Australian CCC announces final decision on reply paid mail
The Australian Competition and Consumer Commission today announced its final decision not to object to Australia Post's proposal to restructure prices for Reply Paid mail.
The changes are to take effect from 1 July 2003, dependent on the deployment of a new Reply Paid computer management system.
The ACCC's decision will lead to a reduction in the price of small, barcoded Reply Paid letters. The price of large and small unbarcoded Reply Paid letters will rise.
The ACCC has also decided not to object to the introduction of an annual fee for each Reply Paid permit number, and proposed changes to current Reply Paid terms and conditions.
The new charges will more closely reflect the true cost of services, including the fixed cost associated with administering individual Reply Paid accounts.
Acting ACCC Chairman, Mr Ross Jones, said that on the basis of information provided by Australia Post, the proposed changes are likely to be revenue neutral and would not increase Australia Post's profitability above the level considered reasonable by the ACCC in its decision on stamp prices last year.
In response to Australia Post's draft notification, the ACCC issued a Preliminary View document in mid-March in which it did not object to Australia Post's proposal. Australia Post then provided the ACCC with a formal price notification on 26 March 2003.
The ACCC's assessment took into account submissions it received from interested parties, including major users of mail services. The final decision will be available on the ACCC website.
BACKGROUND
Under the Australian Postal Corporation Act, certain postal services are 'reserved' to Australia Post. This means that Australia Post has the exclusive right to provide these services. In particular, Australia Post has an exclusive right to deliver letters within Australia and an exclusive right to issue postage stamps.
Most Reply Paid letters fall within the category of Australia Post reserved services which are declared under the Prices Surveillance Act (1). Australia Post must notify the ACCC before it can increase the prices of such reserved services.
The ACCC then has the role of assessing the proposed price increases, and may decide to not object to the proposed increases, or to object to the proposed increase but not object to a lower, specified increase.
There are a number of exceptions to the reserved services.
Most notably, letters weighing more than 250g are not reserved, nor are letters that are carried for a charge more than four times the basic postage rate. Since the current postage rate is 50c, this means that letters carried for a fee of over $2.00 are not reserved.
In February 2003 Australia Post provided the ACCC with a draft price notification proposing a restructuring of Reply Paid mail charges. Australia Post argued that this was necessary in order to: reward and encourage high volume users; recognise the lower processing costs of barcoded small letter items; ensure that fees for handling non-barcoded small letters and large letters better reflected costs; recover part of the costs of administering the Reply Paid service; and position the Reply Paid service as a competitive response service when compared against competing mediums.
(1) Australia Post estimates that revenues for non-notifiable services, such as large letters, represent approximately 4% of total Reply Paid revenues, with approximately 1% of total Reply Paid volumes attributable to non-notifiable services.
CONTACT: Ross Jones, Acting Chairman Tel: +61 (0)3 9290 1812 John Martin, Commissioner Tel: +61 (0)2 6243 1130 Lin Enright, Director, Public Relations Tel: +61 (0)2 6243 1108
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