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Competition unlikely to threaten mail service

Swiss Post will find out in September if it has lost part of its monopoly on letter deliveries

(RSR)

A report commissioned by the Swiss communications ministry says a partial liberalisation of letter delivery services would not threaten the country's mail service.

If the government gives the go-ahead, Swiss Post could see its monopoly on letters limited to those weighing less than 100 grams - a move opposed by unions.

The independent study, released on Thursday, comes ahead of a government debate on the issue next month.

Swiss Post currently holds a monopoly on all letters delivered in Switzerland. Only letters headed abroad or for which the transport costs more than SFr5 ($3.90) can be delivered by other companies.

Under the report's proposals, this monopoly would be curtailed to letters under 100 grams. The measures would apply to one in every ten letters, or 17 per cent of Swiss Post's revenue from mail deliveries.

But according to German consultants WIK-Consult, the company which compiled the study, Swiss Post would not be too adversely affected by the proposals.

It said that previous experiences in Europe have shown that competition only develops slowly in countries where liberalisation has occurred. In Sweden, the national postal service still delivers 90 per cent of all letters despite operating on an open market for the past ten years.

Competitors

The study estimates that competitors would only snare five to ten per cent of the market for letters over 100 grams, or up to one per cent of all mail deliveries.

It found that companies already delivering packages or newspapers and with their own infrastructure were likely to be the first competitors for Swiss Post.

But any potential competitor would have to put in a request for a concession and would not have a distribution network comparable to Swiss Post's, driving up costs.

The authors said that Swiss Post already benefited from widespread brand recognition and a good reputation as well a certain privileges such as simplified customs procedures.

A partial liberalisation of letter deliveries would not threaten Swiss Post's funding of its universal service, they said.

Mixed reactions

Swiss Post said in a statement it could accept a partial liberalisation of letter deliveries, adding that it should be able to respond to market conditions in a "socially acceptable" manner.

The unions were less satisfied with the study. The Communication Union said the report only pleaded in favour of more liberalisation and did not consider working conditions or possible price increases for services.

The public services union, Transfair, warned that any future liberalisation should not go beyond what was approved by parliament in 2002.

Meanwhile, the Swiss Business Federation, economiesuisse, said it was pleased with the report's findings, adding that its goal was a complete opening of the postal market.

Package deliveries were liberalised in 2004. Swiss Post remains the market leader, with private companies grabbing a 17 per cent share of business.

swissinfo with agencies

In brief

The market for package deliveries was totally liberalised in 2004.

Services for letter deliveries could be partially liberalised next year.

A report commissioned by the communications ministry says an open market would contribute to improved services for customers and possibly create new jobs.

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