Switzerland’s “Mr Price” pushes Swiss Post to scrap price increases

Swiss Post has bowed to legal pressure from Switzerland’s pricing regulator, agreeing not to implement planned postal rate increases. The postal service was threatened with legal action back in February 2013 by the nation’s Pricing Supervisor, Stefan Meierhans, because of its high profit margins.

Meierhans, a lawyer dubbed “Monsieur Prix” (Mr Price) in Switzerland, had said that given Swiss Post’s high profitability, seeking to raise postal rates further was “excessive”.

Yesterday Swiss Post conceded that were it to fight the regulator in court, it would likely be exposed to “lengthy” proceedings.

As a result, it agreed to a compromise in which it will not increase A and B mail letter rates until the end of March 2016. The letter services have not seen a price increase since 2004.

Domestic parcel services also escape price increases until the same deadline.

From April, consumers will see a CHF 1.50 reduction in prices for returning parcels to mail order companies, using both priority and economy shipping. Fees for customs clearance services for import consignments will also be reduced, by CHF 0.50.

And, Swiss Post will hand out four free stamps to every household in Switzerland in 2014.

Another change will see Swiss Post’s large international letter service — now known as MiniPac International, previously Maxi letter international — will no longer be seen as a registered mail service, with prices lowered by CHF 6 as a result. Swiss Post introduced a new “Registered Mail Prepaid” service this week at a reduced price of CHF 5.50.

Swiss Post said it would be making its bulk mail services more accessible to business customers by lowering the threshold from 500 mailpieces to 350 items from April.

Business customers will also enjoy a 50% cut in rates for address correction services, while certain pre-sorting surcharges will also be reduced.

Swiss Post issued a statement warning that its current profit level is expected to decrease “significantly” as letter volumes steadily decrease.

But, the company conceded that at the moment it could do without the price increases.

“In light of Swiss Post’s current sound economic situation, the agreement with the price regulator can be regarded as a viable solution,” it said. “The compromise that has been reached with the price regulator will avoid going into lengthy proceedings.”

Swiss Post noted that last year it changed its mind over raising prices for forwarding services and newspaper deliveries, despite the losses incurred by those services.

Swiss Post saw its profits drop 13% in the first half of the current financial year, with revenues slipping 0.7% year-on-year. As well as the ongoing decline in the letters business, which saw revenues down 6.8% year-on-year, the company faced a hefty new income tax bill as a result of becoming a Public Limited Company in June 2013.