The Government's Postal Act proposal will not bring about major practical changes for mail recipients. The delivery speed for letters equipped with stamps remains unchanged and the delivery of printed magazines is secured in sparsely populated areas with state support.
To Posti, the Government is proposing a price-regulated delivery obligation which, as an under-cost obligation, would constitute prohibited state aid to newspaper publishers.
Today, a proposal to amend the Postal Act and support the delivery of newspapers has been submitted to Parliament by the Government. Posti welcomes the Government's proposal to reduce the number of days for the delivery of universal service letters to three days throughout the country and to support communications in sparsely populated areas by means of a competitive and fixed-term state subsidy.
According to Yrjö Eskola, SVP of Postal Services at Posti, the Government decisions do not bring about major changes for mail recipients in practice. For example, the delivery speed of universal service (letters equipped with a stamp) will not be affected by the new Postal Act.
“The delivery speed of stamped letters will remain unchanged. Other printed mail, such as letters from authorities and newspapers, are considered commercial contract-based deliveries and will continue to be distributed in accordance with the service level agreement (SLA) as agreed with the sending customers,” Eskola points out.
The delivery obligation of the Postal Act affects a very small number of mail items, as stamped letters represent approximately 2–3% of all mail delivered by Posti. Three-day universal service delivery has been possible in cities and urban areas since 2017 in accordance with the current Postal Act.
According to Eskola, the volume of letters has decreased so dramatically due to the digitalisation process that there is no longer enough letter mail to be delivered profitably five days a week. Almost 70% of the volume of letters has disappeared in just over ten years, and the number continues to decline by about 10% annually.
Posti welcomes the new communications subsidy whereby the state will contribute to the current delivery costs of the newspaper company in sparsely populated areas. The Government proposes an appropriation of EUR 15 million for this purpose in next year's budget.
Under-cost price in the delivery of publications would constitute prohibited state aid to the publishers of newspapers
The Government proposes a new separate public service obligation for Posti. According to the obligation, Posti will deliver newspapers at a regulated price in areas where delivery aid is insufficient, there are no tenders for delivery aid or the area is to be excluded from early-morning delivery during the support period. The Finnish Transport and Communications Agency Traficom would determine a 'reasonable' price level which, according to the law proposal, could be below the actual delivery costs. The obligation would apply to those weekdays where there is no universal service delivery.
According to Eskola, the new regulation would mean that Posti would be obliged to distribute publications on a loss-making basis, even though publication delivery service is 100% commercial and open to free competition. This would be completely different from the pricing of universal service, which, according to the Postal Act, is based on costs and includes a reasonable margin.
“The tightening of the regulation and the requirement to make losses is extraordinary, because previously the working group of secretaries of state agreed that postal regulation must be made lighter when volumes of distribution are heavily reduced. The state-owner has also required Posti to operate profitably,” reminds Eskola.
According to the antitrust experts, a loss-making service obligation would be contrary to competition law and would violate the property rights guaranteed by Article 15 of the Constitution. According to European Union law, state aid to business is, in principle, prohibited. According to the Commission's SGEI Decision and the so-called Altmark principles, the compensation should, in principle, cover the net cost of the obligation and a reasonable profit.
“If the compensation for the public service obligation does not cover the costs of the obligation as well as a reasonable profit, we are talking about selling delivery services below cost to newspaper publishers and, most likely, prohibited state aid allocated for the publishers.
When newspaper delivery operates on commercial terms, the scope of the early-morning delivery network can be fully defined commercially by newspaper publishers and delivery companies. The newspaper companies can therefore, if they so wish, transfer the distribution from the early-morning delivery network to the public service obligation at their sole discretion and to Posti at below cost.
Posti's views on other motions in the new Postal Act: