NZ Post in for rough ride over higher fees

'We have put a complaint through to the Commerce Commission because we believe it is an inappropriate proposal and it is not good for the market.'– Dean Bracewell, above

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A group of postal companies including NZX-listed courier company Freightways has asked the Commerce Commission to investigate an attempt by NZ Post to charge them more to access its postal network.

The trend to email means state-owned NZ Post is struggling with a dramatic fall in mail volumes, and its revenues fell from $1.29 billion in 2008 to $1.25b in the past financial year – even with the revenue growth from the rapidly-expanding Kiwibank included.

But a recent bid to ramp up the amount Freightways, Fastway and 25 other courier services pay to get their mail delivered by NZ Post's posties – which those companies need for their rural and residential business – has created anger and accusations that NZ Post is abusing its monopoly position.

Dean Bracewell, managing director of Freightways, which has a market capitalisation of nearly $500m, said: "We have put a complaint through to the Commerce Commission because we believe it is an inappropriate proposal and it is not good for the market."

Bracewell said NZ Post had had an obligation since deregulation in 1998 to provide access to the network to operators such as Freightways, but NZ Post's proposal showed it felt able to decide the terms and price of that access.

He added there was no regulator to rule on whether NZ Post's proposal was fair, and the bosses of NZ Post's rivals had decided to ask the commission to step in.

Bracewell confirmed the proposal would create millions in extra costs for NZ Post's rivals, something confirmed in a recent report from parliament's commerce select committee. The report said the network access agreements had allowed "other operators to cherry-pick profitable delivery runs while New Zealand Post forgoes millions of dollars in revenue."

NZ Post said the proposal aimed to set a "fair access price" that encouraged competition while also maintaining a sustainable universal postal service.

"The review found that New Zealand Post is providing postage rate discounts to other operators that are substantially higher than the legal minimum," said acting chief executive Sam Knowles in a statement. "This is commercially unsustainable and effectively means New Zealand Post is subsidising other operators.

"Given the decline in overall letter volumes due to electronic substitution, this is no longer tenable for New Zealand Post or for our shareholders – the people of New Zealand."

NZ Post told the Sunday Star-Times: "We have briefed the Commerce Commission on our proposals and are aware of the approach to the commission by access customers."

- © Fairfax NZ News