Consignia attempts to limit competition
CONSIGNIA REDOUBLED its efforts to limit the introduction of competition to the Royal Mail yesterday by claiming that plans put forward by the postal regulator would open up half its monopoly to rival operators.
Last month Postcomm said its proposal to liberalise the bulk mail market would open up 30 per cent of Consignia’s monopoly from April. But Consignia said the regulator had got its sums wrong and that 50 per cent of its market, worth pounds 2bn a year, would be up for grabs. The company added that the potential reduction in revenues could lead to the annual loss of pounds 250m in profit within five years and said this would have to be covered by higher stamp prices.
Consignia’s riposte to the regulator comes amid signs that Postcomm may be prepared to back away from the proposals it announced by introducing competition to the Royal Mail more gradually. Under present plans, the Royal Mail’s bulk market for customers mailing more than 4,000 items at a time will be open to competition in six weeks.
The regulator, though independent, is under pressure from ministers to soften its proposals amid fears that postal services could collapse if the Royal Mail loses a large chunk of its most profitable business overnight.
Staut Sweetman, Consignia’s managing director for strategy and business development, said that Postcomm had “grossly under-estimated” the size of the bulk mail market. “This sort of basic mistake makes us very doubtful that the regulator’s case stands up to scrutiny,” he added.
Postcomm said the consultation period on its proposals did not end until 15 March and that no decisions would be taken until April. It has always said it might be prepared to modify its plans if Consignia was able to put forward sufficiently strong arguments.
