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The owner of Royal Mail faces a new claim for £878mn in damages over its delivery operations, adding to the former state-owned postal group’s legal woes as it prepares for a takeover by Czech billionaire Daniel Křetínský.
Bulk Mail Claim Limited announced on Thursday that it had filed an application to start proceedings against International Distribution Services on behalf of organisations across the UK that have sent bulk letters through Royal Mail, over allegations of anti-competitive behaviour that led to higher prices.
The action follows a £600mn case currently being brought by Royal Mail customer Whistl, which sorts bulk letters like utility bills for clients before passing them on to Royal Mail for delivery.
Ofcom found in 2018 that Royal Mail had attempted to introduce a new pricing model that would have raised delivery costs for Whistl, in a move that prevented the customer launching a rival letter service in 2014.
Royal Mail said this month that Whistl’s claim was “unsubstantiated and entirely without merit. We will continue to defend our position robustly and if necessary to trial.”
The latest multimillion-pound case over a historic issue in Royal Mail’s letters’ operation could pose yet another costly challenge for Křetínský as he prepares to buy the company and transform it into a more modern parcel delivery group.
The two claims far outweigh the pre-tax £114mn profit reported by IDS during the most recent financial year. The postal group is also struggling with growing competition in the parcels market, complaints over service levels, and discontented postal workers. Royal Mail is lossmaking and IDS’s profit is generated entirely by its separate Dutch parcel business, GLS.
Royal Mail, which still holds a UK monopoly over the bulk letter deliveries after being privatised in 2013, was previously fined £50mn following Ofcom’s ruling in 2018. The latest claim is being brought after the Supreme Court rejected Royal Mail’s appeal against Ofcom’s decision in 2022.
On a newly launched website, any organisations who paid for bulk mail delivery services in the UK between 10 January 2014 and 7 June 2022 are being urged to participate and benefit from any future award of damages.
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The application to bring collective proceedings has been filed at the Competition Appeal Tribunal and is being supported by law firm Lewis Silkin and a “highly experienced commercial litigation funder” that will receive a fee from any damages awarded, the website states.
It alleges that Royal Mail’s actions prevented competition and led to higher prices for the businesses, public bodies and charities who now depend on its service.
Royal Mail confirmed it had received the application from Bulk Mail Claim Limited.
“We consider [the claim] to be without merit and we will defend it robustly,” the group said.
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