authority (JCRA), the draft law could require rival operators to subsidise Jersey Post for doorstep mail deliveries.
The preliminary draft, released for consultation by the Industries Committee some weeks ago, outlines the steps to abolish States monopoly over postal services. The changes to the structure of Jersey Post will be similar to those proposed for Jersey Telecom, with a new private limited company taking over from the States Postal Committee.
But the JCRA are unhappy with certain aspects of the proposals. In a letter to John Mills, acting chief executive for Industries, they say the definitions in the 71-page document are ‘too complex and cumbersome’, argue against the notion of a ‘social’ postal service and are unhappy with the suggestion that Jersey Post should have the right to deliver all letters weighing up to 500 grams.
But their prime concern is the proposal to allow Jersey Post to get competitors to subsidise its service obligations to the community.
They state: ‘Efficient operators in the private sector should not be burdened with shoring up the possible inefficiencies of the incumbent operator. This concept is wrong in principle in that there should be a level playing field.’
JCRA executive case officer Paul Hamilton explained: ‘It’s unfair, because in effect it would involve taxing private operators, such as courier companies, to subsidise Jersey Post and I don’t think any private company would be happy with that.
‘Industries say that if Jersey Post still delivers to every doorstep, that is a universal service obligation and parts of that service will be uneconomical. But our view is that Jersey Post are in a monopoly position, which is a benefit, so they should not be asking for any form of aid.’
Referring to the maximum weight limit of 500 grams, he said the average in the EU was 350 grams and was due to go down to 50 grams by 2006. ‘The weight limit in Jersey would then be up to ten times heavier we feel that’s a bit too much.’
But Industries Committee member Deputy Gerald Voisin said that the figure was based on the EU 1997 directive. ‘If Jersey Post were to adopt a 50 gram limit, it would have a dramatic effect on their business,’ he said.
Deputy Voisin said that the notion of a social postal service probably had more relevance to countries with outlying areas, but could also apply for instance if there were special postal rates for senior citizens. ‘This clause is not obligatory but it is a concept promoted in the EU directive.’
Alternatively, he said, a fund could be set up so that if an operator came in and ‘cherry-picked’ the most lucrative business, that firm would required to contribute towards less-profitable areas of the service a concept the JCRA are happy to support.
Deputy Voisin said that around six interested parties had submitted their comments for consultation and these were now being considered by Industries’ competition policy sub-committee in the context of the final draft law, to be brought to the States later this year.
