The investigation initially followed a complaint made by Whistl (previously known as TNT) in 2014. Whistl intended to enter the wholesale mail delivery market, and stated that Royal Mail had abused its dominant market position. A £50m fine was issued to Royal Mail by the regulator, for breaches of competition law and discrimination against its only major rival for wholesale mail delivery.
The Ofcom investigation found that Royal Mail had increased prices in 2014, meaning that any wholesale competitor would have to pay higher prices in the remaining areas where Royal Mail was available for delivery. Under the 2014 price changes, Whistl had to pay 0.25p more per letter for Royal Mail to make a final delivery in areas where it used Royal Mail.
Ofcom stated that Royal Mail abused its dominant position; penalising wholesale customers that tried to compete with it on bulk mail delivery. Ofcom competition director Jonathon Oxley stated that Royal Mail had broken the law by abusing its dominant position. Royal Mail’s actions amounted to ‘anti-competitive discrimination against customers like Whistl, who sought to deliver bulk mail.’ adding that
all companies must play by the rules. Royal Mail’s behaviour was unacceptable, denying postal users the potential benefits that come from effective competition.
Royal Mail is appealing Ofcom’s decision.
Competition law forbids anti-competitive agreements and the abuse of a dominant position. Examples of potential anti-competitive agreements include; a distributor agreeing with suppliers not to sell below a particular price, and agreements to fix prices or share markets.
Examples of abuse of a dominant position include refusing to supply an existing or long-standing customer without justification, or a dominant business charging prices so low or high, driving out competitors and then normalising prices again.
If you require advice on compliance with competition law, call Ison Harrison on 0113 284 5000.
