Union demands cap on Royal Mail’s competition in UK postal market
Britain’s Communication Workers Union has called on postal regulators to place a cap on competition to Royal Mail. The union said a cap would promote a “healthy, sustainable” level of competition in the postal sector while preventing rivals “cherry-picking” Royal Mail’s most profitable routes.
The CWU, which represents more than 115,000 postal workers in the privatised company running the UK’s universal postal service, made the call within evidence it submitted to a Parliamentary inquiry into Royal Mail’s competition.
It comes as part of a campaign to push regulator Ofcom into taking action against Royal Mail’s chief rival in the delivery of letters, Whistl.
The CWU says Whistl, the company previously known as TNT Post UK, should not be allowed to run end-to-end mail delivery services in select parts of the UK, and that it should be required to meet similar service standards to Royal Mail’s universal service — delivery six days a week across the country.
The CWU said today that the universal service is being “undermined” by the ability of competitors to take on the more lucrative delivery areas.
Billy Hayes, the union’s general secretary, called on regulator Ofcom to “urgently” put a cap on Royal Mail’s competition.
He claimed that the regulator appeared to favouring its duty to promote competition in the mail market rather than its duty to protect the universal service.
“Customers receive a good quality service from Royal Mail’s postmen and postwomen and competitors rely on the flexibility of the universal service, which allows them to pass on responsibility for delivering high-cost mail,” said Hayes.
“The universal postal service is highly-valued by the British public and essential to a fully functioning economy and society. We believe a cap will help to support a healthy, sustainable level of competition in the postal sector.”
Competition
Ofcom has a statutory duty to review the UK postal market and levels of competition within it by the end of 2015. But the CWU and Royal Mail have been lobbying the regulator to bring that review forward in the light of Whistl’s expansion.
If it decides a rival is affecting the sustainability of the universal service, Ofcom does have the legal power to impose certain conditions, including the imposition of service standards or requirements for rivals to pay into a central fund to support the universal service.
However, so far Ofcom has said there is no evidence that Whistl’s service is impacting on the universal service sufficiently to bring forward the review, or take action.
Whistl, owned by Dutch postal service PostNL, began its end-to-end delivery service in West London in April 2012, and has since expanded to North-West, South-West and parts of Central London as well as Manchester and Liverpool. It now delivers to about 1.2m of the UK’s 29m addresses.
Ofcom said in August that all of Royal Mail’s rivals together currently deliver just 0.4% of the addressed mail volume in the UK. Meanwhile, consumer trends mean addressed mail volume as a whole in the UK is declining by about 9.4% per year at the moment.
Royal Mail’s rivals in the end-to-end delivery market made £11.3m in revenue in 2013, 0.15% of total.
