Postcomm examines UK Royal Mail’s special privileges

Postcomm today (12 January 2004) published a consultation document that examines the special privileges enjoyed by Royal Mail and considers whether they distort competition in mail services.

Royal Mail’s special privileges include exemption from VAT and special parking privileges. The exemptions date from the time when Royal Mail was the sole provider of postal services.

Postcomm’s document considers whether Royal Mail’s special privileges are necessary to provide a universal service, or distort competition in postal services.

Postcomm has no powers to make changes itself to any of these statutory privileges, but if it considers that a change is needed it will make recommendations to the appropriate government department or authority. Any changes may require appropriate legislation.

Of all the privileges Royal Mail enjoys, Postcomm considers Royal Mail’s VAT exemption to be the most contentious, a view supported by postal operators who argue that this privilege materially distorts competition.*

The document says:

“Postcomm’s provisional view is that VAT exemption is not necessary for the provision of a universal postal service, distorts competition in a significant part of the UK postal services market and should be reviewed as a priority, with the aim of levelling the playing field.”