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Outside editorial: Postal Service's pricing proposal is monopolistic

Posted: June 25, 2012 - 11:00pm

The following editorial appeared in the Miami Herald:

As the U.S. Postal Service struggles to balance its books under pressure from congressional rules that have required it to pay more up front for its workers’ pensions than most businesses, the quasi-private/public agency has come up with a “solution” that smacks of a monopolistic pricing arrangement that would favor one national direct mail media company and hurt community newspapers big and small.

More than two dozen members of Congress — led by U.S. House Oversight and Government Reform Committee Chairman Darrell Issa, and including Florida Rep. Connie Mack — have written Postmaster General Patrick Donahue to ask for a “detailed justification” for the proposed deal. The Newspaper Association of America also asked the U.S. Postal Regulatory Commission to nix the proposal between the Postal Service and the Valassis company.

The problem isn’t the discounted rate, per se — if that rate were applied in a manner that’s fair to competitors. But the way the rules have been written, the deal essentially grants one company postage rebates ranging from 20 percent to 36 percent for new mailings containing advertising by national retailers.

In their letter, lawmakers assert that the rates would have “unanticipated and adverse results on the marketplace.” True, and they would force newspaper companies, historically big and steady clients for the Postal Service, to take their business elsewhere and look for cheaper delivery rates.

It’s a lose-lose proposition.

“If the price structure for these advertisements changes significantly, many newspapers may shift away from the use of the Postal Service toward the use of private delivery methods, to the Postal Service’s financial detriment,” the members of Congress wrote in their letter. “Due to the volume of profitable mail at risk, even a small decline in newspaper mail would cause a net revenue loss for the Postal Service under this negotiated service agreement.”

Precisely.

As the lawmakers note, the Postal Service’s special designation as a quasi-public agency that is supposed to run like a business makes it “both a competitor and a regulator. It is, therefore, imperative that the Postal Service does not abuse its power and directly or indirectly pick winners and losers in the private sector.”

To have one special deal for a single national company raises questions about anti-trust shenanigans. The courts would have to make that call, of course, but it’s vexing that the Postal Service would view this one-size-fits-only-one-company proposal as a fair and profitable deal. It’s not.

The regulatory commission will make its decision soon on the Postal Service proposal. It should stamp it “return to sender” and demand that any new arrangement be true to the Postal Service’s mission of serving all clients fairly, without prejudice.

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