An Post has brought a High Court challenge against the Director of Telecommunications and Postal Regulation's imposition of a levy expected to cost the firm about £2 million (€2.5 million) in 2002. Mr Justice O Caoimh was told the levy would be 0.5 per cent of relevant turnover next year and has amounted to 0.2 per cent this year.

The judge granted Mr Peter Charleton SC, for An Post, leave to challenge the levy in judicial review proceedings against the director, the Minister for Public Enterprise and the Attorney General. In the action, the firm seeks several reliefs, including an order quashing the Postal Levy Order 2/2001 and declaration that the Postal Levy No 2 Order Regulation 474 of 2001 is contrary to EC law, unlawful and disproportionate and lacks transparency.

An Post claims a European Council directive does not require that it should pay a levy or is required to fund the national regulatory authority. An Post also argues that in the director's consultation process, she failed to provide any material information and in particular any breakdown of the costs which were proposed to be incurred by her which would require to be covered by the levy. Mr John Dempsey, executive director of international and regulatory affairs at An Post, in an affidavit said his firm had been mandated by EC (Postal Services) Regulations to provide a universal post service within the State.

The director decided on June 22nd last to impose a temporary levy order on An Post to pay the director £250,000 for the levy year ending June 30th, pending the consultation process on a more permanent scheme and mechanism for calculating it. Mr Dempsey said An Post was deeply concerned about the open-ended nature of the obligation to fund the director. Requiring An Post to pay some £2 million next year represented an unreasonable proportion of the Universal Service Obligation area profit in 2000 terms.

When its own expenditure on regulatory matters was included, An Post calculated the cost of regulation, were it to be applied in 2000, would have led to an overall loss in the USO obligation.