Royal Mail ‘breached competition law’ with delivery charges, Ofcom finds

Ofcom’s probe, which began last February, was originally started after a complaint from a Royal Mail rival: Whistl.

The price changes for bulk mail delivery services, in which other postal firms pass letters collected from large businesses to Royal Mail for sorting and delivery, were set out in January 2014.

Ofcom alleges that changes made by Royal Mail to these services meant that higher access prices would be charged to competitors.

The regulator said the former state-owned postal service’s changes to wholesale prices for bulk mail delivery services, or access services, breached competition law by discriminating against other operators that were trying to compete with it.

That’s because Ofcom, the competition regulator that oversees Royal Mail, on Tuesday issued a “Statement of Objections” setting out a grievance against Royal Mail.

Ofcom has the power to fine Royal Mail up to 10% of its annual turnover.

Its big accusation is that Royal Mail changed the way it did business with rivals in a way that “would act as a strong disincentive against entry into the delivery market”.

The Statement of Objections from the regulator into the behaviour of Royal Mail comes a fortnight after the regulator confirmed the scope of a review into the company’s operations.

“It represents one stage in Ofcom’s investigation, and no assumption should be made at this stage that there has been a breach of competition law”, Ofcom added.

Shares in Royal Mail fell 2 percent in early deals to 492.5 pence.

“The company considers that the pricing changes proposed in 2014 were fully compliant with competition law”, it said in a statement.

“They are an important part of Royal Mail’s commercial response to both changing market conditions and. are reflective of relevant market costs”. The price changes were never implemented after being suspended following Whistl’s complaint and later withdrawn.

The business said it would not “consider carefully” the provisional findings of the OfCom investigation and submit a “robust defence” to the watchdog. “Royal Mail has co-operated fully with Ofcom throughout its investigation to date and will continue to do so”.