Rivals seek to block UK Royal Mail's pounds 2bn handout
TNT, the main competitor to Royal Mail in the UK, is warning that it will complain to Brussels if the government agrees to put public money into the state-owned postal operator to fund investment.
With all restrictions on competition lifted today, Royal Mail chairman Allan Leighton believes the group needs pounds 2 billion investment if it is to compete with major international operators such as TNT and DHL Global, part of Deutsche Post.
The government is considering a loan or an equity investment styled on a rights issue. However, TNT believes any such move could be anti-competitive and break the rules on state aid. Nick Wells, chief executive of TNT Mail, said: ‘If it is unfair and anti-competitive, we are not going to sit there and watch it happen.’
TNT’s legal adviser, Angus Russell, said there were problems with both arrangements. With a rights issue, the government as the shareholder would subscribe to all shares offered – unlike in the City, where investors can refuse if they think it offers bad value.
Asked about a loan arrangement, Russell said: ‘What happens if they can’t repay it? Wouldn’t they just go to the government with a begging bowl? There is precedent for this.’
