An Post's legal challenge against a £2.35 million (€2.98 million) levy charged by the telecoms regulator, Ms Etain Doyle, is due to come before the High Court by the end of next week.

"Papers are being finalised and will be lodged before the end of the current law term," a spokesman for An Post said yesterday. The case was due to start yesterday.

It is thought the State company will challenge Ms Doyle's legal right to impose the fee for regulating the quality of postal services this year and in 2002. An Post has stated publicly that the charge is inappropriate, given its dire financial position.

Ms Doyle proposed a £250,000 regulatory charge for the January-June period this year, and £350,000 for July-December. The proposed fee for next year is £1.75 million. The proposed levy is required to pay for Ms Doyle's regulation of the services An Post is required to provide throughout the State. These comprise the postal business for letters and parcels up to a certain weight. The stance of Ms Doyle's office is that the levy is required to pay for monitoring of postal service quality. Similar work carried out elsewhere for An Post will no longer be necessary.