Irish Competition Authority Decisions

1. Notification was made by An Post on 30 September, 1992 with a request for a certificate under Section 4(4)of the Competition Act, 1991 or, in the event of a refusal by the Competition Authority to grant a certificate, a licence under Section 4(2) in respect of a standard agency agreement between An Post and the Postmasters.

2. The notification concerns a standard agency agreement between An Post as the Principal and the Postmasters as agents of An Post to provide a "counter business" - the retail activities carried on in a post office - in sub-post offices on behalf of the company.

3. An Post is the state owned company engaged in the operation of the national postal service. The company also operates money transmission services and provides agency services for Government Departments, An Post National Lottery Company, Telecom Eireann and other bodies. The company's turnover in 1993 was £271.8m on which a profit of £7.1m ws made. The Postmasters of whom there were 1,914 in September, 1992 operate the sub-post offices on behalf of An Post.

4. The service concerned in this notification is the provision of Counter Services, that is the service activities carried on in post offices, by Postmasters in sub-post offices to the public on behalf of An Post. Counter services include receipt, registration and dispatch of letter and parcel mails and express delivery mails; sale of postage and saving stamps; sale of TV and dog licences; government publications; postal and money orders; saving certificates and prize bonds; operation of a savings bank service; and Social Welfare, Telecom Eireann and other agency businesses. The business is made up of the statutory monopoly activities of An Post, together with services which An Post operates on behalf of other bodies such as NTMA, Government Departments and Telecom Eireann.

5. There were 2009 post offices on 1 September, 1992, and of these 95 were owned by An Post and managed by its employees and the remaining 1,914 sub-post offices were operated on a sub-contract basis by self employed Postmasters. Over £3 billon worth of transactions are carried out annually at over 2,000 post offices throughout the State. Many Sub Postmasters are also engaged in other retail activities as, for example, newsagents.

6. The notified agreement is a standard agreement, which incorporates a Book of Rules, between An Post and the Postmasters and is of unlimited duration. The sub postmaster is appointed to a sub post office to provide services on behalf of An Post, for which s/he is paid by way of commission calculated on the volume of business transacted. The sub postmaster provides the premises from which the business is conducted. Appointment to the position of postmaster is by competition, but the appointee does not become an employee of An Post.

7. Under rule 2.12 Postmasters are restricted from being the proprietor of a newspaper, either wholly or jointly, or from taking part in the editing, printing or management of a newspaper. The Postmaster is allowed to hold an agency for the sale or delivery of newspapers, but not to engage an employee to deliver a newspaper which is usually not posted, at the same time as a postal delivery.

8. Under rule 2.13 the Postmaster is restricted from holding certain occupations, either as principal or agent, while employed by An Post as the Postmaster of a Sub-Post Office. These include banking or money lending business, or a business connected with a building, provident or friendly society which involves the receipt of money on deposit. Any business connected with a parcel delivery company, or with carriers of parcels is also forbidden. The business of an agency for the collection and distribution of news, the management, printing or publishing of a newspaper or as a correspondent for a newspaper is also prohibited. Philately and bookmaking activities are also restricted. Postmasters are restricted from carrying on on their own account any activity which An Post might in the future require the Postmaster to perform on behalf of the company. Postmasters and part time officers are permitted to engage in the Life Insurance business under certain conditions, i.e. Postmasters must make it clear to all that they are involved in the Life Insurance business in a private capacity; the Post office can not be used for that purpose and it can not be transacted during official hours or while wearing the official uniform and the insurance money must at all times be kept separate from the Post Office money.

9. Under rule 2.14 the Postmasters are prevented from trading in jewellery, watches, plate or other articles in the office, while outside the Post office, they must not act as agents or sell any article of merchandise while on duty.

10. Rule 2.15 restricts the Postmasters from any connection with, ownership or management of a public house, unless there is no direct access between the public house and the Post Office. The Post office portion of the premises should not itself be licensed.

11. Under rule 2.16 Postmasters are prevented from holding positions as Collectors of Rents, Debts or Rates; Assistance Officer; Health Inspector; Officer of a Circuit Court; Sheriff's Officer; Process or Summons Server or Garda Siochana. The spouse of a person holding a position forbidden to servants of An Post is ineligible as Postmaster.

12. Under rule 2.19(a) no officer of An Post can take out a patent or seek provisional protection for an invention without first obtaining the consent of the company. Any officer who applies for a patent without the consent of An Post can be dismissed.

13. In support of its request for a certificate, An Post submitted that the arrangements between the company and the Postmasters did not have the effect of preventing, restricting or distorting competition in the State or in any part of the State. They claimed that the arrangements were akin to those of exclusive dealing contracts with commercial agents and that the EC Notice of 1962 found that such contracts were not caught by Article 85(1). They submitted that by using the same criteria, the agreement between An Post and the Postmasters would be found not to contravene Section 4(1) of the Competition Act, 1991. Furthermore, they claimed that the EC Commission Notice of 1979 concerning sub-contract agreements concluded that such arrangements did not contravene Article 85(1). They submitted that the arrangements between An Post and the Postmasters was of a sub-contract nature and consequently, following the same criteria, the arrangements did not contravene Section 4(1) of the Act. They also made a number of submissions in support of a request for a licence, which it is not necessary to consider in this decision.

14. Section 4(1) of the Competition Act states that 'all agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competition in trade in any goods or services in the State or in any part of the State are prohibited and void'.

15 . Section 3(1) of the Competition Act defines an undertaking as ´a person being an individual, a body corporate or an unincorporated body of persons engaged for gain in the production, supply or distribution of goods or the provision of a service.' An Post are engaged for gain in the provision of postal services and other services such as savings banks and other savings products, parcels, postal and money order business, Social Welfare and other agency business as well. The Postmasters are self employed operators, acting as agents for An Post. Consequently, they are all undertakings within the meaning of section 3(1) of the Competition Act. The agreement is therefore an agreement between undertakings. The agreement has effect within the State.

16. The Authority considers that Postmasters are agents of An Post. The Authority does not consider that Postmasters are subcontractors for An Post. They sell goods and services and receive monies on behalf of An Post and are remunerated by reference to the volume of services they provide. They do not own the goods they sell and the takings of the business are remitted without deduction to An Post. The postmaster operates as an auxiliary organ of the principal. The agency agreement between An Post and postmasters is not itself offensive under section 4(1). The Authority has stated in its decision on the Conoco consignee agreement [1] that where an agency agreement itself does not offend it is possible that certain clauses of it might do so. In this agreement, none of the clauses themselves offend against section 4(1).

17. In the opinion of the Authority, An Post and the Postmasters are undertakings within the meaning of Section 3(1) of the Competition Act, and the notified arrangements for the provision of postal and other services in Sub-Post Offices by the Postmasters on behalf of An Post constitute an agreement between undertakings. In the Authority's opinion the agreement does not offend against Section 4(1) of the Competition Act, 1991.

18. The Competition Authority has issued the following certificate:

The Competition Authority certifies that in its opinion, on the basis of the facts in its possession, the standard agreement between An Post and the Postmasters for the provision of postal and other services in Sub-Post Offices, (CA/837/92E), notified to the Competition Authority on 29 September, 1992 under section 7(1), does not offend against section 4(1) of the Competition Act, 1991.

For the Competition Authority

Patrick Massey

Member

27 April, 1995.