Select Committee on Trade and Industry Minutes of Evidence

Examination of Witnesses (Questions 220-222)



  220. I have a small point on the Swedish experience, which is often quoted. We had it put to us this morning that there was, you might say, a cherry-picking, urban operation set in place, to which the Swedish national postal service responded with predatory pricing, almost bankrupted itself, had to then put charges on other services, hence the very substantial rise in domestic mail as distinct from business mail. Could such a situation arise in the UK or would the postalised pricing system be a protection?
  (Mr Corbett) I think it would be our job, Chairman, to ensure it did not arise in the UK. The situation in Sweden is that they introduced liberalisation without an awareness of the importance of having a regulator to watch what was going on, and these very significant price distortions, as Swedish Post dropped its business price to try to hold off the impact of new entrants, really came about because there was no regulation in place to get them to stop it. Equally, with regard to the very significant hike in the prices charged to domestic consumers. Clearly that is a lesson we would wish to learn from.

  221. I am going to ask you one last question and preface it in this way. I am perhaps more agnostic about this matter than some of my colleagues are, because I take the view that probably you have embraced the model we have had for the liberalisation of gas and electricity which went down the route of volumes to major customers, trickling down, as it were, to the domestic market. So I am a bit more relaxed about it than some of my colleagues but, nevertheless, could you for the record paint the picture of how you see the liberalised market operating? How Consignia would respond to that and what the service would be for consumers, both domestic and business? Could you give us a couple of minutes on how you see it through the looking-glass?
  (Mr Corbett) I will try to do that in a couple of minutes, Chairman. I think the interesting contrast between post and utilities like gas, electricity and water, is that when there is a price differential or a service quality differential offer to big users of gas and electricity, it is the big user which derives the benefit and that is the end of it. When you have similar opportunities being made available to bulk mailers, remember, although 86 per cent, as we said, of all mail is posted by businesses, 63 per cent of all that mail is delivered to you and me. So the service that the big mailer wants is a service which is not only going to provide value for money but is also going to be responsive to their needs to be able to get in touch with the people they are communicating with, private individuals. So anything which improves the quality of the service will actually reflect in the service we receive as individuals. You do not get this sharp distinction which you get with other utilities between the interests of the business users and the interests of the private consumer, because they are integrally related one to the other. We believe that the proposals we are putting forward for the liberalisation of bulk mail will very quickly filter through into service quality improvements for the benefit of individual users.

  222. On that point, Mr Corbett and Mr Stanley, thank you very much. We will come back to you on any points we think we need further clarification on, but thank you very much for taking the time to attend this afternoon.
  (Mr Corbett) Thank you.

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