Ofcom has provisionally found that Royal Mail breached competition law with the price increases competitor Whistl complained to the regulator about last year.
The complaint was lodged by Whistl in January 2014, when the then-TNT Post accused Royal Mail’s price changes to its access services of discriminating against its key competitors in the market.
Whistl alleged that Royal Mail was trying to jeopardise its foray into the final mile delivery sector, as it was rolling out a trial of its final mile service to major UK cities at the time the complaint was made.
While Royal Mail suspended the proposed changes shortly after Ofcom launched its investigation into the accusations, the regulator has said its provisional decision is that the “changes to the prices, terms and conditions for the provision of access services included unlawful price discrimination”.
The announcement added that the provisional finding is that these price changes discriminated against those in direct market competition with Royal Mail, and would have thus “strongly” discouraged competition within the delivery market.
Royal Mail has been sent a Statement of Objections, which outlines Ofcom’s provisional findings, the actions it proposes to take and the reasoning behind those actions. Royal Mail can now make representations to Ofcom, which will be considered before the regulator makes its final decision.
In a statement this morning, Royal Mail said it was “disappointed” by Ofcom’s announcement.
It added: “The company considers that the pricing changes proposed in 2014 were fully compliant with competition law. They were an important part of Royal Mail's commercial response to both changing market conditions and to Ofcom's statements in its March 2013 guidance document on end-to-end competition in the postal sector.”
The final mile service Whistl was protecting with its complaint to Ofcom was suspended earlier this year, following the exit of its financial backer LDC. Its annual results later revealed that the roll out and upkeep of the service had incurred costs of £10m.
However speaking at a conference in London at the beginning of the month, Whistl chief executive Nick Wells blamed Royal Mail for the service’s demise, telling delegates “Royal Mail screwed us”.
