Dutch raises no objections against TNT price cap

The Dutch government raised no objections on Friday against regulating stamp prices of Dutch mail company TNT NV a proposal that has worried investors, but said it will seek a balanced approach.
An amendment to the country's new postal law seeks to limit the returns TNT can generate on part of its mail business, the so-called universal service that includes letters and parcels. Analysts have voiced concerns that the rule, put forward by parliamentarians of the ruling Christian Democrats and Labour, could hurt TNT's margins and as a consequence its valuation.
TNT currently has a monopoly on letters up to 50 grams around half of the 2 billion euro ($2.7 billion) Dutch postal market which will end from the start of next year under the new postal law. The government said it would not seek to remove the amendment, which according to politicians has majority support in parliament.
If passed, Dutch telecoms and post regulator OPTA would initially set TNT's stamp prices based on costs and a "reasonable return." In the following years, prices would be allowed to rise in line with inflation. "There has to be a good balance between affordability of the universal service and a reasonable return for the provider," the economy ministry said in a letter to parliament, released after a cabinet meeting that lasted late into the evening. OPTA will set the initial stamp price based on rules determined by the economy ministry, the letter said.
Lawmakers from the Christian Democrats and Labour have said that they did not expect the rule to lead to significant cuts in TNT's stamp prices.
The ministry also proposed changes to the draft law to guarantee minimum employment standards for postal workers - a move that analysts have said would mostly affect TNT's rivals and could hence be positive for the firm.
The standards will not be written directly into the new postal law as the Labour party had demanded, but the government will have the option to enforce them later if employers and trade unions cannot find an agreement in ongoing talks.
The Labour party had argued that workers needed to be protected, as TNT's rivals, as well as TNT unit Netwerk VSP, employ few permanent staff and pay carriers by the number of items delivered.