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European Mailers Protest Early Increases In Terminal Dues

BRUSSELS – European Postal authorities have jumped ahead of the Universal Postal Union in implementing new terminal dues for cross-border mailings.

Last month the European Commission approved the REIMS II agreement among 17 European postal authorities (including non-EU-members Iceland, Norway and Switzerland; the Dutch opted out), allowing them to raise terminal dues provided the hike had no significant effect on end-user prices.

But two weeks later Alastair Tempest, director general of the Federation of European Direct Marketing (FEDMA), charged that “there are clear signs that this condition is violated from the start.

“Several postal customers have been confronted in the past days with announcements of price changes for intra-EU mail for next year, running into increases of 20-40 percent and even as high as 60 percent. This is unacceptable.”

FEDMA, the European Magazine Publishers Federation and the Federation of European Publishers immediately announced the launch of “a detailed investigation into the development of postal end-user prices for cross-border mail in the EU.”

The issues are complex and focus on the time allowed for the increases to take effect. The original agreement called for the originating country – where a mail piece was posted – to pay 55 percent of the receiving country’s domestic rate. Rates would rise 5 percent a year until they reached 80 percent after five years. Terminal dues are not new and many receiving countries are subsidizing cross-border mail.

The issue, Tempest said, was not the principle of an increase but the amount, the time and some other quid pro quos – sharply increased quality of postal service, for example.

The revised agreement the EC’s competition commission approved would start with the 55 percent of domestic rates, rising to 60 percent at the end of 1999 and to 70 percent at the end of 2,000.

At that time the commission “will have another look to make sure you are not doing anything naughty and that the agreement is being kept to the letter. We thought that a great idea because the EU can stop postal administrations from increasing prices any further.”

What FEDMA will tell the EC once the investigation is completed, Tempest said, is that “the one condition you imposed in accepting the agreement was there would not be any unnecessary or excessive increases.

“We find, however, that increases of 20 to 60 percent in some weight categories of the mail to be both unnecessary and excessive. This is a real shock.”

What makes the issue difficult and often intractable is the selective increases being put in place and the differences among postal administrations in implementing them.

The increases are not uniform, varying by the type and weight of mail sent, and from post office to post office. Thus the Germans, who have some of the highest mail rates in Europe, will not charge more now. Britain and Spain and some others will, Tempest said.

Even more worrying to direct mailers is the trend among many postal operators to charge a flat rate for terminal dues within Europe rather than different rates for different countries.

Thus paying 55 percent of domestic cost would be very low in Spain, Portugal or Greece, but very high in Denmark, which has Europe’s highest postal rates, Tempest said.

Averaging out the costs for all of Europe is easier than calculating individual differences, but the result is higher mailing costs across the continent. No one has done that yet, but interest is great, he said.

The mailers hope that the evidence they collect will persuade the EC to crack down on postal operators with threats to withdraw their approval of REIMS.

“They could do that,” Tempest said, “The EC’s anti-trust department has wide powers to give assent and to take it away.”

Meanwhile, FEDMA and other European mailers worry that European postal authorities will push other developed countries in the UPU to follow their lead in raising terminal dues to European levels.

At last month’s UPU meeting in Beijing an overwhelming majority of the 189 countries in attendance voted for a terminal dues increase. But country specific rates would not come into effect until 2001.

Moreover, the UPU-mandate increase are spread over a longer period of time, until 2005, and the increases appear to be more modest than those some European postal operators are putting into effect now.

A UPU statement issued after the Beijing Congress said that “the new system is expected to incur increased costs in developed countries of as much as 39 percent by 2003 for the delivery of their mail in other developed countries.”

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