Postcomm publishes its observations on Royal Mail's access agreement with UK Mail Ltd

31 March 2004

Postcomm today published its observations on the access agreement, under which Royal Mail will deliver mail for UK Mail Ltd, which was announced last month.

Under the agreement, UK Mail will collect mail from its customers, and pass it to Royal Mail’s inward mail centres for delivery the next day. The document shows that the average prices agreed between Royal Mail and UK Mail were very close to those which Postcomm would have proposed, and are within the margin of judgement inherent in such calculations. Prices charged by Royal Mail for this “final mile” service range from 13p for a letter weighing up to 60g to around £3.65 for an item weighing 2Kg.

Today’s document gives other interested organisations an indication of Postcomm’s position on the agreement; which aspects Postcomm endorses, and which it does not. It is intended to assist those seeking access in the near future by indicating to what extent other operators might expect a similar deal if they needed to approach Postcomm for a determination.

Postcomm chairman Nigel Stapleton said:

“Downstream access is crucial to the success of competition in postal services. This agreement enables Royal Mail to earn revenue by delivering UK Mail’s post, and at the same time allows UK Mail and its customers to benefit from Royal Mail’s nationwide delivery network.

“I expect this deal to lead to others – and swiftly. The detailed guidance that this document provides on the many aspects of an access negotiation should ensure that agreements can be reached more quickly in future.”

Postcomm will now monitor the effectiveness of the agreement, in order to satisfy itself that it does indeed benefit users through the introduction of effective competition, while posing no threat to Royal Mail’s ability to provide a universal service.

Notes for editors

In November 2001 UK Mail Ltd obtained a licence from Postcomm to collect, sort and transport mail for delivery by Royal Mail. After around six months of negotiations the two participants were unable to agree an access price and Postcomm was called upon to set a price. Postcomm was set to publish its final proposals on access prices in December 2003, when the companies announced they had agreed heads of terms and asked for the determination to be suspended.

The access agreement between Royal Mail and UK Mail was finalised on 10 February 2004, without the need for a determination from Postcomm.

Printed copies of today's document, Promoting Effective Competition in UK Postal Services through Downstream Access (pdf, 489KB) are available from Postcomm at 6 Hercules Road, London SE1P 7DB.