Term Contracts

Royal Mail applied to Postcomm for a Direction under Condition 21 (29) to make a change to the price terms for some of the price controlled products formally notified to Postcomm on 17 December 2007. Specifically Royal Mail would like to make change to the reconciliation payment that Term Contract customers may have to pay if they terminate the contract early or fail to post the contracted volume. The Direction would cover Term Contracts for all classes of Mailsort 700 and 1400 and Mailsort 120 2nd and 3rd class.

Postcomm has, by Direction, approved this change to the reconciliation payment for Term Contracts. This decision is without prejudice to any aspect of the investigation which Postcomm is conducting into Term Contracts. It has been taken because the change addresses Postcomm’s most immediate concern about Term Contracts, that the reconciliation payment had been set at a level that exacerbates the potential tie-in effects of such payments, and therefore alleviates (although it may not entirely eliminate) these effects. Postcomm also noted that it appears that the change is likely to benefit Royal Mail’s customers and concluded that it would be inappropriate and disproportionate to restrict Royal Mail from proceeding to offer the Term Contract tariff for Controlled Services as amended.

Royal Mail has delayed the introduction of Term Contracts for Mailsort 120 3 until 13 June 2008.

Royal Mail’s application and Postcomm’s Direction are available from the links below.

Term Contracts

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