The National Commission of Markets and Competition (CNMC) has requested Post to modify your accounting system for fiscal years 2018 and 2019, in which you applied income from administrative notifications in the subsidized universal postal service, when they should not be included. Administrative notifications, despite representing only 3.6% of total shipments, generated 21.5% of total Correos revenue in 2019, up to 297 million euros. Competition considers the practice of Correos a administrative infraction. Ten years after the liberalization of the postal sector, Correos continues to hold the majority of the market share in this administrative notification service, managing 91.3% of the total in 2019.
For Correos, the Competition resolution “fully coincides with what is required in previous resolutions that, at present, are provisionally suspended by Section 8 of the Contentious-Administrative Chamber of the National Court”. From the postal agency management they consider that the Competition criterion goes against the jurisprudence of the Court of Justice of the European Union and the criterion of the European Commission itself, which on May 14, 2020 considered that the aid granted by the Kingdom from Spain to Correos, among others, for the service of administrative notifications, were compatible with EU law. Therefore, Correos maintains that its accounting is correct.
Correos obtained a net profit of 14.8 million euros in 2019 and losses of 153 million in 2018. The postal agency achieved profits of 1.8 million in the first half of this year, compared to losses of 130, 5 million euros in the same period of 2020. Revenues rose 20.6% to 1,163 million euros. The modification of the accounting system for those two years would mean a relevant accounting change for the agency’s accounts.
The regulator warns the public postal company that failure to comply with this requirement could be considered an administrative offense, among those provided for in Title VII of the postal law. Competition explains that Correos is the company designated by law to provide the Universal Postal Service, that is, a set of services that must be permanently guaranteed throughout the national territory, with certain quality standards and at affordable prices for all users. This Universal Postal Service includes national and cross-border shipments of letters, postcards of up to 2 kilograms and postal packages of up to 20 kilograms, for which Correos receives compensation for the “unfair” financial burden of meeting these service obligations. public.
In this context, the CNMC has concluded that the 2018 and 2019 Correos analytical accounting model complies with the provisions of the law, with some exceptions, one of which affects this administrative notification service. Specifically, Correos imputes administrative notifications within the section of registered letters, when in reality administrative notifications, unlike registered letters, are not part of the Universal Postal Service. This inclusion affects the accounting separation that must exist between services included and excluded from the scope of the Universal Postal Service.