Royal Mail in breach of competition law

• 20 September 2019
• Transport / Logistics Services

Royal Mail and postal services reseller the SaleGroup have been found in breach of UK competition law. 

The Competition and Markets Authority (CMA) began an investigation into the situation in May 2018, which has resulted in the two companies admitting their breach of the law. ParcelForce had been in touch with the reseller, which trades as Despatch Bay, to ensure that neither Royal Mail or ParcelForce would offer parcel delivery services to the other’s business customers.

On concluding its investigation, the CMA handed over the case to postal regulator OfCom, which has completed its own agreement.

OfCom says: “We have provisionally found that the agreement broke competition law because it aimed to restrict competition by sharing customers.”

Despatch Bay sells parcel delivery services to small and medium-sized businesses. Being carrier-agnostic it sells the services from multiple delivery companies and does not deliver parcels itself. Despatch Bay also offers a single point of contact for billing and invoicing.

OfCom found that communications between Royal Mail and the SaleGroup regarding at least 90 customers implemented, monitored and enforced an agreement to share customers between. August 2013 and May 2018.

The illegal activities involved regular emails between ParcelForce and Royal Mail where one asked another to withdraw a competitive quote provided to specific customers. In particular this would happen where one company would undercut the other’s price, forcing the price up that the customer would have to pay.

The SaleGroup also shared its customer list with ParcelForce, with the aim of making sure each company could avoid offering services to the other’s customers.

Gaucho Rasmussen, Ofcom’s Director of Investigations and Enforcement, said: “Anti-competitive agreements like the one between Royal Mail and the SaleGroup are designed to restrict competition, and they often lead to customers paying higher prices as a result.

“This kind of behaviour is a serious breach of competition law and unacceptable.”

Where a company reports its own illegal activity the CMA policy is to grant them immunity. In this case, this was bestowed upon Royal Mail which the SaleGroup has been fined £40,000 – given the size of the company, a sizeable fine.

OfCom has showed its provisional decision to the two companies and the SaleGroup has offered to settle the matter.