European practise

Table 9 presents information on price control mechanisms applicable in countries of the European Union.

**Table 9 - European practise on application of a price control mechanism**
Country	Description
Belgium	Application of a price cap to services (national and international outgoing services) that integrate the universal service, except for mail the price of which varies according to their amount and handling (which means that it applies only to mail sent by residential users and small and medium-sized enterprises). Applies to: priority and non-priority mail weighing up to 2 kg; parcels up to 10 kg; registered mail and insured mail. Price variations are limited to the value of inflation (without alcohol, tobacco and fuel) plus a factor associated to compliance with quality of service indicators (bonus), the use of price variations that are allowed but which have not used before being permitted. Variation weight for each price: revenues in year t-2.
France	On 22 July 2014, pricing criteria for the period 2015-2018 were defined: overall price cap corresponding to the value of inflation plus 3.5% (efficiency factor X = -3.5%). With this formula, and in view of inflation forecasts, the estimated price cap is 5.2% in average nominal terms. The efficiency factor was set on the base of the following assumptions: inflation by 1.7% and annual traffic variation by -6.3%. The efficiency factor may be revised where actual values of assumptions are very different from estimated values, at the request of the USP or of the Regulatory Authority. Pricing criteria will be subject to reassessment by mid-2016. The price cap applies to the universal service as a whole (national and international outgoing services).
United Kingdom	The maximum accumulated variation of the price of a non-priority letter, in the 7-year period, corresponds to 53%+annual CPI (on the basis of the price applied in the 2011-2012 financial year). Price cap applicable to the basket of remaining non-priority items of correspondence and parcels (single piece) weighing up to 2 kg: same price cap. Rules apply only to single piece mail.
The Netherlands	Price cap (applicable only to single piece items of correspondence, parcels and registered mail, given that bulk mail integrates the universal service). Value of the price cap yet to be determined.
Sweden	Price increases of single piece mail up to 500g, in the national scope, limited by inflation verified in the twelve months ending on June of the preceding year. The variation that has not been implemented in a given year may be implemented in one of the three following years.
Germany	Applies to a basket made up of all products provided by a service provider holding a dominant position in the market (in practise, the mechanism applies to the incumbent). Does not apply to bulk mail (that is, more than 50 letters). Annual price cap corresponds to the inflation value (for year t, inflation corresponds to the average of inflation in the twelve months ending on June of year t-1) deducted of factor X, which was 0.6% in 2012 and 2013, and is 0.2% between 2014 and 2018. Variation weight for each price: traffic in year t-2. The use of price variations that are allowed but which have not used before is permitted, insofar as no misuse occurs (to be assessed by the Regulatory Authority).
Italy	Applies to a basket made up of addressed and non-addressed correspondence, parcels and editorial mail (including addressed advertising up to 2012, which in that year was removed from the US scope). The price cap corresponds to the inflation value deducted of 0.5% efficiency factor, plus a quality of service correction value (that depends on the variation between objectives and results of the quality of service in each year).
Ireland	Price cap applicable to the universal service, for 5 years (2014-2019) corresponding to: CPI + 14.98% in the first year; CPI+1.35% in the following years. The price cap may be reviewed at the end of 3 years. At the same time, a maximum variation for prices of letters is defined: 13% in the 1^st year, 2.5% in the following years.
Austria	Mechanism not applied.
Czech Republic	Plans to apply such mechanism.
Estonia	Price cap applied to the US. The US covers only single piece mail.
Finland	Mechanism not applied.
Greece	Mechanism not applied.
Hungary	Mechanism not applied.
Luxembourg	Mechanism not applied.
Malta	Mechanism not applied.
Poland	Plans to apply such mechanism.
Romania	Mechanism not applied.
Slovenia	Mechanism not applied.
Spain	Mechanism not applied.
Latvia	Mechanism not applied.

Source: ICP-ANACOM, based on decisions of several Regulatory Authorities and on the study “Pricing behaviour of postal operators”, Copenhagen Economics for the European Commission, December 2012.