ACCC issues final decision on Australia Post's proposed price increases

The Australian Competition and Consumer Commission today issued its final decision not to object to Australia Post's proposal to increase the price of the basic postage rate from 50 cents to 55c.

Australia Post must now give written notice of this change to the basic postage rate to the Minister for Broadband, Communications and the Digital Economy.  The Minister has the power under the Australian Postal Corporation Act 1989 to disapprove proposals to vary the basic postage rate within 30 days after receiving written notice.

The ACCC has also decided not to object to Australia Post's proposal to increase other letter prices, including large ordinary letters, and small and large PreSort Bulk Mail.

"The ACCC has decided not to object to Australia Post's proposal because the proposed price increases do not involve Australia Post over-recovering the costs of providing these letter services," ACCC Chairman, Mr Graeme Samuel, said.  

"The ACCC did identify a concern that Australia Post's current proposal did not provide sufficient certainty for some customers. Therefore, in its decision, the ACCC has established a framework for future price notifications that will encourage Australia Post to continue to reduce costs, improve productivity, and provide more certainty for Australia Post's customers."

Australia Post proposes to increase postal prices with effect from 15 September 2008.  The previous price increase was in 2003.

Background

Under the prices surveillance provisions of the Trade Practices Act 1974 ('the TPA'), 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, and
• 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.

On February 5 2008, Australia Post lodged a draft price notification, proposing to increase prices for its reserved letter services.  On June 20, the ACCC issued its preliminary view to not object.  After consideration of the submissions in response to the ACCC's preliminary view in early July 2008, and receipt of Australia Post's formal price notification on 18 July 2008, the ACCC issued its final view today to not object to the proposed price increases.