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Evaluation of the Postal Regulation


Publication number: 2013-30
Authors: J. in ’t Veld, E. Gerdes, F. van der Veen, B. Baarsma, J. Weda
Commissioned by: Ministry of Economic Affairs
Published by: Rebel

The Postal Regulation 2009 lays down rules for a system of cost-based prices for the Universal Postal Service (UPS). The Minister of Economic Affairs asked Rebel and SEO Economic Research to evaluate the Postal Regulation.

The evaluation shows that the Postal Regulation allows the UPS provider too much leeway to make cost allocation decisions as it sees fit. This affects the cost level of the UPS and other services, and hence the affordability of the UPS. There is room within the cost allocation system to make decisions that result in substantially different cost levels for the UPS and other services. Given the differences in the degree of competition in the various segments of the postal market, PostNL has a strong strategic and economic incentive and the opportunity to use the rules so as to allocate costs particularly to the UPS, where PostNL has a de facto monopoly. There are insufficient guarantees that market forces provide a counterweight against this incentive.

The regulatory authority therefore needs more tools to deal with the cost allocation rules so as to prevent undesirable cross-subsidization more effectively. To ensure effective supervision of the Postal Regulation, the regulatory authority needs to have insight into the cost allocation method for setting the start rates and the power to approve the cost allocation method and/or the prices based on that method. Lastly, the regulatory authority needs to have the power to check ex post whether the prices have actually been set in line with the approved system.

Sensitivity to volume changes also needs to be reduced by (1) reducing the regulation period from four years to three and (2) determining volumes based on extrapolation by the regulatory authority from the volume trend in the past three years instead of only one year.


Category: 2013