TOP STORY | Wednesday, 29 August 2007

Maltapost privatisation deal to be investigated by Competition Division

Charlot Zahra

The Consumer and Competition Division will be investigating the sale of shares from Maltapost plc to Lombard Bank plc. Business Today can also reveal that Lombard Bank CEO Joseph Said is involved according to records at the registry of companies in the running of the rival postal service UPS through holding companies.
BusinessToday asked the Division whether this constituted a conflict of interest according to competition laws. Mireille Vella, Director-General, Consumer and Competition Division within the Ministry for Competitiveness and Communications answered:
“Please note that the Consumer and Competition Division is aware of this transaction and will be examining the transfer of shares of Maltapost plc to Lombard Bank plc once all documentation is received in order to assess whether this is a notifiable concentration under the Control of Concentrations Regulations 2002 under the Competition Act.”
On his part, Said told BusinessToday that any question about a conflict of interest was “totally incorrect”.
According to the UPS (short for United Parcel Service) website, the US-based company’s Authorised Service Contractor is Airswift Couriers Limited, whose directors are First Gemini plc, David Tortell, Francis Vella and Mark A Spiteri, while its shareholders are Express Trailers Limited, TransEuroSystems Limited, Calco Limited and First Gemini plc.
A further examination of the Registry of Companies shows that subsidiary company First Gemini plc’s Directors are Joseph Said, Alec Mizzi and Reginaldo Vella, while it has around 200 shareholders.
It also shows that subsidiary company Calco Limited’s Directors are Alan Mizzi, Alec A Mizzi and Joseph Said while its shareholders are Alf. Mizzi & Sons Limited and First Gemini plc.
Likewise, the third subsidiary company, Transeuro Systems Limited’s Directors are Joseph Said, Mark A Spiteri and Aldo Vella, while its shareholders are First Gemini plc and Alfred Grima.
On 9 August 2006 Said resigned as Director of Airswift but has retained his directorship in three of the four companies that have a shareholding in the company, that is, First Gemini plc, Calco Limited and TransEuroSystems Limited.

Asked whether the Malta Communications Authority (MCA) would investigate these claims, the Authority said yesterday that “its remit with respect to the regulation of Maltapost relates almost entirely to the latter’s Universal Service Obligations (USOs) and the services within the current reserved area over which Maltapost has exclusive monopoly rights.”
An MCA spokesperson explained that “Airswift provides services that are in competition with Maltapost solely in the wider competitive area (i.e. outside the universal service area), which is liberalised.
“The MCA’s remit with respect to such services (e.g. courier services) relates solely to ensuring that integrity of mail and that consumer complaint mechanisms are appropriately provided by these service providers.
“In providing the competitive services, prospective postal operators need to solely notify the MCA of their entry in the market and the MCA has no authority to withhold their authorisation,” the spokesperson told BusinessToday.
On July 30 the government had announced the total privatisation of Maltapost plc by the transfer to Lombard Bank Malta plc of a 25 per cent shareholding in the company, taking Lombard’s holding from the existing 35 per cent to a majority shareholding of 60 per cent.
Full privatisation was to be made in two stages: firstly there will be the transfer to Lombard Bank Malta plc of the 25 per cent shareholding, making Lombard the majority shareholder.
At a second stage, the government will sell via an initial public offering its remaining 40 per cent shareholding. Maltapost will be listed on the Malta Stock Exchange.
The government had said the sale was consistent with its policy of giving up its commercial operations to limit itself to regulating in the interest of the consumer.
The situation today was that the market for postal items exceeding 50 grams was totally liberalised and open to competition. It did not make sense for the government to operate in competition with the private sector.
The EU was also drawing up regulations so that from 2009, the postal market would be open to competition. The postal monopoly has seen its days and it did not make sense for the government to continue operating in it.
The government, through the MCA, would ensure that universal postal services obligations would at all times be satisfied by Maltapost in the interests of consumers.
The share transfer at a consideration of Lm1,217,585, represents one-and-a-half times the net asset value of the shares according to the last audited accounts of September 2006.
On the average profit registered by the company over the last three years, this price represented a high price to earnings ratio of 68.
The government considered the transaction to have been concluded at an advantageous price apart from it also holding significant strategic value.