ACCC gives all clear to Australia Post

Australia Post is not using its monopoly to subsidise its logistics services, the ACCC says

ByRob McKay | July 26, 2010

Australia Post’s financial support of its logistics operations remains unabated as the business arm struggles to pay its way, the Australian Competition and Consumer Commission (ACCC) has found.

The enterprise has sought to gain a profit in logistics through investment over the past four years but this had been stymied recently due to an "extremely difficult trading environment" that was expected to continue.

The competition watchdog issued its fifth report on Friday analysing whether the government-owned firm aids its competitive services from its monopoly earnings.

It says that non-monopoly backing for logistics has been the case in every since it began monitoring cross-subsidy in 2004-05, "but the size of the subsidy increased substantially in 2008-09".

The actual figures were confidential but the previous year’s report showed revenue from logistics services was $3.3 million less than the direct cost of providing the service.

The increase in the subsidy to logistics from $1.2 million in 2005-06 to $3.3 million in 2006-07 was a result of "continuing infrastructure development".

"As the logistics business developed in 2005-06, the level of subsidy decreased by $4 million to $1.2 million," the previous report says.

"However, the subsidy to logistics has increased by over $2 million in 2006-07."

Australia Post’s logistics services include international origin services, freight forwarding, warehousing, inventory management and packing, distribution and returns management, as well as electronic order processing, automated reporting and credit management.

"The regulatory accounts do not provide evidence that Australia Post is cross-subsidising its competitive services with revenue from its monopoly services," ACCC Chairman Graeme Samuel says.

"Australia Post's logistics services continue to be subsidised.

"However, the source of that subsidy appears to be Australia Post's other competitive services, rather than its monopoly services."

ATN was awaiting return calls from Australia Post and the ACCC at deadline today.

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