Consultation and Proposed Decision on a Price Control Mechanism for MaltaPost plc and Revised Postal Tariffs

This consultation and proposed decision take into account  the main factors considered by the MCA in the development of a proposed price control mechanism for MaltaPost plc and the Authority’s position on the tariff revisions requested by MaltaPost.

Throughout 2012, MaltaPost was negatively impacted by changes in the regulatory framework, set by the Universal Postal Union . The changes related mainly to the inter-operator fees receivable/payable in respect of international mail (cross-border mail). MaltaPost’s profits in this regard were significantly reduced. This negative impact on MaltaPost was worsened by the fact that domestic letter mail and registered mail have recorded systematic losses over the years.
This, coupled with considerable reductions in the volumes of domestic mail has put increasing pressures on the long-term sustainability of the universal service area, that is, quality postal services, or products, which Maltese citizens have a right to access, at fair and affordable prices, irrespective of where they may live.  
In this context, the MCA is proposing a price control mechanism that is capable of achieving the following regulatory objectives:
safeguarding the viability of the Universal Service;
promoting competition;
preventing abuse of market power;
safeguarding the affordability of the Universal Service; 
contributing towards productive and allocative efficiency; 
complying with tariff principles in the Postal Directive ; and,
minimising regulatory and implementation overhead.
Following technical consultations with MaltaPost on the price control mechanism, MaltaPost submitted its request for tariff revisions. In evaluating these requests, the MCA applied a two-pronged test to ensure primarily that the proposed tariffs were in line with the price control mechanism and furthermore, to assess affordability implications.
After due consideration and thorough analysis of the requests made by MaltaPost, the Authority believes that price increases in a number of universal services are necessary in order to safeguard the provision of such services.  Also, the MCA deems that the revised postal tariffs will generally remain affordable to users and shall retain the current position of being amongst the lowest within the EU. To this effect, the MCA is proposing to accept the tariff revisions requested by MaltaPost for financial year 2013 as follows:
In addition to these, MaltaPost also submitted its price proposals for the period 2014-2015. The Authority is proposing to provisionally accept these tariff proposals unless these are found to be non-compliant with the parameters of a future price control mechanism for the said period. In setting this price control, the MCA will assess any new developments that may come to light, as well as the assumptions, forecasts or efficiency levels considered by MaltaPost, prior to confirming such tariffs. 
Interested parties are invited to participate in this consultation process and submit their views by no later than Friday, 19th October 2012.
Regulatory Type: 

MCA Reference: 
Closing Date: 
Friday, October 19, 2012

Related Decision:
Price Control Mechanism for MaltaPost plc and Revised Postal Tariffs - Responses to Consultation and Decision Notice