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Mail-sorting group Whistl has warned Czech billionaire Daniel Křetínský that he should prepare to shell out up to £600mn in damages following his takeover of Royal Mail, as it doubles down on a claim against the postal group for anti-competitive behaviour.
Nick Wells, Whistl’s executive chair, said Royal Mail’s current management had put its “head in the sand” since the company initially submitted its claim in 2018, but encouraged Křetínský to come to the negotiating table if he completes a takeover announced last month.
Křetínský’s investment group “should be very cognisant, when they’re buying Royal Mail, of the potential liability”, he told the Financial Times.
Whistl, which sorts letters such as utility bills for business clients and passes them on to Royal Mail, is taking the former state-run postal service to the Competition Appeal Tribunal after Ofcom fined Royal Mail £50mn in 2018 for abuse of its dominant position in the bulk mail delivery market.
The postal regulator found that Royal Mail attempted to introduce a new pricing model that would have raised delivery costs for Whistl, a customer, in a deliberate move that prevented it launching a rival letter delivery service in 2014. The Supreme Court rejected Royal Mail’s appeal against Ofcom’s decision in 2022.
Whistl’s claim for damages, which is proceeding after Royal Mail’s appeal was rejected by the Supreme Court, poses yet another challenge for Křetínský as his EP Group prepares to buy Royal Mail’s owner, International Distribution Services.
“We always remain open to a negotiated settlement [but] we remain confident and committed to the legal process . . . We’re expecting a substantial recompense,” said Wells.
Whistl’s £600mn claim would exceed the pre-tax £114mn profit generated by IDS during the most recent financial year, as Royal Mail struggles with growing competition in the parcels market, substandard service levels and discontented postal workers. A trial date has been set for November 2025, after EP Group expects to complete a takeover that values IDS at £5.3bn including debt.
Royal Mail, whose current management has said the case is “without merit”, will “have to wake up and smell the coffee and realise that they’ve got to pay damages for what they did”, said Wells.
“It is inconceivable that Daniel Křetínský and his team won’t know about the potential liability . . . I would encourage [them] to engage, at the appropriate point.”
The Competition Appeal Tribunal has set a preliminary hearing for the case on Wednesday.
Given the existing rulings in its favour, Peel Hunt analyst Alexander Paterson warned that “Whistl has got a very good case”. Whoever owns Royal Mail when the court makes its decision “might find there’s a rather expensive bill to pay”.
The potential damages could complicate Křetínský’s plans to plough money into services such as parcel lockers for Royal Mail, which he has said is not modernising fast enough. Royal Mail is lossmaking and all of IDS’s profits are generated by its Dutch parcel business, GLS.
Křetínský’s investment group was “talking about investment in [parcel lockers]”, said Wells. “They need to understand that there is a liability for damages for Whistl and that will either be negotiated beforehand or it will be decided by the courts.”
Royal Mail said Whistl’s claim was “unsubstantiated and entirely without merit. We will continue to defend our position robustly and if necessary to trial.”
EP Group declined to comment.
Additional reporting by Ivan Levingston in Berlin
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