Informatics Ministry delivers blow to Ceska Posta

The Ministry of Informatics' rejection of a complaint by Ceska Posta against the press distribution company MediaServis is expected to erode the state-owned mail deliverer's monopoly. Ceska Posta filed a complaint with the ministry in June after MediaServis ran a direct mail campaign for a large bank in Prague. The company delivered thousands of letters to individual addresses of potential customers containing information about the new bank service. Ceska Posta said the campaign infringed its protected monopoly area which it is granted in return for it providing a nationwide public mail delivery service. The monopoly covers personal letters up to 350 grams in weight. Direct marketing companies are allowed to send out non-addressed, non-personalized marketing materials. The question facing the ministry was whether MediaServis' letters to individual addresses counted as personal letters within or outside Ceska Posta's monopoly. The ministry decision last month upheld MediaServis' claim that it had found a loophole in the law that allowed it to send personally addressed marketing letters if the contents were all the same. Ministry of Informatics spokeswoman Klara Volna confirmed to PBJ that the ministry decision was that MediaServis hadn't broken the law. MediaServis now expects to take further advantage of the opening it has found. "This [the decision of the ministry] created a major precedent in the Czech market," said Michal Koliandr, MediaServis general manager. "We expect a lot of companies to start using our services." Mediaservis said it had distributed large amounts of personal direct mail in the past two years, but Ceska Posta only reacted this summer. MediaServis now has the green light to grab more of the mail distribution market. "We can beat Ceska Posta because we have additional services and lower prices," he said. MediaServis updates address lists for clients and operates a call center employing 150 people who track mail deliveries. Several days after mail is sent, they call the addressees to check whether it has been received. MediaServis charges on average 15 percent less than Ceska Posta for regular mail, depending on the volume of the mail, Koliandr said. Last year, MediaServis controlled 5 percent of the mail service market. "Our aim is to finish 2003 with an 8 to 10 percent market share," Koliandr said. MediaServis is majority-owned by F-Log, part of the German company Fiege. Publisher Mafra, owner of the daily Mlada Fronta Dnes; Vltava Labe Press and Economia, own the rest of the company. With 8,000 staff members, Mediaservis' core business is distribution of newspapers and magazines to subscribers. It cooperates with 150 publishers in the country and controls around 65 percent of Czech magazine distribution and almost 100 percent of newspaper distribution. Some of the major mail sector customers are insurance companies, banks and B2B firms. In June, MediaServis took over the non-addressed direct mail company Tempo Team. Although MediaServis claims that many companies are leaving the state mail deliverer, Ceska Posta said that it doesn't fear the competition. Jaroslav Jurek, director of Ceska Posta's business strategy department, said it hadn't received official word from the ministry about the decision. "There exists some lawyers' opinion [that MediaServis didn't break the law], but there is nothing official to justify a dramatization of the situation." Ceska Posta spokesman Ladislav Vancura said clients hadn't left it for MediaServis and that the dispute with MediaServis didn't change anything for its marketing strategy. "We won't decrease prices or change anything because of this," Jurek said. "We offer a universal service for everybody." Ceska Posta runs 3,400 post offices in the country. Its profit shrank in 2002 by 30 percent year-on-year to Kc 392 million. Already facing serious competition on delivery of parcels and express mail, Ceska Posta is going to face even fiercer competition for regular mail delivery next year. The Cabinet decided in early September that its letter delivery monopoly should be restricted to letters up to 100 grams, from next May. The measure is aimed at liberalizing the Czech postal market in line with European Union requirements.