EU internal market commissioner Charlie McCreevy will propose a law opening the European postal market to full competition in 2009.
The controversial directive would prevent governments from protecting their state-owned postal firms by banning rivals from operating in certain sensitive postal sectors. In Ireland, it could pave the way for competitors to An Post to offer door-to-door deliveries of mail, combined email and letter deliveries and to sell their own stamps.
A draft text of the directive seen by The Irish Times shows it would remove the "existing reserved areas" that some member states such as Ireland have imposed.
For example, in the Republic An Post is the only company that is allowed to deliver letters weighing 50 grammes or less. Some states - Britain, Finland and Sweden - have already removed these restrictions but, under the proposed directive, all EU states would have to remove the restrictions by 2009, which is the date targeted by the commission for full liberalisation of the postal market.
Some state postal companies in member states such as France and Belgium have lobbied to have the 2009 date for liberalisation extended. They fear competition will eliminate jobs in EU state postal firms, which in 2004 employed 1.7 million people.
However, the Commission concluded that delaying the existing reform calendar would put into question the benefits of the reforms that have been undertaken so far, and ultimately put into danger the future of the sector and the provision of the universal service.
Delaying the process may compromise new investments in the sector, which will be key for its future, and remove the incentives of traditional operators to adapt to changing market conditions and consumer needs, it says.
Another important provision contained in the draft directive is the maintenance of the universal service obligation, which requires member states to provide its citizens with a postal service comprising at least one delivery and collection five days a week. The directive provides a number of ways for states to finance this universal service, such as state aids, public procurement, compensation funds and cost sharing. Under the proposal member states would be free to choose the method they prefer to compensate their national post offices.
State companies have argued that allowing competitors to cherrypick the most lucrative sectors of the postal market for themselves would erode their ability to provide a universal service. But the commission said it was not necessarily the case that incumbents would lose market share.
It is also proposing to remove some price controls on state postal firms and allow for ad hoc public funding to help them restructure.
The funding of the universal service obligation is a key concern of An Post, which says this service cost it €70 million in losses between 2001 and 2005. It said yesterday that it was important that proposals for liberalisation are balanced, allowing the universal service providers fair remuneration for the services provided.
An analysis of the EU postal market by the commission found that An Post had taken steps to improve its quality and efficiency - notably by "redesigning delivery arrangements" and by reducing staff.
However, it also found that quality of services are still relatively low compared to EU average. The study found Ireland is ranked 23rd out of 25 EU states in terms of quality of service, delivering just 72 per cent of mail a day after postage.
Member states and the European Parliament will debate and vote on the proposed law before it can enter into force.
