EU proposition could lower-postal revenue of An Post

Up to one-third of An Post's revenues could be affected, under a European Commission proposal aimed at opening national postal services to competition, according to the State company. Mr John Foley, head of communications at An Post, said some £130 million in annual revenue would be affected under the Commission's plan. This was just under a third of the group's total revenues of £420 million, he added.

Mr Foley would not comment on suggestions that the proposals would mean significant job losses. He said management was working with unions to gain efficiencies, but there would be no compulsory redundancies.

The Commission's proposal envisages introducing competition for all letters of over 50 grams in weight by 2003. At present private firms may only compete with An Post in letters weighing more than 350 grams. This effects some £20 million in An Post revenue.

Mr Foley said An Post is opposing the Commission's proposals. "Moving from 350 gram letters to 50 gram letters in one go is too big a step. Our view is that there should have been a few intermediate steps," he said.

He claimed the Commission would have to engage in considerable negotiations before introducing the proposals. He said it was not clear if these would be concluded by 2003.

In the face of oncoming competition An Post is seeking efficiencies and to improve profit margins which stand at just over 2 per cent. The EU proposals from the Dutch Internal Market Commissioner, Mr Frits Bolkestein, were described by the Consumer Affairs Commissioner, Mr David Byrne, as "finely balanced" and are expected just to secure a sufficient majority when they come to the Council of Ministers where countries such as Greece, Portugal, and France are expected to put up a rearguard action.

Mr Bolkestein said "fast, efficient, and competitive postal service are vital to the competitiveness of EU industry and to make the Internal market a reality for consumers." He praised Sweden for fully liberalising its postal market which he said had resulted in the finest service in the Union with no loss of service to country's most remote.

The Commission also agreed that by 2004 proposals would be tabled to extend liberalisation yet further by 2007. Proposals at the Commission meeting that the 2007 date should be one for complete liberalisation were not accepted.

Mr Bolkestein had originally proposed this time to go as far as liberalising 27 per cent of the market, from the current 3 per cent, but public postal providers have lobbied against the move. They argue that the potential loss of so much of their market would jeopardise the financial viability of the universal service they are obliged to provide in return for monopoly access to the bulk of the market.

The package includes provision for a Compensation Fund which could be used by national regulatory authorities to spread the cost of uneconomic rural services between those licensed in the market, but the fund mechanism is not expected to be used by most member states.

Mr Bolkestein said that he was confident that the basic provisions of a universal service, the daily delivery and collection of post to every home, would not be affected by the decision. Currently, he said, 14 out of 15 public operators were making money - only the Italians are not.