UK Royal Mail braced for second 'hit' from regulator
ROYAL MAIL faces another multi-million-pound fine this week from industry regulator Postcomm over using its dominance in the postal market to thwart competition.
The action comes a week after the state-owned postal operator was fined pounds 11.7m for losing millions of items of mail. Its timing is also sensitive because the market was only opened to full competition at the beginning of last month.
Postcomm has been investigating the terms on which Royal Mail gives access to its network of postmen to rival companies, enabling them to process bulk business post such as bills and mailshots.
It is thought Postcomm has found that Royal Mail has gained an unfair advantage because there has not been adequate separation of its wholesale division, which deals with and offers terms to rival operators, and its retail arm, which offers products and prices direct to customers such as banks.
This means its retail arm would be able to react to moves to attract business by competitors using information gained by its wholesale arm. BT faced similar criticisms over opening its network of exchanges to rival phone companies.
Competing companies take bulk items from large customers, sort them and deliver them to Royal Mail’s network of 70 mail centres. They are then taken to their final destination by Royal Mail. Rivals gain business by undercutting Royal Mail’s trunking operations.
Bulk mail, the first part of the market to be liberalised, has been open to competitors since 2004. But last year, Dutch operator TPG, UK Mail and Express Dairies – which has since closed its postal operations – complained that they were not being given fair access.
Postcomm is believed to want assurances that Royal Mail will ensure there are stringent Chinese walls between the two parts of its business.
Such findings would highlight problems with the operation of competition. While the market has now been fully liberalised, bulk mailing still represents the vast majority of activity by rival firms.
Postcomm declined to comment on the report ahead of its publication.
