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Postal Regulatory Commission.
The Commission is establishing a public inquiry regarding Postal Service's claim that the Inbound Letter Post product is subject to competition. This notice informs the public of this proceeding, invites public comment, and takes other administrative steps.
Submit comments electronically via the Commission's Filing Online system at http://www.prc.gov. Those who cannot submit comments electronically should contact the person identified in the FOR FURTHER INFORMATION CONTACT section by telephone for advice on filing alternatives.
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FOR FURTHER INFORMATION CONTACT:
David A. Trissell, General Counsel, at 202-789-6820.
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III. Claims of Competition and Commission Action
IV. Ordering Paragraphs
In recent proceedings, the Postal Service claimed that the Inbound Letter Post product 
is subject to competition. The Commission establishes this docket to examine these and related claims.
A. The Universal Postal Union
The Universal Postal Union (UPU) is a United Nations specialized agency comprising 192 member countries, including the United States.
Member countries negotiate international agreements governing the exchange of international mail, including applicable rates for the delivery of international mail. The UPU identifies three types of international mail: Letter Post, Parcel Post, and Express Mail Service (EMS).
UPU Letter Post mailpieces consist of letters, postcards, printed papers, and small packets weighing up to 2 kilograms.
The UPU divides UPU Letter Post mail into three shapes: Letters and cards (format P); large letters or “flats” (format G); and bulky letters and small packets (format E). In January 2018, the Universal Postal Convention (UPU Convention) began differentiating UPU Letter Post mail by content in addition to shape.
The UPU Convention limits the contents of cards, letters, flats, and bulky letters to documents. UPU Convention, Article 17.2. Small packets are UPU Letter Post mailpieces containing goods. Id. Article 17.3.
B. Statutory Framework
In 2006, the Postal Accountability and Enhancement Act (PAEA) 
was enacted. The PAEA separated postal products into two distinct classifications: Market dominant and competitive.
Pursuant to 39 U.S.C. 3642(b), market dominant products are those products over which “the Postal Service exercises sufficient market power that it can effectively set the price of such product[s] substantially above costs, raise prices significantly, decrease quality, or decrease output, without risk of losing a significant level of business to other firms offering similar products.” 
Competitive products “consist of all other products.” 
Section 3642 of title 39 governs the addition of products to, removal of products from, or transfer of products (or components of a product) between the market dominant and competitive product lists.
The Commission may consider a change to a product's market dominant or competitive classification upon request of the Postal Service, users of the mail, or upon its own initiative. 39 U.S.C. 3642(a). The criteria for assigning a product to either the market dominant or competitive product list is described in 39 U.S.C. 3642(b). When transferring products between product lists, there is nothing to prevent transfer of only part of a product. 39 U.S.C. 3642(c).
The criteria for assigning a product to either the market dominant or competitive product list are based on a measure of the Postal Service's market power; whether or not the product is covered by the postal monopoly; and the concerns of the private sector, users of the product, and small businesses. 39 U.S.C. 3642(b).
The market power criteria are specified in 39 U.S.C. 3642(b)(1) as follows:
[The text of 39 U.S.C. 3642(b)(1) was removed to comply with the Federal Register Document Drafting Handbook, section 2.6. See 39 U.S.C. 3642(b)(1).].
The postal monopoly criteria are specified in 39 U.S.C. 3642(b)(2) as follows:
[The text of 39 U.S.C. 3642(b)(2) was removed to comply with the Federal Register Document Drafting Handbook, section 2.6. See 39 U.S.C. 3642(b)(2).].
The private sector, users of the product, and small businesses criteria are specified in 39 U.S.C. 3642(b)(3) as follows:
[The text of 39 U.S.C. 3642(b)(3) was removed to comply with the Federal Register Document Drafting Handbook, section 2.6. See 39 U.S.C. 3642(b)(3).].
