UK regulator hints at delay to postal competition
MAIL regulator Postcomm today gave its strongest indication yet that the introduction of competition to Consignia will be delayed until well into 2003.
In what is being seen as a victory for Allan Leighton, the new chairman of the Post Office and Royal Mail group, regulator Graham Corbett today signalled he is prepared to let up on the pace of market liberalisation to allow the heavily-lossmaking Consignia get its act together.
Responding to criticism from Labour MP Geraint Davies, Corbett today wrote in the Financial Times: “Mr Davies argues that competition needs to be introduced at a speed that gives Consignia time to adjust. We agree – and are taking careful note of his and others’ representations.”
Postcomm has already delayed a decision on opening up the business mail bulk sector for companies sending out 4000 letters or more, which it says accounts for around a third of the market.
Corbett had been due to give the go-ahead to competition in this market from April. Now it has delayed consultation on the plans until the middle of next month with an announcement of a decision at the end of May.
A Postcomm spokesman said the regulator was under pressure from Consignia, the Communications Workers Union and Labour MPs to say it would further delay plans to open the market at May’s announcement.
“If we are convinced Consignia needs more time then that is what we will do,” said a spokesman. “It would be pretty arrogant of us not to listen to what people have to say to us.”
Even if it goes ahead, implementation, he said, could not take place before early next year.
Accusing the regulator of leaving it exposed to “cream-skimming” rivals, Consignia has told Postcomm it “grossly underestimated” the market for big bulk business mailings, saying it will hit half its market, accounting for £2 billion a year in revenues.
“Initial analysis by Consignia shows the loss of revenue involved will lead to £250 million of profit being lost annually within five years,” said Consignia director Stuart Sweetman.
Consignia reported a fivefold increase in operating losses to £100 million in the first half of last year with write-offs extending the interim loss to £281 million. This week it announced the cutting of the first 15,000 jobs in its major restructuring.
It is believed former Asda boss Leighton made a delay in competition a condition of his becoming chairman of Consignia.
Postcomm says full competition is still on schedule for 2006.
