Georgian postal regulation nurtures a monopolist
24 April, 2014
Georgian postal regulation nurtures a monopolist
A new draft law on Georgian postal communication opposes best practices and international obligations assumed by the EU. It lays ground to the emergence of a monopolistic company on the market that may scare off around 40 communication companies including the global fames DHL, TNT, UPS and FEDEX. If this happens, the image of Georgia will be marred significantly because the world only knows about one similar precedent in Turkmenistan when international postal companies left the country in 2005.
draft law on postal communication was prepared by Ministry of Economy and Sustainable Development for forthcoming parliamentary discussions. The draft puts the National Communication Commission (GNCC), the communication market’s regulatory body, in charge of the post/parcels market too. Besides that, it introduces barriers on carrier business implementing shipping of letters and parcels as well as on companies handling money transfers.
Only authorized companies will be able to implement the said services. However, the problem is that “authorization” is misinterpreted and means in fact licensing, Natia Kutivadze, a legal analyst at Transparency International Georgia, said in an interview with Georgian Journal. As a matter of fact, the current law also envisages authorization of market players, the term implies the simple registration of companies and asks for no terms. The draft, however, requires a special qualification and material-technical base as is necessary for authorization. This in fact equals licensing which opposes the international practice and EU regulations which demand liberalization of the postal market as much as possible.
Besides, the new requirements lay ground to non-transparency and misinterpretation because the paragraphs on authorization do not elaborate on details or the required qualification, or the material-technical base. The definition of these details is left to the discretion of GNCC which poses a risk to a subjective approach and discrimination, Kutivadze believes.
Another concern is that the state-owned Georgian Post gets a 20-year-long mandate as a national operator handling the universal postal service [that includes access to basic postal service which does not imply luxurious services like courier or express shipping] while the EU law only allows a 2-year office term for such an operator and selects it via an open tender. Moreover, the draft gives an exclusive right to the Georgian Post to handle letters and parcels under 2kg and 30kg respectively while the maximum international limit for this is 100 grams. Otherwise, once parcels enter Georgian territory the Georgian Post takes care of their delivery which opposes to international companies’ principles. Besides, they have to pay for Georgian Post’s service which expands its operational costs and this will end in higher consumer prices. And because 70% of postal shipping is made up of letters and parcels under 2kg and 30kg, international operators plan to quit if the limits are not removed. The biggest sufferer will be the Georgian consumer, left with high prices and no options because the Georgian Post cannot offer similar services alone: it does not have the necessary infrastructure.
“The TNT head-office will never allow Georgian Post to handle its parcels because we track the entire route of our parcels on-line which also includes access to our secret commercial information. The admission of Georgian Post to our parcels means entrusting them with our commercial secrets. This is not going to happen,” Nino Menteshashvili, CEO of the TNT representative company operating in Georgia for 25 years, told GJ.
The government explains that planned changes are a political decision. In the meantime, these changes mean that the Georgian post market which has been liberalized since 2005 will be regulated following the EU Association Agreement scheduled to be signed in June. The EU regulation acknowledges the liberalization of the post market especially in non-universal services and asks for monopolist-free market.
On 16 April, TI Georgia, together with the post market players, called on Ministry of Economy to streamline the draft with the EU Association Agreement prior to submitting it for the parliamentary discussions. The government agreed on canceling the authorization terms, however, it maintains the 30 kg term that is critical to carriers. Negotiations are underway and the business hopes for a compromise.

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