Ofcom: provisional view that Royal Mail breached competition law as a result of proposed price rises for bulk mail delivery services

Ofcom set out in a Statement of Objections its provisional view that Royal Mail breached competition law by engaging in conduct that amounted to unlawful discrimination against postal operators competing with Royal Mail in delivery services.

The case was brought as a result of a complaint by Whistl UK Ltd. On 10 January 2014, Royal Mail announced changes to its prices, and terms and conditions on bulk mail delivery services otherwise known as ‘Access services’. These services allow companies such as Whistl to hand over letters they collect from large customers – banks or utility companies for example – to Royal Mail for final sorting and delivery.

Whistl UK Ltd alleged that price rises in this area were anti-competitive. Ofcom opened an investigation on 21 February 2014 and in March 2014, Royal Mail suspended the planned changes and withdrew them completely in March 2015.

The statement by Ofcom alleges that the price rises for ‘access services’ would have acted as a disincentive to new businesses entering the delivery market, which would have further increased barriers to postal businesses seeking to compete with Royal Mail All this could lead to a potential distortion in the market which would be against the best interests of consumers.

The Ofcom view is only a provisional one, and represents one stage in Ofcom’s investigation. No assumption should be made at this stage that there has been a breach of competition law. Royal Mail has said it will make “robust” representations to Ofcom, which will be carefully considered before a final decision is taken.

Royal Mail said it was ‘disappointed’ by Ofcom’s announcement. The company said it took its compliance obligations very seriously and believed the proposed pricing changes were fully compliant with competition law. It said the proposals were an important part of Royal Mail’s commercial response to both changing market conditions and to Ofcom's own March 2013 guidance document on end-to-end competition in the postal sector.