When including products on the competitive product list, the product must also meet the financial requirements of 39 U.S.C. 3633(a), which:
[The text of 39 U.S.C. 3633(a) was removed to comply with the Federal Register Document Drafting Handbook, section 2.6. See 39 U.S.C. 3633(a).].
C. Classification of Inbound Letter Post
Sections 3621 and 3631 of title 39 listed the products preliminarily classified as market dominant and competitive, respectively. The PAEA preliminarily classified single-piece international mail as market dominant and bulk international mail as competitive. 39 U.S.C. 3621(a)(10) and 3631(a)(4). When the Commission requested comments related to the classification of inbound international mail in its initial rulemaking pursuant to the requirements of PAEA, the Postal Service argued that the Commission should not classify inbound Start Printed Page 33966international mail as market dominant or competitive.
The Commission found the Postal Service's arguments for exceptional treatment of inbound international mail as neither market dominant nor competitive unpersuasive and inconsistent with section 3642.
The Commission concluded, “[h]ad Congress intended to exempt inbound international mail from the requirement that all products be categorized as either market dominant or competitive, it would have done so explicitly, as it did by specifically exempting experimental products from the requirements of section 3642.” Order No. 43 at 78 (footnote omitted). The Commission found that the PAEA unambiguously requires the Commission to classify inbound international mail products as either market dominant or competitive. Id. Consistent with section 3621, the Commission classified Inbound Letter Post as a market dominant product. Id. at 85.
III. Claims of Competition and Commission Action
In Docket Nos. R2018-1 and Docket ACR2017, the Postal Service repeatedly claimed that Inbound Letter Post is subject to “considerable,” “substantial,” and “intense” competition, especially Inbound Letter Post small packets.
However, the Postal Service filed documents in support of its claims of competition for the first time when it filed its Motion for Reconsideration. Motion for Reconsideration, Attachments 1-4. Despite these claims of competition, the Postal Service acknowledged that the Inbound Letter Post product is on the market dominant product list and that it has not requested to transfer all or part of the Inbound Letter Post product to the competitive product list. Motion for Reconsideration at 6.
In its Motion for Reconsideration, the Postal Service stated that it explored the potential transfer of Inbound Letter Post small packets from the market dominant to the competitive products list. Id. However, the Postal Service stated that one obstacle to transferring all or part of the Inbound Letter Post product from the market dominant product list to the competitive product list relates to the “inability to separate Inbound Letter Post that is subject to the Private Express Statutes [(PES)] from Inbound Letter Post that is not subject to the PES.” Id.
These claims raised the question of whether Inbound Letter Post should be wholly or partially transferred from the market dominant product list to the competitive product list. Rather than attempt to address these issues in Docket No. ACR2017, the Commission concluded that the best course of action is to initiate a separate proceeding to evaluate these issues, including the non-public attachments the Postal Service provided with its Motion for Reconsideration.
Accordingly, the Commission establishes the instant proceeding to examine the classification of the Inbound Letter Post product. The Commission is issuing a Commission Information Request (CIR) concurrently with this Order. Once a sufficient record has been developed, the Commission will issue a procedural schedule inviting comment.
Pursuant to 39 U.S.C. 505, James Waclawski is designated as an officer of the Commission (Public Representative) to represent the interests of the general public in this proceeding.
Additional information may be accessed via the Commission's website at http://www.prc.gov.
IV. Ordering Paragraphs
It is ordered:
1. The Commission hereby establishes Docket No. PI2018-1 to review issues related to the classification of the Inbound Letter Post product and parts thereof.
2. Pursuant to 39 U.S.C. 505, James Waclawski is designated as an officer of the Commission (Public Representative) to represent the interests of the general public in this proceeding.
3. The Secretary shall arrange for publication of this order in the Federal Register.
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By the Commission.
Stacy L. Ruble,
[FR Doc. 2018-15284 Filed 7-17-18; 8:45 am]
BILLING CODE 7710-FW-P