CTT request for discount of inputs in calculating QSI pursuant to the Convénio de Qualidade (Quality Convention)

Decision on the request put by CTT, pursuant to Article 6 of the Convénio de Qualidade (Quality Convention) of the Universal Postal Service of 10 July 2008, to discount inputs covering distribution of correio normal (non-priority mail) and correio azul (priority mail) impacted by the general strike held on 24 November 2011, for the purposes of calculating the QSI defined under said Convention

1. Under the terms of clause 8, paragraph 1, point b) of the Contrato de Concessão do Serviço Postal Universal (Contract governing the Universal Postal Service Concession) of 1 September 2000, as amended on 9 September 2003 and 26 July 2006 (Concession Contract), CTT - Correios de Portugal, S.A. (CTT) is bound to provide those services licensed out, ensuring their interoperability, continuity, availability and quality, the quality thereof being specifically in accordance with the parameters and levels of quality established under the Convénio de Qualidade (Quality Convention) of the Universal Postal Service ¹, as concluded between ICP - Autoridade Nacional de Comunicações (ICP-ANACOM) and CTT on 10 July 2008 ², pursuant to clause 12 of said Concession Contract and pursuant to article 8, paragraph 5 of Law no. 112/99 of 26 July (Lei de Bases - Basic Law) ³, with the amendments introduced by Decree-Law no. 116/2003 ⁴, of 12 June.

2. Article 6, paragraph 1 of the Convénio de Qualidade (Quality Convention) sets out that "should any force majeure or phenomenon situation take place, the occurrence and evolution of which are clearly outside the control of CTT, and have an impact on the quality of service provided by CTT, the latter may request, for the purpose of calculation of the quality of service indicators (QSI) comprised in [the Convention], the deduction of the inputs for the concerned periods of time and geographic flows"

3. Paragraph 2 of the same Article sets out that such force majeure or phenomenon situations as mentioned in paragraph 1 "... shall be deemed to mean unpredictable or insurmountable natural events and/or facts attributable to third parties, that occur, evolve, or the effects of which occur regardless of CTT's will and ability to control, such as war, subversion, epidemics, cyclones, earthquakes, fire, lightning, floods, general strikes and any other similar events that may impair normal conditions of clearance, sorting, transport and distribution of postal items".

4. In accordance with paragraph 4 of article 6, the request to effect the discounting of inputs, as referred to in the preceding paragraphs, is to be submitted in writing by CTT, together with the grounds therefor, within a period not exceeding 60 days following the date on which the events in question took place.

5. Under paragraph 5 of article 6, the decision whether or not to grant CTT's request is incumbent upon ICP-ANACOM , which decision is to be notified to CTT no later than 30 days subsequent to the date of the request's receipt and, in the event that the request is rejected, is to be reasoned. Irrespective of the presentation of a request to discount inputs, CTT is bound to find the best alternatives during the occurrence of situations as referred to in paragraphs 1 and 2 of article 6.

6. Given its wide reporting, it was general knowledge that a general strike of workers would take place on 24.11.2011, which, according to the media, would include CTT workers.

7. By letter of 20.01.2012, CTT reported that a general strike had taken place on 24.11.2011, which strike was supported by trade unions representing CTT employees, whereby a stoppage was reported as occurring at CTT with a significant level of overall participation (29.6 percent) and high levels of participation among the operational sorting and transport services (43.1 percent)  and distribution services (40.8%); this stoppage impaired the normal functioning of the postal network at national level - causing delays in the routing and distribution of postal items - and, consequently, affected performance of quality of service in November 2011.

8. CTT also reported that in order to minimize the expected impact of this strike action on the postal service, in the days preceding the general strike, it engaged a plan to strengthen operational activities, consisting of the intensification of distribution operations during the weekend and days prior to the strike and consisting of additional distribution on the preceding Monday, Tuesday and Wednesday, in order to accelerate delivery of items accepted in the period preceding the strike.

9. According to CTT, and notwithstanding the measures taken, in light of the transit time of the different services, the reported stoppage impacted the normal performance of the quality of the corresponding distribution of correio azul (priority mail) (the service most affected by the strike action) and of correio normal (non-priority mail) (albeit affected to a lesser extent).

10. CTT, arguing that the stoppage occurring on 24.11.2011, as caused by a general strike, constitutes a situation of force majeure,  triggered regardless of CTT's ability to control and causing delays in the routing and distribution of postal items, impacting performance of quality of service during the month of November, submitted a request to ICP-ANACOM, pursuant to and for the purposes of article 6 of the Convénio de Qualidade (Quality Convention), whereby it sought that inputs covering the distribution of correio azul (priority mail) and correio normal (non-priority mail) be discounted from calculation of QSI in respect of November 2011 and with regard to the following national routes and periods:

i) correio normal (non-priority mail) sent from 21 to 24 November (inclusive) on all routes;

ii) correio azul (priority mail) sent from 23 to 24 November (inclusive) on all Mainland routes

iii) correio azul (priority mail) sent from 22 to 24 November (inclusive) on CAM routes (Mainland, Azores and Madeira).

