Anti-competitive behaviour - zonal pricing for access
On the 14 September 2006 Postcomm imposed a financial penalty of £1 million on Royal Mail for failing to take adequate steps to ensure it did not gain an unfair commercial advantage over its competitors in the fast-growing ‘access to the last mile’ market.
The penalty was reduced from the £2.16 million originally proposed, following Postcomm’s consideration of representations from Royal Mail and other interested parties. The original penalty was proposed in a report published on 17 February 2006 and we published our proposal to vary the penalty to £1 million on 12 July.
Royal Mail currently has more than 96% of the postal market and, since April 2004, has been charging some competitors a fee for its postmen and postwomen to deliver their mail. Royal Mail currently delivers more than a billion of these items each year. Postcomm began investigating these so-called downstream access arrangements last year after three of Royal Mail’s competitors – Express Ltd, TNT Mail UK Ltd and UK Mail Ltd – complained about various aspects of Royal Mail’s competitive behaviour.
Postcomm concluded that Royal Mail did not have adequate measures within its wholesale and retail divisions to prevent it obtaining an unfair advantage over its competitors.
On the 25 May 2007 the High Court ruled against the penalty because of a technical difficulty in its policy for calculating financial penalties in cases where the benefit to Royal Mail and the burden on others from the licence contravention cannot be assessed. The Judge held that Postcomm could not depart from its published penalty policy in the circumstances of this case.
More information about Postcomm's work on investigating complaints about anti-competitive behaviour.
Related documents:
- 25 May 2007 - news release
- Postcomm statement on High Court judgement.
- 14 September 2006 - notice of imposition of financial penalty
- Condition 10 of Royal Mail's licence: prohibition against obtaining unfair commercial advantage. A complaint about Royal Mail's offer of zonal downstream access. Final report and decision of the Postal Services Commission (pdf, 403KB).
- 14 September 2006 - news release
- Postcomm imposes penalty on Royal Mail for securing unfair commercial advantage
- 25 July 2006 - Royal Mail representation
- Royal Mail's representation to the document 'A complaint about Royal Mail's offer of zonal downstream access: second report and decision of the Postal Services Commission' (pdf, 435KB)
- 12 July 2006 - second report and decision of the Postal Services Commission
- Condition 10 of Royal Mail's licence: Prohibition against obtaining unfair commercial advantage. A complaint about Royal Mail's offer of zonal downstream access (pdf, 350KB)
- 12 July 2006 - news release
- Postcomm proposes to vary its penalty on Royal Mail for securing unfair commercial advantage.
- 17 February 2006 - report and decision of the Postal Services Commission
- Condition 10 of Royal Mail’s Licence: Prohibition against Obtaining Unfair Commercial Advantage A Complaint about Royal Mail’s Offer of Zonal Downstream Access (pdf, 347KB)
- 17 February 2006 - news release
- Postcomm issues enforcement order and proposes £2.16million penalty on Royal Mail for securing unfair commercial advantage over new operators.
- 7 January 2005 - scope of investigation
- "Licensed operators" complaint about Royal Mail's zonal pricing for access" (pdf, 64KB). This document outlines the scope of Postcomm's investigation.
