UK Royal Mail warned on poaching business
Postcomm, the postal reg-ulator, has threatened to fine Royal Mail if it continues to use anti-competitive practices to keep rivals out of the UK postal market.
Royal Mail yesterday agreed to rein in its marketing activities staff after Postcomm found discounts offered to magazine and catalogue companies had contravened competition rules.
At the end of 2003, AMP, a rival postal company, complained that Royal Mail was trying to poach business customers through the use of special offers. AMP, which specialises in delivering magazines and catalogues, alleged that Royal Mail had offered discounts to companies in these sectors in an effort to drive it out of business.
Following a long investigation, Postcomm said that Royal Mail had contravened two conditions in its licence designed to facilitate competition, as any discounts should be offered equally to all customers.
Royal Mail said it had not realised at the time the discounts were anti-competitive, and that they were no longer on offer.
The group had agreed to tighten its internal pro-cedures to ensure that it complied with regulations. Any new promotions would be approved at senior level and Royal Mail had agreed to train its sales staff in competition law.
But Postcomm added that it would monitor Royal Mail, “and if similar conduct arises in the future, other forms of enforcement will be considered, including financial penalties”.
The regulator is also due to decide soon on whether to fine Royal Mail for failing to meet any of its 15 quality of service targets for the 2003-04 financial year.
Nigel Stapleton, chairman of Postcomm, said: “Competition in postal services has only just begun. Postcomm is being very watchful that Royal Mail – which currently has over 99 per cent of the letters market – is not using its dominance, perhaps unwittingly, to freeze out competitors.”
Business mail tends to be more profitable than mail sent by members of the public, which Royal Mail says loses it money.
The group is keen to hold on to as many business customers as possible to ensure its financial recovery continues.
