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2018 | OriginalPaper | Buchkapitel

Is the Compensation Fund an Appropriate Tool for Financing Universal Postal Service Obligations?

verfasst von : Vincenzo Visco-Comandini

Erschienen in: New Business and Regulatory Strategies in the Postal Sector

Verlag: Springer International Publishing

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Abstract

This chapter discusses pros and cons of the compensation fund in the postal industry, envisaged in the European directive as an alternative measure to a state subsidy for financing universal service obligations. The fund is a tax charged only to competitors for sharing these costs. Its application conflicts with general normative principles required for making a tax socially efficient, as the benefit principle, the competitive neutrality and the solidarity principle. Their respect makes its tax base and rates definition very problematic, especially with regard to multisided e-commerce parcel markets. The chapter provides a positive explanation for why governments, regulators and national providers may be interested in enacting the fund.

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Vorheriges Kapitel Design and Enforcement of Compensation Funds After Confetra: A Legal and Economic Analysis

Nächstes Kapitel Compensation Fund in Postal Service: A Step Forward After the Polish Case

In some member States the CF has been partially adopted according to prior legislations, as in Italy where competitors providing USO services are legally charged a 3% tax on their affected revenues. To avoid the tax, competitors labeled their products as non-USO, thus making the Italian CF in practice empty.

In France, USO cost in TLC represents 0.26% of USP’s revenues (Boldron, Borsenberger, et al., 2009).

In some countries as Italy, unprofitable mail delivery already accounts for nearly 24% of total population (Poste Italiane, 2018).

Also, in TLC the calling party pays for the service, but its cost is partially recovered by the access charge imposed on receivers for being connected to the network.

All over the world, every time the USP closes some deep loss-making PO, local politicians react negatively. The CF would shift its economic burden to competitors.

The directive by defining the procedure for calculating the net USO cost includes USP’s benefits to deduct, but not those enjoyed by third parties. Regulators generally tend to underestimate these benefits.

Cases C-259/16 and C-260/16, 28 November 2017.

La Poste receives a separate state subsidy for its post offices network, financed under the aménagement du territoire program.

This is the chosen parameter uniformly adopted across member State’s legislation including the CF as an option.

Bring City Mail, the main USP’s competitor in Sweden, became slightly profitable after more than 15 years from its market entry. Nexive, Poste Italiane’s main competitor in Italy, after getting nearly 15–20% market share in business letter, today faces significant losses.

The Hypothetical Monopolist or Small but Significant Non-transitory Increase in Prices (SSNIP) test usually defines the relevant market by determining whether a given increase in product prices would be profitable for a monopolist in the candidate market. For assessing interchangeability in postal services, it investigates whether a permanent price increase of 5–10% on a given USO product would trigger demand side substitution to a non-USO product sufficient to make the price increase unprofitable (Copenhagen Economics, 2015, Chapter “Inducing Optimal Quality Under Price Caps: Why, How, and Whether”).

An example of USO enlargement is the new USO priority mail product Posta 1 PRO (business mail) launched in 2016 by Poste Italiane, provided with a “light” proof of delivery. Before its launch, proof of delivery, a typical value-added feature, was considered by both ex post and ex ante regulators the yardstick for distinguishing non-USO from USO products (European Commission, 2000).

It is three-sided if the platform directly sells items to customers, four-sided if the platform acts as intermediary between sellers and customers.

In France La Poste holding a bank license directly supplies this service, while Poste Italiane sells bank’s third parties loans branded as postal.

Theoretically, the test would require including both transaction costs and the willingness to pay for privacy.

Mail markets were excluded since USP’s dominance is almost identical across countries (mean market share = 95.17%, coefficient of variation = 0.3256).

Data for Luxembourg are not available.

Data were generated by averaging the 2016 declared range of values provided by Copenhagen Economics (n = 21). In case of missing data, 2012 values provided by WIK (n = 8) relating to Belgium, Bulgaria, Croatia, Cyprus, Denmark, Greece, Sweden and United Kingdom (four not authorizing, three authorizing, one enforcing) were taken. Although related to different years, these data seem to be comparable since USP’s market share are generally slightly stable across time.

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Titel: Is the Compensation Fund an Appropriate Tool for Financing Universal Postal Service Obligations?
verfasst von: Vincenzo Visco-Comandini
Verlag: Springer International Publishing
Buch: New Business and Regulatory Strategies in the Postal Sector
Print ISBN: 978-3-030-02936-4

Electronic ISBN: 978-3-030-02937-1

Copyright-Jahr: 2018
DOI: https://doi.org/10.1007/978-3-030-02937-1_9