Price control 2006-2010

Review of certain aspects of Royal Mail's price control

On 22 March 2007, Postcomm, wrote to mail operators and customers to tell them that it had started a review – that would be completed within six months – of two key features of the Royal Mail’s 2006-2010 Price and service quality control.

Postcomm has examined requests from TNT Post, UK Mail and Royal Mail to adjust the margin between the price Royal Mail charges its customers for bulk mail products and the amount Royal Mail charges other operators for access to its network and delivery of mail over the ‘final mile’. Royal Mail was seeking to reduce the margin between ‘access’ prices and its retail prices, while TNT Post and UK Mail were seeking to increase this difference. Royal Mail also asked for greater price rebalancing flexibility by way of increased limits to its price sub-caps from 3% to 8.5% per annum.

On 26 November 2007 Postcomm confirmed its decisions on the consultation, made in August 2007, that Royal Mail should be given extra flexibility to increase some retail prices and that access margins should be left unchanged. A decision document explaining Postcomm's decision was published on 10 January 2008.

Price Control for 2006-2010

The final consultation on the changes that Postcomm proposed to Royal Mail’s licence to bring into force a new package of price and quality of service controls on Royal Mail ended on 2nd May 2006.  Royal Mail’s new licence was finally agreed and sealed on 25th May 2006.  Royal Mail has been operating since 3 April 2006 as if the new licence was in place.

Review of certain aspects of the price control - related documents:

3 July 2009 - direction
 Interim Review of the price control condition 21 paragraphs 15 and 16 - Correction to Direction to permit increased tariff rebalancing (pdf, 38KB)
3 July 2009 - news release
Postcomm corrects Interim Review direction to permit increased tariff rebalancing
10 January 2008 - decision document
Review of Royal Mail’s pricing flexibility and the level of access headroom (the ‘Interim Review’ of the price control) - A Decision and Direction by the Postal Services Commission (pdf, 237KB)
26 November 2007 - news release
Postcomm confirms changes following their Interim Review of 2006 - 2010 Price Control 
14 November 2007 - consultation responses
Archant Life (pdf, 19KB)
CWU (pdf, 46KB)
DMA (pdf, 44KB)
Emap (pdf, 17KB)
Email response from Simon Rickman (pdf, 21KB)
Futurenet (pdf, 211KB)
G Howse (pdf, 115KB)
Haymarket (pdf, 25KB)
HM Revenue & Customs (pdf, 42KB)
Mail Competition Forum (pdf, 58KB)
Mail Users' Association (pdf, 39KB)
Periodical Publishers Association (pdf, 39KB)
Postwatch response, November 2007 (pdf, 58KB) 
Reader's Digest (pdf, 36KB)
Reed Business Information response (pdf, 15KB)
TNT Post response (pdf, 30KB)  
UK Mail response (pdf, 32KB) 
23 October 2007 
 Royal Mail response (pdf, 173KB). Royal Mail have today given us permission to publish.
9 August 2007 - consultation document
Review of Royal Mail's pricing flexibility and the level of access headroom (the 'Interim Review' of the price control). Postcomm's proposals (pdf, 251KB) 
9 August 2007 - news release
Royal Mail given extra pricing flexibility but urgent imperative must be transformation of its business 
24 April 2007 - Industry workshop presentations and responses
Royal Mail presentation (pdf, 147KB)
TNT Post and UK Mail presentation (pdf, 51KB)
Communication Workers Union (CWU) response (pdf, 181KB)
Mail Competition Forum (MCF) response (pdf, 113KB)
Postwatch response, April 2007 (pdf, 59KB)
QVC response (pdf, 14KB).
30 March 2007 - Royal Mail's business case 
Information in support of its request for a review of access headroom and greater pricing flexibility (pdf, 869KB). 
23 March 2007 -  UK Mail request
Request for review of Royal Mail price control under Royal Mail Group plc Licence Condition 21 paragraph 5, (i)(bb)(aa) (pdf, 17KB).  Additional information from UK Mail in support of their request (pdf, 53KB). 
22 March 2007 - Industry letter and annex 
Review of certain aspects of Royal Mail’s 2006-2010 Price Control (pdf, 52KB).  Annex to letter (pdf, 28KB). 
22 March 2007 - TNT request 
Request pursuant to condition 21, paragraph 5 (i)(bb)(aa) of the Royal Mail Group plc licence, as last amended on 25 May 2006 (pdf, 15KB).  Additional information from TNT in support of their request (pdf, 127KB). 
22 March 2007 - news release 
Postcomm to examine Royal Mail’s charges to new operators for access to the ‘final mile’. 
20 March 2007 - Royal Mail's request 
Request pursuant to condition 21, paragraph 5b (i), and condition 21 (16) of the Royal Mail Group plc licence, as last amended on 25 May 2006 (pdf, 127KB). 

