Postcomm steps up its drive for full competition
Postcomm will focus on preventing anti-competitive practices by the monopoly supplier, and improving customer protection in the next stage of its drive towards a fully competitive market in postal services, Nigel Stapleton, chairman of Postcomm, told a conference today (2 November 2004).
Speaking at the UK Mail Summit in London, he said the 80 million items a day handled by Royal Mail together with its daily national coverage allow substantial economies of scale and act as barriers to competition. New entrants also need to overcome customer inertia, a lack of knowledge of the new competing products and Royal Mail’s VAT advantage – it is exempt from VAT whereas competitors must add VAT to their prices.
Royal Mail recently returned to profit but at the expense of customer service, Mr Stapleton said. “Royal Mail has missed all its service targets for last year and the first quarter of this year: that is effectively a covert price increase and suggests competition should be speeded up so customers have more choice.”
Postcomm is consulting on bringing forward the introduction of full competition in postal services by 15 months to 1 January 2006.
In the bulk mail sector, which is already partly competitive, four companies now have access agreements with Royal Mail which enables them to inject pre-sorted mail into the Royal Mail’s network for final delivery by postmen. Other companies are providing a full end-to-end delivery service, including “mail with the milkman” and a high security service for passports and credit cards.
Commenting on anti-competitive behaviour, Mr Stapleton said: “We won’t hesitate to use our powers to deal with unfair attempts to prevent the new entrants from gaining a foothold in the market”. If competition was stifled, he did not rule out the separation of Royal Mail’s collection and delivery operations.
Royal Mail’s next price control, which will operate from 2006, will include a framework for progressive deregulation once the market becomes more competitive, he said. Postcomm will also look at new quality of service targets for Royal Mail which may be linked to the prices it can charge.
