Royal Mail fined £50m for abusing its dominant position

Royal Mail has been fined £50m for breaking competition law by abusing its dominant position in the postal delivery market.

An investigation by the regulator Ofcom found that it discriminated against Whistl, one of its customers and its only major competitor delivering letters.

The investigation followed a complaint by Whistl about changes Royal Mail made to its wholesale customers’ contracts in early 2014.

At the time, Whistl was expanding its business to compete directly with Royal Mail by delivering business letters (known as ‘bulk mail’) to addresses in certain parts of the UK – becoming the first company to challenge Royal Mail’s monopoly in the large-scale delivery of bulk mail.

The 2014 wholesale price increases meant that any of Royal Mail’s wholesale customers seeking to compete with it by delivering letters in some parts of the country, as Whistl was, would have to pay higher prices in the remaining areas – where it used Royal Mail for delivery.

Following notification of these new prices, Whistl suspended plans to extend delivery services to new areas.

The Ofcom investigation found Royal Mail’s actions amounted to anti-competitive discrimination against customers, such as Whistl, who sought to deliver bulk mail.

Jonathan Oxley, Ofcom’s Competition Group Director, said: “Royal Mail broke the law by abusing its dominant position in bulk mail delivery.

“All companies must play by the rules. Royal Mail’s behaviour was unacceptable, and it denied postal users the potential benefits that come from effective competition.”

Please contact Jon Alvarez about the issues raised in this article or any aspect of competition law.