Local postal operators in Sweden - PTS-ER-2009:20
04/05/2009
The appropriation directions of the Swedish Post and Telecom Agency (PTS) state that the Agency among other things is to describe the situation in the market and changes taking place there. Sweden has had a ‘deregulated’ postal market since 1993. What are the factors behind today’s market and what are the prerequisites for establishing, running and expanding a business in the sector for postal operations and related services in Sweden? This question was posed to postal operators with operations in Sweden (excluding Posten AB) and it is mainly their responses which are discussed in this report.
In 1993, the monopoly of Sweden Post, the former Swedish postal authority, was abolished. Since then, approximately 100 operators have, for a certain period of time, actively run some kind of postal operation in the Swedish market. In October 2008, there were around 30 operators2 active in Sweden, of which Bring CityMail and SDR, alongside Posten AB, were the largest. In 2007, Posten AB’s market share was 90.67 per cent, Bring CityMail’s 9.12 per cent and the market share of other stakeholders 0.21 per cent. Of the latter, the four largest operators in this group accounted for the same number of mail items as all the other operators combined.
The majority of the operators presently investigated are active in or close to cities of varying size, with the exception of the metropolitan areas of Stockholm, Gothenburg and Malmö, where only Bring CityMail competes with Posten AB. The largest volumes are handled by operators having regional or national operations, whereas local stakeholders are small-scale. Nearly one-third of the operators stated that they find it difficult to survive solely on the provision of postal services and related services. In order to achieve profitability, they combine postal operations with other operations of varying kinds. Apparently their operations are more specialised in terms of postal services among the major stakeholders.
One of the situations that a newly established postal operator must deal with is the dominance of the postal market by a very strong stakeholder in the form of Posten AB. The domination and strong tradition of Posten AB in the market means that new operators must devote considerable resources to convince customers that they are an adequate alternative to Posten AB locally or regionally. In this context, PTS considers that additional information initiatives by the Agency and by Fria Postoperatörers Förbund (FPF, an independent postal operators’ association) could make these operators more visible.
PTS and the Swedish Competition Authority received criticism in the study by a few operators, which considered that the public authorities monitoring competition do not have a sufficiently strong focus on the deregulated postal market. Introducing principles concerning non-discrimination and transparency in terms of charges and other conditions to the Postal Services Act would serve as additional support in PTS’s supervisory work and give it a stronger impact, according to the Agency. For this reason, prior to the ongoing review of the Postal Services Act, PTS stated that the provision in the Directive 2008/6/EC Article 12 concerning non-discrimination and transparency should be introduced in postal legislation. The Agency is also currently running a project to define what should be deemed to be a reasonable price and profit margin when reviewing Posten AB’s pricing.
A number of operators have mentioned the lack of accessibility to postal infrastructure as a barrier impeding establishment. In addition, some of them have written in this context that major operators should be given greater potential to purchase services within Posten AB’s distribution chain at a cost-based price. In connection with the Postal Services Act inquiry, PTS will consider how these areas can be covered in the legislation and how Article 11a in the Directive concerning access to postal infrastructure has been incorporated in Swedish law.
Only a few operators stated that the requirements imposed by sector legislation and regulations issued by public authorities cause difficulties when establishing and expanding postal operations. Instead, these operators pointed out that regulations and procedures applying in connection with public procurements may reduce the potential to compete for important customers. According to PTS, there may be a need of information initiatives focusing on parties responsible for public procurement as well as postal operators. PTS has also observed that the capacity of small operators to successfully compete for public procurements would probably improve if several operators collaborated and submitted joint tenders covering a larger geographical area.