Postcomm acts to protect competition

Postwatch, the watchdog for postal services, welcomes regulator Postcomm’s proposal to fine Royal Mail £2.16m for failing to tackle structural weaknesses that could give the company an unfair commercial advantage over its competitors.

Postcomm has proposed the fine following an investigation, prompted by Express Ltd, TNT Mail UK Ltd, and UK Mail Ltd complaining to the regulator in November 2004. Express Ltd left the market in November 2005.

Commenting on the proposed fine, Gregor McGregor, Chief Executive of Postwatch, said:

“Having only been opened up to full competition last month, the postal market is immature, but developing rapidly. Building customer and competitor confidence and ensuring a level playing field are essential if the UK postal market is to flourish. It was essential that Postcomm take action to protect the competitive market and we are pleased it has.

“It is now up to Royal Mail to put in place internal structures that prevent competitors’ commercially sensitive information being used to gain unfair advantage. It is astonishing and deeply worrying that Royal Mail has had to be told about the need for Chinese walls.

“The amount of the fine is very much a matter for Postcomm’s judgement. Any fine has to be substantial enough to ensure Royal Mail take the action required. Postwatch would expect any future fines for anti-competitive behaviour to be substantially bigger.”

Notes to Editors

1. The Postcomm document: A Complaint about Royal Mail’s offer of Zonal Downstream Access and its associated press are published on Postcomm’s website www.psc.gov.uk .

2. The Postcomm investigation found that Royal Mail has failed to put in place adequate measures within its wholesale and retail divisions to prevent the company obtaining an unfair advantage over its competitors. This could enable the retail arm to use information obtained by the wholesale section to attract or retain business. It is usual for a company working for different clients to put in ‘Chinese walls’ to prevent confidential information being shared. Such separation is essential if conflicts of interest are to be avoided.

3. Condition 10, paragraph 2 of Royal Mail’s licence states that the company “shall conduct its business as a postal operator in the manner best calculated to ensure that neither (a) the Licensee [Royal Mail] (b) any related person of the Licensee or (c) any other person obtains any unfair commercial advantage in connection with the provision by the Licensee of access to its postal facilities…”

4. The bulk mail market opened to competition in January 2003. The postal market opened fully to competition in January 2006. Since that date, companies licensed by Postcomm have been able to supply any postal services to customers.

5. For more information about Postwatch visit www.postwatch.co.uk

More information

Daryl Barrett on 020 7259 1239 or 07900 263 020

Robert Forsyth 0131 226 6922 or 07900 263 014