Ofcom delivers record £50m fine for Royal Mail's breach of competition law

15 Aug 2018

The case surrounds actions found to be undertaken by Royal Mail in 2014 when TNT (now known as “Whistl”) was attempting to gain entry into wholesale mail delivery then dominated by Royal Mail. Had it been successful, TNT/ Whistl would have been Royal Mail’s first such competitor.

Ofcom’s inquiry following a complaint by Whistl, alleging that Royal Mail (1) had a dominant - indeed a monopoly position in the relevant market, and (2) had used this position to undermine TNT/Whistl.

In effect, Ofcom's central finding was that price rises in 2014 by Royal Mail forced potential competitors out of where they would have to use Royal Mail infrastructure for delivery. Ofcom's found Royal Mail's price rises to be "anti-competitive discrimination against customers, such as Whistl, who sought to deliver bulk mail".

Jonathan Oxley, Ofcom’s competition group director, stated that Royal Mail breached competition law by abusing its dominant market position. If a company has a large enough part of a relevant market sector then it must behave in such a way as not to prejudice its competitors in an unreasonable way.

Royal Mail expressed its disappointment with Ofcom’s decision and “considers that the decision is without merit and fundamentally flawed."

It is Royal Mail’s case that the 2014 price changes were designed to foster its unique obligation to provide a Universal Service. Unlike other entrants in to the market, Royal Mail must provide a statutory Universal Service which in effect obliges it to provide a same rate/charge service whether the delivery is to Land’s End, Aberdeen or any point inbetween.

Whistl’s initial legal advice suggests that it now has a claim for damages. Their spokesperson has suggested that the claim will need to be quantified.

Royal Mail has indicated it will appeal the penalty.

Please contact Jonathan if you are looking for advice about competition law or any other commercial dispute.

Jonathan’s comments were featured in both The Financial Times and The Daily Telegraph, 15 August 2018.

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