Term Contracts - Royal Mail not in breach of its licence

[POSTMAN]

21 May 2010

Postcomm today announced that following a detailed investigation it is satisfied, on the basis of the evidence presently available, that Royal Mail is not in breach of its licence in offering Term Contracts. The final decision has been communicated to the parties involved and is available online.

Term Contract discounts were first introduced for Mailsort services by Royal Mail in April 2008. Customers who sign a Term Contract receive a discount of 1.4% or 2% for one or two years respectively, for a commitment to mail at least one million items a year and have a weekly collection in at least 48 weeks of the year. The Mail Competition Forum (MCF) lodged a complaint in January 2008 about Term Contracts, alleging a breach of Condition 11 of Royal Mail’s licence. Postcomm’s final decision confirms its provisional findings issued in the ‘minded to’ decision that was published in July 2009, having carefully considered representations received and market developments since then. The investigation into Term Contracts has therefore been closed.

Notes

Postcomm is the independent regulator for postal services in the UK. It is our job to protect the universal service and make sure that postal operators, including Royal Mail, meet the needs of their customers throughout the UK.

The Mail Competition Forum (MCF) was established in December 2004 to represent the interests of licensed operators that compete with Royal Mail. The MCF’s stated objective is to “facilitate customer choice through fair, vibrant and sustainable competition within a stable and undistorted UK postal market, and its role is to develop and promote the interests of new market entrants”. The membership of the MCF comprises City Link, Citipost AMP Ltd, DHL Global Mail UK, DX Network Services Limited, Racer Consultancy Management, TNT Post UK Limited and UK Mail Limited.

Condition 11 of Royal Mail’s licence relates to the promotion of effective competition. Among other things, it prohibits undue discrimination and undue preference in the provision of postal services, and prohibits Royal Mail from charging excessive or predatory prices.

Mailsort is a pre-sorted bulk mail service offered by Royal Mail to its account customers. Mailsort is a service for letters, large letters, A3 packets and packets and is offered in three sortation levels and at three delivery speeds.

Please visit Postcomm’s website at: http://www.psc.gov.uk/competition/anti- ... racts.html" onclick="window.open(this.href);return false;