Price control 2006-2010 - related documents:

25 March 2008 (document dated 20 March 2008)
Postal Services Act 2000. Sections 11and 13. Licence granted to Royal Mail Group plc. Condition 21 Paragraph 29. Direction (pdf, 17KB).  
25 March 2008 (document dated 12 March 2008)  
Condition 21 (29) direction application from Royal Mail (pdf, 116KB). 
16 June 2006 -  Royal Mail's revised licence
Postal Services Act 2000, Section 14. Modifications to the conditions of the licence held by Royal Mail Group Plc (pdf, 509KB).  This document explains the changes that have been made to the proposed licence modifications published on 31 March 2006.
16 June 2006 - consultation responses to December 2005 final proposals 
Royal Mail (pdf, 2MB), 
response from the Direct Marketing Association (DMA) (pdf, 51KB), 
Jane Newell (pdf, 4MB), 
Mail Competition Forum (MCF), December 2005 final proposals (pdf, 104KB), 
response from the Mail Users' Association (MUA) (pdf, 79KB), 
Postwatch, December 2005 final proposals (pdf, 611KB), 
Communication Workers Union (CWU) (pdf, 683KB). 
16 June 2006 - consultation responses to March 2006 Licence modifications proposals 
Postwatch (pdf, 30KB), 
Mail Competition Forum (MCF), March 2006 licence modification proposals (pdf, 64KB) 
25 May 2006 - Royal Mail licence 
Postal Services Act 2000, Section 11. Amended licence granted to Royal Mail Group plc (formerly Consignia) on 23 March 2001 and amended on 25 May 2006 (pdf, 350KB) 
15 May 2006 - Frontier Economics report 
Response to Royal Mail's comments on Frontier Economics' response to Royal Mail (pdf, 113KB)
31 March 2006 - proposed licence modifications 
Royal Mail's price and service quality review 2006 - 2010. Licence modifications proposals. March 2006 (pdf, 1059KB) 
31 March 2006 - news release 
Postcomm publishes proposed licence modifications for Royal Mail 
14 March 2006 - news release
Postcomm confirms price and service quality controls for Royal Mail 
17 February 2006 - LECG report 
Future efficient costs of Royal Mail's regulated mail activities. Bottom-up review of Royal Mail's strategic plan. Final conclusions. Excised version (pdf, 564KB) 
3 February 2006 - report by Frontier Economics
Market share analysis for Postcomm's final price control proposals (pdf, 427KB) 
26 January 2006 - LECG report, Top Down final conclusions 
A top down assessment of Royal Mail's future efficient cost path based on a review of the performance of other postal operators, firms in other regulated industries, and of Royal Mail's own historic performance (pdf, 135KB) 
26 January 2006 - LECG report, Base year and Baseline final conclusions 
An assessment of Base year costs and Baseline for Royal Mail's UK inland mails, outgoing international and downstream access products over the period of 2005/06 to 2009/10 (pdf, 96KB) 
23 January 2006 - LECG report on Internal Benchmarking 
This internal benchmarking report (pdf, 309KB) compares the cost performance/efficiency of similar units within Royal Mail and identifies the potential for Royal Mail to lower costs by achieving its own best performance consistently across mail centres and delivery offices. 
4 January 2006 - Supplementary paper, proposed licence modifications 
2006 Royal Mail price and service quality review: Final Proposals, supplementary paper (pdf, 436KB)
7 December 2005 - Final proposals 
2006 Royal Mail price and service quality review: Final Proposals (pdf, 1.8MB) 
17 October 2005 - Royal Mail consultation response to June 2005 initial proposals 
Introduction to response (pdf, 943KB),
main consultation response (pdf, 1.8MB),
