Zonal pricing for bulk retail mail services judicial review

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22 June 2009

In April 2008 Royal Mail1 brought judicial review proceedings against Postcomm, seeking to quash Postcomm’s decision to reject its application to introduce “zonal pricing” for a number of its bulk retail services. Postcomm had rejected the Royal Mail Letters’ application in December 2007 on the basis that the proposal would introduce a zonal pricing structure for bulk retail services that appeared to have a number of discriminatory features and that it would have been introduced in a manner which would have resulted in unreasonable changes for Royal Mail’s customers. The structure which was rejected would have had five zones.

Separately Royal Mail Wholesale submitted an application to Postcomm to modify the Conditions of its licence to enable it to introduce a new four- zone pricing structure for access services. After careful consideration of this application, consultation with stakeholders and constructive engagement between Postcomm and the Royal Mail Wholesale team, Postcomm decided on 14 May 2009 to modify the Licence to enable Royal Mail Wholesale to offer the proposed new zonal access pricing structure from April 2010.

Since first making its application to introduce zonal pricing for bulk retail mail services, Royal Mail has indicated that circumstances have changed. On this basis Royal Mail Group has proposed to withdraw its judicial review application in relation to retail zonal pricing, with each side paying its own legal costs. Postcomm has accepted this proposal. Royal Mail's new approach to the pricing structure for access services could provide the basis on which Postcomm’s main objection to the proposed bulk retail zonal pricing structure could be resolved. Against this background, continuing with the litigation, which would involve considerable legal cost, is not in the interest of postal users who ultimately would have to meet that cost. The judicial review proceedings therefore are at an end.

1Royal Mail Group is made up of a number of separately managed business units which includes Royal Mail Letters and Royal Mail Wholesale.

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