Ofcom fines Royal Mail £50 million for abuse of dominance

Ofcom fines Royal Mail £50 million for abuse of dominance

Ofcom has found that Royal Mail has breached the Chapter II prohibition of the Competition Act and Article 102 TFEU through unlawful discrimination against rival postal delivery operators.

Ofcom launched its investigation in 2014 after a complaint from Whistl, a provider of bulk mail services, concerning a proposed change in Royal Mail’s wholesale access prices.  Whistl was planning to build its own delivery network but relied on Royal Mail to deliver business letters that it collected and sorted.

The proposed pricing structure meant that if the firm wanted to begin bulk delivery itself in certain regions, it would have to pay Royal Mail 1.2 per cent more per letter than those firms who used Royal Mail to deliver mail across the UK.  Ofcom considered that Royal Mail had used its quasi-monopoly position as a provider of delivery services to sanction operators who entered into competition with it.

Royal Mail and Whistl had asked Ofcom to consider the case using Ofcom’s sector regulatory powers but Ofcom instead decided to use its competition powers.

The £50 million fine is the largest fine to be imposed by Ofcom.

Royal Mail has said that it will appeal against the decision.

Meanwhile, Royal Mail is embroiled in antitrust litigation itself through a follow-on action arising out of the European Commission’s July 2016 decision against the EEA trucks cartel.  It is seeking some £270 million in damages against DAF Trucks undertakings as a result of the overcharge it allegedly paid for trucks.

Ofcom press release, 14 August 2018