11. Items covered by the request to discount inputs made by CTT, correio normal and correio azul items, on all routes in the first case and on Mainland and CAM routes in the second, may impact QSI1 (Transit time for Non-Priority Mail), QSI2 - Transit time for Priority Mail - Mainland, and QSI3 (Transit time for Priority Mail - CAM ⁵).

12. In light of the required standards of the services:

a) correio normal (non-priority mail - delivery within 3 working days following item acceptance -, the stoppage in question may have affected normal mail distribution occurring between 21 and 24 November;

b) correio azul (priority mail) on Mainland routes - delivery within 1 working day subsequent to item acceptance - the occurrence may have affected correio azul distribution occurring between 23 and 24 November on the Mainland;

c) correio azul (priority mail) on CAM routes - delivery within 2 working days following item acceptance -, the reported occurrence may have affected priority mail distribution occurring between 22 and 24 November on routes between Mainland Portugal, the Azores and Madeira.

13. The facts reported by CTT constitute a situation of force majeure, since the occurrence of the general strike is covered by paragraph 2 of article 6 of the Convénio de Qualidade (Quality Convention), insofar as it was triggered, evolved, or had effects occurring regardless of CTT's will and ability to control, impairing the normal conditions of sorting, transport and distribution of postal items of correio normal (non-priority mail) and correio azul (priority mail) on all national routes.

14. Therefore, considering:

i) the information communicated by CTT, by letter dated 20.01.2012;

ii) the provisions of paragraphs 1 and 2 of article 6 of the Convénio de Qualidade (Quality Convention);

iii) that a general strike convened by the two national trade unions occurred in Portugal on 24.11.2011;

iv) the stoppage caused by the general strike impacted the distribution of correio normal (non-priority mail) and correio azul (priority mail) in November 2011, causing delays in the dispatch of items and affecting quality of service performance:

• on national routes of correio normal (non-priority mail) sent from 21 to 24 November (inclusive);
   
• correio azul (priority mail) on Mainland routes sent on 23 and 24 November;
   
• correio azul (priority mail) sent from 22 to 24 November (inclusive) on CAM routes.

v) The facts reported by CTT constitute a situation of force majeure, since the occurrence of the general strike is covered by paragraph 2 of article 6 of the Convénio de Qualidade (Quality Convention), insofar as it was triggered, evolved, or had effects occurring regardless of CTT's will and ability to control, impairing the normal conditions of sorting, transport and distribution of postal items of correio normal (non-priority mail) and correio azul (priority mail) .

vi) that, in accordance with article 10 of the Convénio de Qualidade (Quality Convention), CTT is required to send to ICP-ANACOM quarterly reports, by the end of the month following the end of the quarter, with the evolution of values achieved for the QSI, and shall enable the monitoring of those values,

the Management Board of ICP-ANACOM, in exercise of the assignments conferred by points b), d), h) and n) of paragraph 1 of article 6 and point b) of article 26, all of its Statutes, as approved by Decree-Law no. 309/2001 of 7 December, and pursuant to paragraph 5 of article 6 of the Convénio de Qualidade (Quality Convention) governing the Universal Postal Service of 10 July 2008, with the amendments as introduced on 10 September 2010, determines:

1. To approve the discounting of the inputs covering distribution of correio normal (non-priority mail) and correio azul (priority mail) directly impacted by the general strike held on 24 November 2011, in respect of distribution of correio normal (non-priority mail) and correio azul (priority mail), on the following national routes and in the following periods:

i) correio normal (non-priority mail) sent from 21 to 24 November (inclusive) on all national routes;

ii) correio azul (priority mail) sent from 23 to 24 November (inclusive) on all Mainland routes

iii) correio azul (priority mail) sent from 22 to 24 November (inclusive) on CAM routes (Mainland, Azores and Madeira).

2. To order CTT, under article 10 of the Convénio de Qualidade (Quality Convention) to send to ICP-ANACOM, within ten working days:

i) the annual QSI values referring to 2011, obtained with and without these discounted inputs;

ii) QSI values covering 4th quarter 2011, calculated with and without these discounted inputs;

iii) a copy of the database used to calculate the QSI defined in the Convénio de Qualidade (Quality Convention), with and without  the inputs discounted in 2011 by application of the present decision.