Postcomm rejects Royal Mail's retail zonal pricing application (UK)

Postcomm has rejected Royal Mail’s application to charge large mailers – using products which are not part of the universal service – different prices depending on where in the UK their mail is delivered (Royal Mail calls this zonal pricing).

The reasons for this decision are broadly that Postcomm is not satisfied that the change would be introduced in a manner which avoids unreasonable changes to users, and because it involves discrimination.

Postcomm has made this brief announcement today to provide clarity to users of postal services and will publish full reasons for its decision in January 2008.

This decision does not mean that Postcomm is ruling out any future moves towards retail zonal pricing for products outside the universal service should Royal Mail propose an alternative approach that avoids the problems presented by the current application. Postcomm is generally supportive of pricing that is more reflective of costs.

Royal Mail’s ‘zonal pricing’ application did not include services paid for by stamps or those bulk mail products that are included within the definition of the universal service which must, under the Postal Services Act, remain priced at a uniform rate regardless of delivery zone across the country. It is open to Royal Mail to submit a new application if it can be framed to meet the relevant regulatory tests.