Postal Services Bill (HL Bill 66)

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(a) OFCOM have made a procurement determination under section 43
(fairness of bearing burden of universal service obligations), and

(b) in the light of that determination, OFCOM consider it appropriate for
the number of postal operators designated as universal service
5providers to be greater than one.

(4) The second case is where—

(a) a postal administration order has been made under Part 4, and

(b) OFCOM consider it appropriate for the number of postal operators
designated as universal service providers to be greater than one for, or
10in connection with, achieving the objective of the postal administration.

(5) OFCOM must publish each designation in such way as they consider
appropriate for bringing it to the attention of members of the public.

(6) The procedure to be followed for the making of a designation under this
section must be provided for in regulations made by OFCOM.

(7) 15OFCOM may—

(a) review the designations for the time being in force, and

(b) consider what (if any) designated USP conditions should continue to
apply to each of the universal service providers.

(8) The procedure to be followed on a review must be provided for in regulations
20made by OFCOM.

(9) Regulations made by OFCOM must provide for a postal operator’s
designation to cease to have effect where, in any case described in the
regulations, the operator is no longer subject to any universal service
obligations.

(10) 25Both the procedure for designations and the procedure for the conduct of
review of designations provided for by regulations under this section must be
one appearing to OFCOM

(a) to be efficient, objective, proportionate and transparent, and

(b) not to involve, or to tend to give rise to, any undue discrimination
30against any person or description of persons.

(11) OFCOM must notify the European Commission of the designations and of any
case where a designation ceases to have effect (and the notification must
identify the postal operator designated or ceasing to be designated).

35 Designated USP conditions

(1) 35OFCOM may impose a designated USP condition on a universal service
provider.

(2) A designated USP condition is a condition requiring the provider to do one or
more of the following—

(a) to provide a universal postal service, or part of a universal postal
40service, throughout the United Kingdom, or in a specified area of the
United Kingdom, in accordance with the standards set out in the
universal postal service order,

(b) to provide, or make arrangements for the provision of, access points for
the purposes of a universal postal service,

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(c) to provide specified information (at such times and in such manner as
OFCOM may direct) to other postal operators and users of postal
services about the services within paragraph (a) that it is required to
provide, and

(d) 5to do anything else that OFCOM consider appropriate for the purposes
of, or in consequence of, the obligations imposed under any of
paragraphs (a) to (c).

In this subsection “specified” means specified in the condition.

(3) OFCOM may impose a designated USP condition only if they consider it is
10necessary to do so in order to secure the provision of a service of a description
set out in the universal postal service order in accordance with the standards
set out there.

(4) A designated USP condition may make provision as to the tariffs to be used for
determining prices in accordance with which a universal postal service, or part
15of a universal postal service, is provided.

(5) In exercising the power conferred by subsection (4), OFCOM must seek to
ensure that—

(a) the prices are affordable,

(b) the prices take account of the costs of providing the service or part of a
20service, and

(c) the prices provide incentives to provide the service or part of a service
efficiently.

(6) A designated USP condition may impose performance targets.

(7) If there are two or more universal service providers—

(a) 25OFCOM must secure that there is no overlap in the universal service
obligations imposed on the providers, and

(b) designated USP conditions may require the providers to make
arrangements for securing that a universal postal service operates
uniformly and effectively throughout the United Kingdom.

(8) 30In this Part “universal service obligations”, in relation to a universal service
provider, means the obligations imposed on the provider by any designated
USP condition.

36 Publication of information about performance

(1) A designated USP condition must include provision requiring the universal
35service provider concerned—

(a) to publish information about the extent to which it is providing
specified postal services in accordance with specified standards, and

(b) to publish annually an independently audited performance report.

(2) The reference here to an independently audited performance report is to a
40report that—

(a) contains information about the provider’s performance in complying
with specified requirements under the designated USP condition, and

(b) is audited by an independent person for accuracy and, if there are two
or more universal service providers, for its usefulness in comparing
45information published by other universal service providers.

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(3) An “independent person” means a person who is independent of both OFCOM
and universal service providers.

(4) OFCOM must notify the European Commission of anything contained in a
designated USP condition as a result of subsection (1).

(5) 5A designated USP condition may require the universal service provider
concerned to meet the costs of the audit required as a result of subsection (1)(b).

(6) A designated USP condition may include other provision requiring the
universal service provider concerned to publish information about its
performance in complying with specified requirements under the designated
10USP condition.

