Competition issue clouds Royal Mail sell-off
Royal Mail’s attempt to sell its cash handling business to the private sector hit an obstacle yesterday after the Department of Trade and Industry decided to refer the move to the Competition Commission.
The move is potentially embarrassing for Alan Leighton, chairman of Royal Mail, who has been involved in a bitter battle with the Communication Workers’ Union over the outsourcing of services.
The CWU has opposed the sale, fearing for the jobs of the 3,000 workers who are set to be transferred if the sale to Securicor, the business services company, goes ahead. It also argues that the sale would give Securicor a virtual monopoly over cash handling and distribution.
But the DTI’s decision was not enough to persuade the union to call off its strike ballot over the issue. Royal Mail’s cash handlers, who distribute cash to Britain’s post office network and some private-sector businesses every day, are voting on proposed strike action. Their verdict is due on Thursday.
John Keggie, deputy general secretary of the CWU, said he hoped the Post Office would “stop wasting time trying to sell business and start trying to grow it instead”.
The DTI said the decision of Melanie Johnson, competition minister, to refer the sale was in accordance with the advice of the director-general of Fair Trading, who concluded there was a “significant prospect” that the transaction “may be expected to result in a substantial lessening of competition”.
The director-general concluded that “as a result of the merger the rivalry between the Post Office and other national players will be lost”, and the number of national cash-in-transit providers will fall from three to two in Britain and from two to one in Northern Ireland.
However, even if cash handling remains within Royal Mail, it is believed some jobs might disappear because of the recent loss of some large private-sector contracts.