annex 1 (pdf, 247KB),
annex 4 (pdf, 222KB),
annex 5 (pdf, 225KB),
annex 6 (pdf, 300KB),
annex 7 (pdf, 237KB),
annex 8 (pdf, 361KB),
annex 9 (pdf, 97KB),
annex 10 (pdf, 370KB),
annex 11 (pdf, 116KB),
annex 13 (pdf, 142KB),
annex 14 (pdf, 348KB),
annex 15 (pdf, 296KB),
annex 17 (pdf, 140KB),
annex 18 (pdf, 427KB),
annex 19 (pdf, 271KB). 
17 October 2005 - Royal Mail Pensions Trustees Ltd response to June 2005 initial proposals 
Royal Mail Pensions Trustees Ltd (pdf, 21KB)
17 October 2005 - non Royal Mail consultation responses to June 2005 initial proposals
Communication Workers' Union (CWU) (pdf, 110KB), 
Direct Marketing Association (DMA) (pdf, 69KB), 
Department of Trade and Industry (DTI) (pdf, 3.7MB), 
Intellect (pdf, 37KB), 
Mail Competition Forum (MCF) (pdf, 195KB), 
Mail Users' Association (MUA) (pdf, 105KB), 
National Federation of Subpostmasters (NFSP) (pdf, 42KB), 
Periodical Publishers' Association (PPA) (pdf, 77KB), 
Postwatch, June 2005 initial proposals (pdf, 631KB), 
Research International (pdf, 64KB), 
Scottish Council for Development and Industry (SCDI) (pdf, 18KB).  
4 August 2005 - LECG report on Royal Mail's future efficiency
 Future efficient costs of Royal Mail's regulated mail activities. Excised version (pdf, 2.3MB)  
4 August 2005 - Arthur D Little report on technology and innovation in the postal sector 
Technology and innovation in the postal sector. A competitive market review. Report to Postcomm by Arthur D Little Limited (pdf, 511KB) 
4 August 2005 - Hymans Robertson report on Royal Mail's pensions costs 
Report to the Postal Services Commission. Assessment of the funding of the Royal Mail pension plan for the purposes of the 2006 price review (pdf, 351KB)  
6 July 2005 - initial proposals for 2006 price control, supplementary document number 3 
Volume modeling for the price control. A report prepared for Postcomm by Frontier Economics (pdf, 620KB)
5 July 2005 - initial proposals for 2006 price control, supplementary document number 2 
2006 Royal Mail price and service quality review. initial proposals. Supplementary paper 2. Issues regarding quality of service standards (pdf, 200KB) 
27 June 2005 - initial proposals for 2006 price control, supplementary document number 1 
2006 Royal Mail price and service quality review. initial proposals june 2006. Supplementary paper 1. Draft price control condition (pdf, 332KB) 
1 June 2005 - initial proposals 
 2006 Royal Mail and service quality review. Initial proposals (pdf, 1.3MB)
1 June 2005 - news release 
 Postcomm proposes tighter price and service targets for Royal Mail
14 January 2005 - consultation responses 
responses to September 2004 consultation on principles (pdf, 834KB)
24 November 2004 - Frontier Economics report 
Scope of the price control. (pdf, 782KB) Aims to help Postcomm identify which products should be included in the price control and determine whether separate sub-controls should be introduced for different product groups.
20 September 2004 - consultation document 
 2006 Royal Mail price and service quality review. Consultation on principles (pdf, 697KB)
6 September 2004 - consultation responses 
responses to March 2004 consultation on timetable and main issues for review (pdf, 170KB)
14 April 2004 - information request 
 2006 Royal Mail price and service quality control review.  Initial business plan questionnaire to Royal Mail (pdf, 522KB)
17 March 2004 - consultation document 
 2006 Royal Mail price and service quality review. Consultation about process, timetable and main issues for the review (pdf, 371KB).

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