Jersey Post and granting of Postal Operators Licence to competitors

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WRITTEN QUESTION TO THE MINISTER FOR ECONOMIC DEVELOPMENT BY DEPUTY T. M. PITMAN OF ST. HELIER

ANSWER TO BE TABLED ON TUESDAY 20th APRIL 2010

Question

"a) G iven that Jersey Post has worked hard at improving efficiency, including the use of voluntary

redundancy packages, and is only 4 months into a four-year plan, what action, if any, will the Minister be taking following the decision of the Jersey Competition Regulatory Authority (JCRA) to advise the public of its proposal to issue a Class 1 Postal Operator's Licence to convey Large Letters and Packets to Citipost DSA Ltd and Hub Europe Ltd?

2. W o uld the Minister setout the impact that the grantof such licences will have for Jersey Post and confirm that the bulk mailing represents the core profit-making aspect of its operations? Would he further state whether the introduction of competition will lead to job losses and increased long-term costs for the public and would he state whether or not he supports the introduction of competition in this area?
3. W o uld the Minister statehow both Jersey Post andcompetitors can survive and thrive financially in the years aheadwithin such a limited marketwherethe comparatively unprofitablebut socially essential daily mail deliveryto domestic andbusinesscustomers alike is intrinsically dependent on themore profitable side ofthebusiness?"

Answer

1. Byentering into public consultation on its proposal toissue a Class 1 Postal Operator's Licence to convey Large Letters and Packets to Citipost DSA Ltd andHubEuropeLtd, the JCRA is acting wholly within the provisions of the PostalServices(Jersey)Law 2004. Through this Law theJCRA is responsible for granting all licences to postal operators. It is required to determine whether licences should be granted based on considerations listed in Article 8 of the Law.

The JCRA's assessment of these considerations, must include the potential impact of the grant of additional postal licences on JP's continuing ability to operate on a sustainable basis, including the provision of a universal postal service. This obligation is set out in the Initial Notices it published on 29th March 2010, available from the JCRA and on its website. The public consultation closes on 30th April at which point the JCRA will determine if additional licences are to be granted.

2. and c) In their2008Annual Report, Jersey Post'sChairman clearly recognises thebenefits of competition in the market place:

"We accept the inevitability of regulation and competition, both of which in our experience are strong performance motivators."

However, it is imperative that the impact of competition on Jersey Post is fully comprehended before any final decision is made. The JCRA's decision to grant additional licence, must and will include the potential impact of the grant of additional postal licences on Jersey Post's continuing ability to operate on a sustainable basis, including the provision of a universal postal service.

I would expect Jersey Post to submit a robust impact analysis to the public consultation to inform the JCRA's decision which would outline the consequences of the award of additional licences on employment, financial sustainability of their operations and their ability to sustain their universal service provision.

As Minister, I will be guided by the findings of the JCRA's review of the responses to the pubic consultation. It is

this review that will determine whether competition in this area of the market is sustainable.