ACCC issues preliminary view on Australia Post's draft price notification
The Australian Competition and Consumer Commission today issued its preliminary view on Australia Post's February 2008 draft price notification.
Australia Post proposes to increase the basic postal rate for a standard letter from 50c to 55c. It also proposes to increase the prices of other reserved services (i.e. those services over which Australia Post has a statutory monopoly) including large letters and pre-sorted mail. The last time prices for reserved postal services were increased was in 2003.
"The ACCC has taken a forward-looking approach in its assessment of Australia Post current pricing proposal," ACCC Chairman, Mr Graeme Samuel said. "Based on this analysis, the ACCC's preliminary view is to not object to the price increases."
"However, the ACCC requires that any future price notifications be supported by a robust, forward-looking proposal, that provides certainty to users of Australia Post's services about prices for a reasonable period of time, which the ACCC suggests should be at least three years.
"The ACCC has serious concerns about Australia Post's one-year pricing proposal, given its suggestion of a move towards more frequent price adjustments," Mr Samuel said.
"In the absence of information on how prices for Australia Post's monopoly letter services will change over a longer time period, such a move will reduce Australia Post's incentives to maintain cost efficiency over time and create uncertainty for Australia Post's customers."
The preliminary view will be available from the ACCC's website. The ACCC is currently seeking submissions from interested parties on the ACCC's preliminary view. Submissions should be provided to the ACCC by 4 July 2008.
Under the prices surveillance provisions of the Trade Practices Act 1974, the ACCC has a role in assessing proposed price increases for 'declared' services, including certain services that have been 'reserved' to Australia Post under the Australian Postal Corporation Act in recognition of Australia Post's community service obligations. These are:
the collection, within Australia, of letters for delivery within Australia
the delivery of letters within Australia
the exclusive right to issue postage stamps within Australia.
There are a number of exceptions to the reserved services, including letters weighing more than 250g and letters that are carried for a charge more than four times the basic postal rate.
Australia Post lodged a draft price notification with the ACCC on 5 February 2008. The ACCC sought public comment on the price notification by an Issues Paper released on 29 February 2008. Submissions are sought on the ACCC's preliminary view on 4 July 2008.
The ACCC has also identified a number of technical issues in regard to Australia Post's pricing proposal. Although those do not affect the ACCC's current view that it should not object to the current price notification, the ACCC expects Australia Post to address these before it lodges any future price notifications for the ACCC's consideration.
