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LONDON, July 28 (Reuters) – Britain’s postal regulator Ofcom said on Tuesday it believed Royal Mail (LSE: RMG.L – news) had breached competition law by proposing wholesale prices that were designed to be more expensive for any firm looking to run a rival mail delivery service.
The price changes for bulk mail delivery services, whereby other postal firms pass letters collected from large businesses to Royal Mail for sorting and delivery, were set out in January 2014, but claimed to be anti-competitive by Whistl – a company looking to rival Royal Mail by delivering some mail itself.
The price changes were suspended and have since been withdrawn by Royal Mail, while Whistl has ended plans to launch a delivery network.
Ofcom said on Tuesday it was of the view that the price changes included unlawful price discrimination, whereby higher amounts would have been charged to customers that competed with Royal Mail in delivery than to those that did not, thereby posing a deterrent to competition.
Ofcom said its initial view had been sent to Royal Mail in a statement of objections and that the postal firm could now make representations to it before it takes a final decision.
Ofcom said in June it would review the regulation of Royal Mail after the recent withdrawal of rival Whistl from the direct delivery letter market left it with no national competition.
Shares (Berlin: DI6.BE – news) in Royal Mail fell 2 percent in early deals to 492.5 pence.
The company said it was disappointed by the announcement, and it would submit a robust defence to Ofcom. (Reporting by Neil Maidment, Editing by Paul Sandle)
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