(7) The provision made as a result of this section—

(a) must include provision—

(i) requiring information previously published to be updated and
published again, and

(ii) 15requiring the published information to satisfy requirements
that OFCOM consider appropriate to secure its adequacy, and

(b) may include requirements as to the times at which, and the manner in
which, the information is to be published.

(8) In this section “specified” means specified in the designated USP condition.

37 20USP access conditions

(1) OFCOM may impose a USP access condition on a universal service provider.

(2) A USP access condition is a condition requiring the provider to do either or
both of the following—

(a) to give access to its postal network to other postal operators or users of
25postal services, and

(b) to maintain a separation for accounting purposes between such
different matters relating to access (including proposed or potential
access) to its postal network as OFCOM may direct.

(3) The provider’s “postal network” means the systems and all the resources used
30by the provider for the purpose of complying with its universal service
obligations (and, accordingly, includes arrangements made with others for the
provision of any service).

(4) OFCOM may not impose a USP access condition unless it appears to them that
the condition is appropriate for each of the following purposes—

(a) 35promoting efficiency,

(b) promoting effective competition, and

(c) conferring significant benefits on the users of postal services.

(5) In addition, OFCOM may not impose any price controls on a universal service
provider in a USP access condition unless it appears to them that the provider
40concerned—

(a) might otherwise fix and maintain some or all of its prices at an
excessively high level with adverse consequences for users of postal
services, or

(b) might otherwise impose a price squeeze with adverse consequences for
45users of postal services.

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(6) In imposing price controls in a USP access condition in connection with the
giving of access to a universal service provider’s postal network or to part of
that network, OFCOM must have regard to such of the costs incurred in the
provision of that network, or part of that network, as OFCOM consider
5appropriate.

(7) In imposing price controls in a USP access condition OFCOM may—

(a) have regard to the prices at which services are available in comparable
competitive markets, and

(b) determine what they consider to represent efficiency by using cost
10accounting methods.

(8) In deciding what obligations to impose in a USP access condition in a particular
case, OFCOM must (in addition to taking into account anything relevant for
the purpose of performing their duty under section 28) take into account, in
particular, the following factors—

(a) 15the technical and economic viability, having regard to the state of
market development, of installing and using facilities that would make
the proposed access unnecessary,

(b) the feasibility of giving the proposed access,

(c) the investment made by the universal service provider concerned in
20relation to the matters in respect of which access is proposed,

(d) the need to secure effective competition in the long term, and

(e) any rights to intellectual property that are relevant to the proposal.

(9) For the purposes of this section references to giving a person access to a
provider’s postal network include giving a person an entitlement to use, be
25provided with or become a party to any services, facilities or arrangements
comprised in the postal network.

(10) In Schedule 3—

(a) Part 1 makes provision about the kind of matters that may be included
in a USP access condition, and

(b) 30Part 2 makes provision about the resolution of access disputes by
OFCOM.

38 USP accounting conditions

(1) OFCOM may impose a USP accounting condition on a universal service
provider.

(2) 35A USP accounting condition is a condition requiring the provider to do one or
more of the following—

(a) to maintain a separation for accounting purposes between such
different matters as OFCOM may direct for such purposes as they may
direct,

(b) 40to comply with rules made by OFCOM in relation to those matters
about the identification of costs and cost orientation,

(c) to comply with rules made by OFCOM about the use of cost accounting
systems in relation to those matters, and

(d) to secure that its compliance with those systems is audited annually by
45a qualified independent auditor.

(3) An obligation within subsection (2)(a)

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(a) may require the separation to be maintained in relation to different
services, facilities or products or in relation to services, facilities or
products provided in different areas, and

(b) may impose requirements about the accounting methods to be used in
5maintaining the separation.

(4) An obligation within subsection (2)(b) or (c)

(a) may include conditions requiring the application of presumptions in
the fixing and determination of costs and charges for any purpose, and

(b) may require the universal service provider concerned to publish such
10accounts and other information relating to anything required to be
done as a result of those provisions as OFCOM consider appropriate.

(5) An obligation within subsection (2)(d) may require the universal service
provider concerned to meet the costs of the audit.

(6) If a USP accounting condition imposes rules on a universal service provider
15about the use of cost accounting systems, OFCOM may secure that the
condition also imposes an obligation on the provider to make arrangements for
a description to be made available to the public of the cost accounting system
used.

(7) If OFCOM impose an obligation under subsection (6), the description of
20information to be made available must include details of—

(a) the main categories under which costs are brought into account for the
purposes of that system, and

(b) the rules applied for the purposes of that system with respect to the
allocation of costs.

