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Royal Mail revelling in new role as the villain
CHRISTOPHER WILLIAMS
DEPUTY BUSINESS EDITOR
The Telegraph
14 AUGUST 2018 • 8:35PM
The wisdom of Royal Mail going to war with its regulator over £50m is questionable
Who says the art of great letter writing is dead? Dive into Royal Mail’s response to its £50m monopoly abuse finefrom Ofcom and bathe in the ink of a poison pen. We have a legal threat, three uses of “fundamentally flawed” to describe the regulator’s decision and thinly disguised rage throughout.
The company is clearly revelling in its new role as the villain. Less than a month ago Royal Mail provoked a 70pc shareholder rebellion after it handed hefty brown envelopes to departing chief executive Moya Greene and her Switzerland-based replacement, Rico Back.
Who wouldn’t want to turn to the dark side after centuries as a beloved public service? Nobody likes to be typecast. There should be some sympathy for the devil though. The dispute with Ofcom dates back to before privatisation and a misguided attempt to introduce competition to what was already a dying letters market. Royal Mail letter volumes are down nearly 50pc over the last decade.
Nevertheless, Whistl, then known as TNT and part of PostNL, decided to it wanted to compete with Royal Mail to deliver bank statements, utility bills and other bulk mail to front doors.
It wanted to do this only in densely populated urban areas where the costs would be lowest and only three days a week. Any letters outside that would be offloaded to Royal Mail.
Royal Mail understandably viewed this as cherry-picking given it operates under a universal service obligation to cover the entire country six days a week. It designed a pricing system that meant Whistl would pay a bit more per letter than other operators who outsourced delivery Royal Mail everywhere. This was an abuse of dominance, according to Ofcom. It meant Whistl pulled out.
The legal rights and wrongs of that decision will have to be decided by the High Court. Royal Mail claims its economic analysis showed its pricing proposal would have allowed Whistl to compete fairly. Ofcom says different.
Royal Mail’s contention that because it committed no offence – it never actually charged Whistl the proposed prices – may yet prove technically correct. If that is the case, then there is a problem with competition law, however. If Whistl was unable to enter the market because of abusive pricing there must be a way for Royal Mail to be punished.
Whoever thought investors would line up to replicate the Royal Mail letters network in the first place?
Putting aside that important principle and the fate of £50m of Royal Mail shareholders’ money, it will otherwise be a fairly academic argument. Nobody else has attempted to compete with Royal Mail to deliver letters since, because it is a fundamentally unappealing and declining market. PostNL recently pulled out of similar attempts to compete with the national postal services of Germany and Italy.
In the four years since Whistl, nobody has attempted to enter the fray and Ofcom hasn’t seen fit to use its powers to regulate Royal Mail’s wholesale prices to encourage new entrants. The chances of one of the companies competing in the booming parcel market deciding to get involved in delivering letters seem slim.
The question is whoever thought investors would line up to replicate the Royal Mail letters network in the first place, even if they could cherry-pick the most lucrative areas?
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Royal Mail revelling in new role as the villain
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Royal Mail revelling in new role as the villain
A flawed article in some respects. RM is not the devil and posties more often than not do an excellent job. Fake competition introduced by the EU dropped the broken idea known as DSA(Direct Screened Access.)upon us. Competitors could then arrange contracts but not deliver the mail themselves. Instead they give the mail to RM to deliver and collect half the revenue. This inevitably resulted in UK postage charges by RM rising to where they are.
I agree upper echelons within RM are effectively robbing the company blind in terms of directors remuneration. Unfortunately RM is not the only company to do this but they have stuck two fingers up and ignored the majority AGM vote. Other companies have taken notice and action and this does reflect badly on RM. On the other side of the coin RM is continually cost-cutting our operation to a point where some work is being completed unpaid. This is not something that even Whistl did when they tried to deliver letters as they would recall staff at the end of their duty time. RM upper management seems to follow the ' I'm alright jack **** you!' attitude in terms of directors pay versus paying staff for all the hours they work.
I agree upper echelons within RM are effectively robbing the company blind in terms of directors remuneration. Unfortunately RM is not the only company to do this but they have stuck two fingers up and ignored the majority AGM vote. Other companies have taken notice and action and this does reflect badly on RM. On the other side of the coin RM is continually cost-cutting our operation to a point where some work is being completed unpaid. This is not something that even Whistl did when they tried to deliver letters as they would recall staff at the end of their duty time. RM upper management seems to follow the ' I'm alright jack **** you!' attitude in terms of directors pay versus paying staff for all the hours they work.
The views I express here are mine alone and do not represent the views of Royal Mail Group.