Post Office Counters Service
A report on the efficiency and cost of, and the service provided by, the Post Office in the provision of counter services at Crown post offices.

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Summary

On 6 November 1987 the Department of Trade and Industry (DTI) sent to the Commission the following reference:

" The Secretary of State, in exercise of his powers under section 11 (1) (a) and (b) of the Competition Act 1980, hereby refers to the Monopolies and Mergers Commission (' the Commission') the questions set out below relating to the efficiency and costs of, and the service provided by, the Post Office in the provision at Crown post offices of counter services.

The Commission shall upon this reference investigate and report on the following questions:

(1) whether the Post Office could in providing counter services:
(i) improve its efficiency; or
(ii) improve the service provided without any significant increase in its costs; and

(2) whether, in relation to any matter falling within the questions set out above, the Post Office is pursuing a course of conduct which operates against the public interest, except insofar as either of those questions involve consideration of the appropriateness of:
(i) the financial terms on which the Post Office performs or is to perform services in the exercise of its powers under section 7 (1) (c) to (0 of the Post Office Act 1969 (as amended at the date of this
reference); or
(ii) the principle of automation of counter services, and the pilot scheme of automation, approved by the Secretary of State in April 1986.

For the purposes of this reference:
'Post Office' means the Post Office Group, that is to say the Post Office Corporation and any wholly-owned subsidiary of the Post Office Corporation.
' Counter services' means services consisting in the effecting of transactions and any other business resulting in revenue to the Post Office performed in such parts of post offices as are open to the public for the transaction of postal business.

The Commission shall report upon this reference within a period of six months beginning on the date hereof.
(signed) B E ARMSTRONG
An Assistant Secretary
6 November 1987 Department of Trade and Industry"

On 9 November 1987 the then Chairman of the Commission, acting under section 11 (9) of the Competition Act 1980 and Part II of Schedule 3 to the Fair Trading Act 1973, directed that the functions of the Commission in relation to this reference should be discharged through a group consisting of six members of the Commission including, as Chairman, Mr D G Richards. The composition of the group is indicated in the list of members which prefaces this report.

The DTI issued a press notice on 6 November 1987 announcing the terms of reference for the inquiry and inviting persons wishing to do so to give evidence. Notices advertising the reference and inviting interested parties to submit evidence to the Commission were placed in:

The Times
Financial Times
The Guardian
Belfast Telegraph
The Independent
The Scotsman

Post Office Counters Ltd provided much written material at our request and attended two hearings with the Commission. The Chairman of the Post Office Corporation attended the second hearing, and we also held a separate hearing with him. During the inquiry we visited a number of Crown post offices and area, district and territorial offices throughout the United Kingdom.

The Post Office Unions' Council submitted written evidence and representatives attended two hearings with us. We received separate evidence from the Union of Communication Workers and the National Federation of Sub- Postmasters, and held a hearing with the Federation.

We also received evidence from the Royal Mail businesses of the Post Office, National Girobank, a number of outside clients of Post Office Counters Ltd, customers, the Post Office Users' National Council and other organisations representing customers' interests. We held hearings with some of these witnesses.

Consultants from Deloitte Haskins & Sells assisted us in our examination of the financial management of the Counters business. A consultant from Scicon Ltd and Mr S L H Clarke, who immediately before the reference was Director of the Alvey Programme, assisted us in our examination of the automation of counter services.

Some of the evidence which we received during our inquiry was of a confidential nature and our report contains only such information as we consider necessary for an understanding of our conclusions.

We should like to take the opportunity of thanking those who assisted us in our inquiry. We are particularly grateful to those employees of Post Office Counters Ltd upon whom the main burden of our inquiry fell. Without their prompt and efficient response to all our requests for information we would not have been able to complete the inquiry in less than five months.

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