Royal Mail fail to overturn £50 million record Ofcom fine

Royal Mail have failed to get a £50 million record Ofcom fine overturned by the Competition Appeal Tribunal. In August 2018 Ofcom imposed the fine on Royal Mail for an alleged serious breach of competition law. The regulator ruled that the company abused its dominant position by discriminating against its only major competitor delivering letters.

This news comes as Royal Mail fight in the High Court in an attempt to get the CWU ballot for a postal strike declared illegal having failed to prevent potential strikes this Christmas in mediation or negotiations. A decision is expected today.

The penalty was the result of an investigation into a complaint, made to Ofcom by Whistl (one of Royal Mail’s wholesale customers and then known as TNT). The complaint was about changes Royal Mail made to its wholesale customers’ contracts in early 2014, including wholesale price increases it was introducing.

“We have reviewed with great care the terms of Ofcom’s Decision, the six grounds of appeal put forward by Royal Mail; Whistl’s intervention; the arguments and evidence put forward by all parties and the oral testimony of their respective factual and expert witnesses. From this review, and for all the reasons we have given, we are satisfied that Royal Mail’s appeal must fail. Accordingly, we dismiss the appeal. This judgment is unanimous.”
– Competition Appeal Tribunal

Regarding the staggering size of the record penalty, the Competition Appeal Tribunal concluded that the £50 million penalty does not look disproportionate to its current revenues and profitability and noted Whistl’s observation that £50 million, although a large sum, is small in relation to Royal Mail’s shareholder dividend.

Royal Mail response to Competition Appeal Tribunal judgement

“The Competition Appeal Tribunal (CAT) has today issued its judgment on Royal Mail plc vs Office of Communications. We are studying its contents carefully. Royal Mail is disappointed by the CAT’s judgment to uphold Ofcom’s decision.

We are considering all legal options, including whether to seek permission to appeal and to request that payment of the penalty, which would otherwise become payable, be stayed pending any appeal. We will provide an update once we have completed our legal review.”
– Royal Mail