‘Just give us a level playing-field’

Resisting the liberalisation of postal services might seem futile, since the principle has already been conceded, but Belgium among other member states is digging in its heels. Johnny Thijs, chief executive of Belgium’s La Poste is fiercely critical of Internal Market Commissioner Charlie McCreevy’s plans.

"I wonder if those in charge of policy are aware of the consequences and are willing to communicate the threats to everyone concerned," asks Thijs. "I still have to be convinced of the merits of liberalisation. I believe it will be for the benefit of large organisations. It will be to the disadvantage of residential customers, as well as small- and medium-sized enterprises."

Referring to potential job cuts and the maintenance of minimum standards of services, Thijs asks: "Do we want the liberalisation of the postal market to turn into a social battlefield?" But his opposition to McCreevy’s liberalisation agenda is not as clear-cut as it might first appear.

La Poste is a listed company owned by the Belgian state, Post Denmark A/S and equity firm CVC Capital Partners Limited. Modernisation of the company has been on the agenda since a strategic partnership was formed by the three parties and La Poste last year. All concerned are keen to create a highly competitive operator providing services across borders. The approach is not exactly retrograde.

The Belgian incumbent has so far succeeded in winning a share of the profitable business mail market against fierce competition from giants such as DHL and Fedex and smaller players. Retaining that share could be more difficult once it loses its monopoly of the lucrative market for letters under 50 grams, particularly if it alone is saddled with fulfilling the burdensome universal service obligations (USO).

According to a PriceWaterhouseCoopers report, the Belgian postal market is expected to offer huge opportunities post-liberalisation because "new entrants know they benefit from relatively low labour costs and a very dense postal delivery area". Thijs is acutely aware of this. Workers’ wages at La Poste are governed by collective bargaining agreements which will not necessarily apply to competitors.

"Our top 2,500 customers represent 65% of turnover," he says. "For a newcomer, it would be easy from a sales point of view to talk only to these customers and make commercial deals with them. To serve these customers can be very cost-efficient." Surviving in this fiercely competitive market with the USO burden, but without the benefits of its current monopoly, will be tough.

"A hell of a lot of jobs would be lost," says Thijs. "I will remain stuck to cover a large amount of customers and service will only increase in terms of cost. While [my competitor] will use personnel who cost half of what my staff cost. My staff are correctly paid, but certainly not overpaid."

Opponents of liberalisation, including France and Luxembourg, are clearly weary of seeing Sweden held up as the gold standard for open postal markets. "The question is, are these markets truly competitive now?" asks Thijs. "If we get the same landscape as Sweden, we’re happy with that."

The Belgian operator’s main concern about McCreevy’s proposals for liberalisation is that conditions affecting USO maintenance are largely left to the discretion of member states. Thijs claims that Sweden offers the kind of conditions for liberalisation that he would like to see established in Belgium. But the dominant Swedish operator Posten AB, the former state monopoly, funds USO provision entirely from its private revenues. Any state aid awarded by the Swedish government has been for counter services, which are not considered to be a USO.

"I’m pleading with my government for a level playing-field," says Thijs. "I am convinced that solutions can be found to assure continuation of the universal service obligation."

Belgium views legislation obliging all players to respect USO or public financing as the only way of achieving this goal.

Resisting the liberalisation of postal services might seem futile, since the principle has already been conceded, but Belgium among other member states is digging in its heels. Johnny Thijs, chief executive of Belgium’s La Poste is fiercely critical of Internal Market Commissioner Charlie McCreevy’s plans.