(8) 25In this section “qualified independent auditor” means a person who—

(a) is eligible for appointment as a statutory auditor under Part 42 of the
Companies Act 2006, and

(b) if the appointment were an appointment as a statutory auditor, would
not be prohibited from acting by section 1214 of that Act (independence
30requirement).

Persons providing services within scope of universal postal service

39 Services within scope of the universal postal service

(1) A postal service is within the scope of the universal postal service if—

(a) the service falls within the description of a service set out in the
35universal postal service order, or

(b) the service would fall within the description of a service set out in that
order but for the fact that—

(i) in the case of a service consisting of the delivery or collection of
letters or other postal packets, the delivery or collection is not
40made on each of the days required by section 30 (see
requirements 1 and 2),

(ii) the service is not provided throughout the United Kingdom, or

(iii) the service is not provided at an affordable price in accordance
with a public tariff which is uniform throughout the United
45Kingdom, or

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(c) in the opinion of OFCOM the service is of a kind that, from the point of
view of users of postal services, could reasonably be said to be
interchangeable with a service of a description set out in that order.

(2) In this section any reference to a service includes a part of a service.

40 5General universal service conditions

(1) OFCOM may impose a general universal service condition on—

(a) every postal operator providing a service within the scope of the
universal postal service, or

(b) every postal operator providing a service within the scope of the
10universal postal service of a description specified in the condition.

(2) A general universal service condition is—

(a) a condition containing such obligations as OFCOM consider necessary
to impose for, or in connection with, securing the provision of a
universal postal service in accordance with the standards set out in the
15universal postal service order, or

(b) a condition containing such obligations as OFCOM consider necessary
to impose for the purposes of section 44.

(3) A general universal service condition may require a person—

(a) to make contributions in accordance with any scheme established
20under section 44, and

(b) to take such steps as may be required by any such scheme as regards
contributions made by users of services within the scope of the
universal postal service.

(4) At any time when there is a universal service provider, nothing in subsection
25(2)(a) is to be read as authorising the imposition of a condition requiring a
person—

(a) to deliver or collect letters or other postal packets as mentioned in
section 30,

(b) to provide a service throughout the United Kingdom, or

(c) 30to provide a service at an affordable price in accordance with a public
tariff which is uniform throughout the United Kingdom.

41 Recovery of administrative charges incurred by OFCOM

Schedule 4 makes provision authorising OFCOM to impose charges on postal
operators providing services within the scope of the universal postal service to
35meet costs incurred by OFCOM in carrying out their functions in relation to
postal services.

Financial support for universal postal service

42 Review of costs of universal service obligations

(1) OFCOM may from time to time review the extent (if any) of the financial
40burden for a universal service provider of complying with its universal service
obligations.

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(2) In carrying out a review under this section OFCOM must consider the extent
to which, in their opinion, the provider is complying with its universal service
obligations in a cost-efficient manner.

(3) If—

(a) 5regulations under section 34 require the financial burden of complying
with universal service obligations (or proposed universal service
obligations) to be taken into account in determining whom to
designate, and

(b) the regulations provide for a particular method of calculating that
10burden to be used for the purposes of that determination,

that must be the method of calculation applied on a review under this section.

(4) If subsection (3) does not apply, the financial burden of complying is to be
taken to be the amount calculated by OFCOM to be the net cost of compliance
after allowing for market benefits accruing to the universal service provider
15from—

(a) the provider’s designation, and

(b) the application to the provider of universal service obligations.

(5) After carrying out a review under this section OFCOM must either—

(a) ensure that the calculations made by them on the review are audited by
20a person who appears to them to be independent of universal service
providers, or

(b) carry out an audit of those calculations themselves.

(6) OFCOM must ensure that a report on the audit—

(a) is prepared, and

(b) 25if not prepared by OFCOM, is provided to them.

(7) OFCOM must publish—

(a) their conclusions on the review, and

(b) a summary of the report of the audit which was carried out as respects
the calculations made for the purposes of that review.

(8) 30The publication must be in such manner as OFCOM consider appropriate for
bringing it to the attention of the persons who, in their opinion, are likely to be
affected by it.

(9) The Secretary of State may at any time direct OFCOM to carry out a review
under this section.

(10) 35Unless directed to do so by the Secretary of State, OFCOM may not carry out a
review under this section before the end of the period of 3 years beginning with
the day on which this section comes into force.

