Royal Mail price plan breached competition law, says Ofcom

http://www.theguardian.com/business/2015/jul/28/royal-mail-price-plan-breached-competition-law-ofcom

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Britain’s postal regulator, Ofcom, has said Royal Mail breached competition law by proposing wholesale prices designed to be more expensive for any firm looking to run a rival mail delivery service.

The price changes for bulk mail delivery services, in which other postal firms pass letters collected from large businesses to Royal Mail for sorting and delivery, were set out in January 2014. Whistl – a company looking to rival Royal Mail by delivering some mail itself – claimed the prices were anti-competitive.

Related: Ofcom to investigate Royal Mail dominance

The price changes were suspended and have since been withdrawn by Royal Mail, while Whistl has ended plans to launch a delivery network.

Ofcom said on Tuesday it thought the price changes included unlawful price discrimination, in which higher amounts would have been charged to customers that competed with Royal Mail in delivery than to those that did not, thereby posing a deterrent to competition.

Ofcom said its initial view had been sent to Royal Mail in a statement of objections and that the postal firm could now make representations before its final decision. Royal Mail said it was disappointed by the announcement, and it would submit a robust defence.

Related: Ofcom blows Whistl: it will no longer compete with Royal Mail

Ofcom said in June it would review the regulation of Royal Mail after Whistl’s recent withdrawal left it without any national competition.

Shares in Royal Mail fell 2% in early trading to 492.5 pence.