Summary of FTC’s Recommended Postal Reforms

Published June 1, 2008

The Federal Trade Commission report, “Accounting for Laws that Apply Differently to the United States Postal Service and its Private Competitors,” now under review by the Postal Regulatory Commission (PRC), makes several suggestions for reform:

  • Congress may wish to consider acting to reduce the constraints on the U.S. Postal Service’s (USPS) competitive products operations.
  • PRC may wish to consider requiring USPS to account for its implicit subsidies when making pricing and production decisions.
  • Congress could eliminate the legal differences between USPS and its private competitors. This is a long-term suggestion that could be accomplished by relaxing the current mailbox monopoly to allow private carriers to deliver competitive products. FTC says this would deliver a net benefit to consumers.
  • Move to establish USPS’s competitive products division as a separate corporate entity with either private or government ownership. This would eliminate many of the major remaining legal differences between USPS and its private competitors, according to FTC.

“The Post Office has competitive and non-competitive products, which is really a fiction, because they are not separate companies,” said James Cooper, director of policy planning at FTC. USPS is not supposed to sell competitive products below cost or cross-subsidize them. For accounting purposes, how much of the mail truck is being used for competitive Priority Mail versus monopoly First Class mail may need to be determined, but for practical purposes the distinction means little, said Cooper.

“Ultimately the PRC will need to determine the appropriate approach under its regulatory authority to require the USPS to account for the economic benefits it derives from differential legal treatment,” the report notes. “Further, only Congressional action can eliminate the legal constraints that negatively impact the USPS’s competitive product operations.”

— Steve Stanek