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Royal Mail hit by £50m Ofcom fine for flouting competition rules

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By John Glenday | Reporter

August 14, 2018 | 3 min read

Royal Mail has been hit by a £50m fine from regulator Ofcom after it was judged to have flouted competition law in 2014 to undermine a competitor in wholesale mail delivery.

Royal Mail

Royal Mail hit by £50m Ofcom fine for flouting competition rules

The fine was imposed in relation to a complaint by Whistl in which it alleged that Royal Mail abused its position of market dominance in order to unfairly discriminate against it in 2014, when the company was then known as TNT, although it has subsequently exited the market.

A subsequent investigation by Ofcom found that a series of price rises imposed by Royal Mail at this time had the effect of forcing wholesale competitors such as Whistl to pay higher costs when using Royal Mail.

These actions were considered to be ‘anti-competitive discrimination against customers, such as Whistl, who sought to deliver bulk mail.’

Jonathan Oxley, Ofcom's competition director, said: "Royal Mail broke the law by abusing its dominant position in bulk mail delivery. All companies must play by the rules. Royal Mail's behaviour was unacceptable, and it denied postal users the potential benefits that come from effective competition."

Royal Mail strenuously refutes any suggestion of foul play however and has said that it will challenge the ‘flawed’ fine by arguing that the price hikes were necessitated by a need to protect the Universal Service, which obligates it to charge the same postage fees irrespective of its destination within the UK.

Royal Mail was warned back in 2015 that price hikes for bulk mail delivery customers breached competition law.

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