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Ofcom issues ‘Statement of Objections’ to Royal Mail in relation to wholesale charges

Ofcom has today issued a Statement of Objections to Royal Mail plc.

The Statement sets out Ofcom’s 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.

This is part of Ofcom’s investigation into a complaint brought to it by one of Royal Mail’s competitors, Whistl UK Ltd (formerly known as TNT Post UK).

Background to Ofcom’s investigation

On 10 January 2014, Royal Mail announced changes to the prices, terms and conditions for bulk mail delivery services known as ‘access services’. These services enable other postal operators to hand over letters that they collect from large business customers (such as councils, banks and utility companies) to Royal Mail for final sorting and delivery.

Whistl UK Ltd submitted a complaint to Ofcom in January 2014, alleging that the changes were anti-competitive.

Ofcom opened an investigation on 21 February 2014. On 4 March 2014, Royal Mail suspended the planned changes, and on 11 March 2015 the company announced that it had withdrawn them.

Ofcom’s provisional view

The Statement of Objections issued today sets out Ofcom’s provisional view that Royal Mail’s changes to the prices, terms and conditions for the provision of access services included unlawful price discrimination.

Specifically, the Statement of Objections alleges that the changes to Royal Mail’s wholesale prices for bulk mail delivery services contained a differential in pricing which meant that, in practice, higher access prices would be charged to access customers that competed with Royal Mail in delivery than to those access customers that did not.

The Statement alleges that these higher access prices would act as a strong disincentive against entry into the delivery market, further increasing barriers to expansion for postal operators seeking to compete with Royal Mail in this market, and leading to a potential distortion of competition against the interests of consumers.

Next steps

The Statement of Objections sent by Ofcom to Royal Mail states the facts on which Ofcom relies; the objections it has raised; the actions it proposes to take; and its reasons for proposing to take those actions. It represents one stage in Ofcom’s investigation, and no assumption should be made at this stage that there has been a breach of competition law.

Royal Mail can now make representations to Ofcom, which will be carefully considered before Ofcom takes a final decision.

NOTES TO EDITORS

  1. The Competition Act 1998 prohibits agreements, practices and conduct that may have a damaging effect on competition in the UK. The Chapter II prohibition covers conduct by a dominant undertaking that may amount to an abuse of that position and that may affect trade in the UK or a part of it. Its European counterpart, Article 102 of the Treaty on the Functioning of the European Union, covers equivalent conduct that affects trade between EU Member States. Unlawful price discrimination is a type of abusive conduct by a dominant company that is prohibited by competition law.
  2. A Statement of Objections gives notice of a proposed infringement decision under the Competition Act 1998 to the parties involved. This document is not a decision document and the parties have the opportunity to make written and oral representations in response to the alleged case set out by Ofcom. The Statement of Objections will not be published.
  3. Ofcom is the independent regulator and competition authority for the UK communications industries, with responsibilities across television, radio, telecommunications, wireless communications and postal services.
  4. For further information about Ofcom please visit: www.ofcom.org.uk. Ofcom’s news releases can be found at media.ofcom.org.uk

 

Channel website: https://www.ofcom.org.uk/

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