Pre-sorted DM mail may be removed from ACCC oversight

Smarting from the latest price hikes on business mail, the direct marketing industry is now facing the potential of future rises at the whim of Australia Post.

The Federal Government is seeking public comment on a proposal to remove ACCC scrutiny of Australia Post price rises on pre-sorted business mail. Industry commentators fear the move will expose the mailing industry to unfettered monopoly pricing.

Under the proposal, prices surveillance of Australia Post’s reserved services will in future be confined to the so-called ‘granny mail’. Only price rises for ordinary letters will need to be subjected to public scrutiny. For other letters, the vast majority of which are pre-sorted by industrial mailers, Australia Post will be able to set its own prices.

According to the Discussion Paper, the physical letter market has changed substantially over the last two decades and there is now considerable and increasing competition to letters from digital communications, such as email and social networking websites.

These digital services provide competitive pressures on the reserved letter services and have resulted in significant decline in physical letter volumes. As a result, the domestic reserved letter services made a loss of $127 million (excluding restructuring provisions) in 2009–10, following a decline of 51/2 per cent in volume from 4.1 billion items in 2008–09 to 3.9 billion items in 2009–10.

Additionally, ACCC prices surveillance processes can be time-consuming—the ACCC took approximately five months in 2008 and 2009 to consider price notifications—and reduce Australia Post’s flexibility to respond to market changes and opportunities.

These lengthy processes restrict Australia Post’s ability to plan and innovate in the design of the products it offers to businesses and organisations in response to their needs.

Given the increased competition and the greater choice of communication medium—which in particular has lessened the dependency on Australia Post’s discounted letter services—the government is considering whether to reduce the coverage of ACCC scrutiny of Australia Post’s reserved letter services.

The government is considering whether to limit notified services to ordinary letter services and to remove Australia Post’s other letter services from the CCA declaration.

The Government maintains that the price for ordinary letters, currently at 60 cents, will operate as a ceiling for pre-sorted bulk mail. This is disputed by members of the mailing community who fear the business mail will be used to cross subsidize the general mailing price.

They maintain that the current tranche of price rises will contribute to the migration of essential and marketing mail to electronic formats and that any further rises from Australia Post will only hasten the flight.

The department is seeking public comments on the possible narrowing of prices surveillance of Australia Post’s domestic reserved letter services to exclude other letter services.

By email to postalris@dbcde.gov.au
By post to The Manager
Postal Strategy Unit
Consumer Policy & Post Branch
Department of Broadband, Communications and the Digital Economy
GPO Box 2154
CANBERRA ACT 2601