Regulator stamps on Consignia
A BITTER row between Consignia, the former Post Office, and PostComm, its regulator, escalated yesterday with claims that the mail group had circulated "irresponsible and inaccurate" information. Martin Stanley, chief executive of PostComm, fired off an angry letter to Consignia's managing director, Stuart Sweetman, saying: "I am writing to express my disappointment at the irresponsible and inaccurate letter that Consignia sent to MPs on March 6, compounded by an equally inaccurate press release the same day. "I am particularly sorry that, during a period of consultation on the introduction of competition to the UK postal market, you should think it appropriate to put pressure on an independent regulator in this way. You seek to justify your action by suggesting that PostComm is proceeding with reckless haste and has a flawed understanding of the postal market. Both these claims are untrue." The two sides are fighting about how much of the mail market is made up of "bulk" mail sent in bundles of more than 4,000 and, therefore, how much Consignia's revenues will be affected by opening it up to competition, something PostComm wants to do by April. PostComm says it represents only one-third of the market, but Consignia says it makes up half of the postal market and will cost the company pounds 2 billion in lost revenue, leading to pounds 250m in lost profits over five years. John Roberts, Consignia chief executive, has said repeatedly that the PostComm proposals to open up the entire monopoly to competition are unrealistic. Last week, Mr Sweetman stated publicly: "The regulator has grossly underestimated the amount of mail posted in bundles of more than 4,000. This sort of basic mistake makes us very doubtful that the regulator's case stands up to testimony." He said the price of a stamp could rise by 6p as a result of lost profits. However, Mr Stanley's letter yesterday rubbished these claims. He wrote: "The statement that pounds 2 billion of Consignia's revenue would be up for grabs has no basis in reality. Even assuming that many new entrants are queuing up to enter the market, Consignia is in by far the best position to compete for and retain the lion's share of the bulk mailing business. "Our intention, subject to consultation, is to open 30pc of your market by revenue – no more and no less." PostComm maintains that its figures are based on information provided by Consignia. Mr Stanley said in his letter: "You have known since the 1999 White Paper that a postal regulator would be charged with bringing forward arrangements for the introduction of competition. We have since carried out a number of major consultation exercises, including one last year which explicitly asked for views on the advantages and disadvantages of various market-opening options. Consignia and many others have participated in these exercises. Your arguments and information have significantly shaped our proposals." Consignia currently has a monopoly on letters costing less than pounds 1 to post, but this is also set to be taken away. A Consignia spokesman said yesterday: "We will look at the letter [from PostComm]. There are five days of consultation to go and we will make our full response to PostComm next week. That response will make it clear that PostComm's figures are wrong. A key concern remains the provision of a universal service." The Communication Workers Union, the postal trade union, is preparing a central London demonstration next weekend to warn of the dangers of increased competition to the postal service. Postal workers' leaders will also meet next week to organise a ballot on a new pay deal, which would remove the threat of strikes by 145,000 Royal Mail employees. The pay deal is worth 6.9pc over two years, but will be linked to productivity. If it is accepted in the ballot, the new pay will be backdated to last October, and the next pay review date will be October 2003.
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The postal regulator launched a fresh attack on Consignia yesterday, accusing the company of misleading the public in an attempt to protect its business from competition.
Postcomm has written to the company defending itself after the former Post Office called into question the quality of the regulator's work in a letter to MPs, claiming it had "misunderstood a fundamental part of the market".
Martin Stanley, Postcomm's chief executive, said: "I am particularly sorry that during a period of consultation on the introduction of competition to the UK postal market you should think it appropriate to put pressure on an independent regulator in this way."
Consignia has stepped up pressure in recent weeks in an attempt to water down the proposals for ending Consignia's monopoly.