43 Fairness of bearing burden of universal service obligations

(1) This section applies if OFCOM

(a) 40have concluded on a review under section 42 that complying with its
universal service obligations imposes a financial burden on a universal
service provider, and

(b) have published that conclusion in accordance with that section.

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(2) OFCOM must determine whether they consider it is or would be unfair for the
provider to bear, or to continue to bear, the whole or a part of the burden of
complying with its universal service obligations.

(3) The determination by OFCOM of—

(a) 5whether it is or would be unfair for the provider to bear, or to continue
to bear, that burden, or

(b) the extent (if any) to which that is or would be unfair,

must be made in accordance with regulations made by OFCOM.

(4) OFCOM must publish the determination.

(5) 10The publication must be in such manner as OFCOM consider appropriate for
bringing it to the attention of the persons who, in their opinion, are likely to be
affected by it.

(6) If OFCOM determine that it is or would be unfair for the provider to bear, or
to continue to bear, the whole or a part of that burden, they must submit a
15report to the Secretary of State setting out their recommendations as to the
action (if any) that they consider ought to be taken to deal with the burden.

(7) The report may make recommendations—

(a) about the order in which action ought to be taken, and

(b) as to whether the taking of action ought to be contingent on the success
20or otherwise of the taking of other action.

(8) The recommended action may consist of one or more of the following—

(a) the carrying out of a review under section 33 (review of minimum
requirements),

(b) requiring contributions to be made in accordance with section 44 for
25meeting some or all of that burden, and

(c) the making of a procurement determination.

(9) A procurement determination is a determination by OFCOM as to whether, in
their opinion, any particular postal operator or operators (which may include
the provider) could provide any of the postal services required to be provided
30by the universal service obligations concerned in a way which would mean
that—

(a) no unfair financial burden would be imposed on any person (or
persons) in complying with those obligations, or

(b) the financial burden imposed on any person (or persons) in complying
35with those obligations would be less unfair than the one mentioned in
subsection (6).

(10) A procurement determination must be made in accordance with regulations
made by OFCOM.

(11) After receiving the report under subsection (6), the Secretary of State must
40determine what action (if any) the Secretary of State considers ought to be
taken by OFCOM to deal with the burden.

(12) The Secretary of State may then direct OFCOM to take that action.

(13) A direction under subsection (12) may make provision—

(a) about the order in which specified action is to be taken, and

(b) 45for the taking of specified action to be contingent on the success or
otherwise of the taking of other specified action.

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In this subsection “specified” means specified in the direction.

44 Contributions for meeting burden

(1) This section applies where the Secretary of State has directed OFCOM to
require contributions to be made for meeting some or all of the burden
5concerned.

(2) The contributions are to be made by either or both of the following—

(a) postal operators providing services within the scope of the universal
postal service,

(b) users of services within the scope of the universal postal service (by
10way of the charges paid by them).

(3) OFCOM may determine that the contributions under this section are to be
made only by a description of postal operator or user.

(4) The assessment, collection and distribution of the contributions must be
carried out in accordance with a mechanism provided for in a scheme
15contained in regulations made by OFCOM.

(5) OFCOM must exercise their power to make the regulations in a way they
consider will secure the operation of the scheme—

(a) in an objective, proportionate and transparent way,

(b) in a way that does not involve, or tend to give rise to, any undue
20discrimination against particular postal operators (or a particular
description of postal operators) or particular users (or a particular
description of users), and

(c) in a way that avoids, or (if that is impracticable) minimises, any
distortion of competition.

(6) 25The regulations may provide for—

(a) the scheme, and

(b) any fund set up for the purposes of the scheme,

to be administered by OFCOM or some other person specified in the
regulations.

(7) 30A person may be specified only if OFCOM are satisfied as to the person’s
independence of both—

(a) universal service providers, and

(b) postal operators providing postal services within the scope of the
universal postal service.

(8) 35The regulations may not be made unless—

(a) the Secretary of State has consented to the making of them and

(b) a draft of the statutory instrument containing them has been laid
before, and approved by a resolution of, each House of Parliament.

45 Report on sharing mechanism

(1) 40This section applies where regulations under section 44 provide for a scheme
for the assessment, collection and distribution of contributions.

(2) OFCOM must prepare and publish a report setting out, in relation to the period
to which it applies—

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(a) every determination by OFCOM that has had effect in relation to a time
in that period as a determination of the costs of providing anything
required to be provided by a universal service provider to meet its
universal service obligations,

(b) 5the market benefits for each universal service provider that have
accrued to the provider during that period from its designation and the
application to it of universal service obligations, and