Royal Mail 'Faces French Competition Fine'

[TrueBlueTerrier]

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It emerges that the trading activities of a Royal Mail unit have been under scrutiny, possibly for years, in France.

Royal Mail has confirmed its French parcels business is under investigation by competition authorities and admitted it may face a hefty fine.

The company said it had been served a notice by the Autorite de la Concurrence in France that it was facing allegations of "breaches of anti-trust laws" by GLS France - an operation it bought in 2000 after purchasing the group's wider European business.

TNT Express confirmed it was also caught up in the probe, which is understood to cover the parcels business across France.

Royal Mail said: "We are currently considering the notice received from the French regulator.


Royal Mail is yet to receive any news on a potential fine

"Given the early stage of this matter, we cannot yet determine the amount or range of potential loss; however, it is possible that it could be material".

Some industry analysts estimated a maximum penalty of up to £160m - equating to 10% of GLS's turnover - if any wrong-doing was uncovered.

Shares in FTSE 100-listed Royal Mail fell 1% in early trading on Wednesday.

While the GLS Group is profitable, the French operation reported a £21m loss for its last financial year.

TNT Express said it had been co-operating with the investigation since it started in 2010 and could also not rule out a "material" fine.

The French regulator said it could not give the names of the companies involved nor details of the alleged practices being investigated.

[TrueBlueTerrier]

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The fledgling recovery of Royal Mail Group's (RMG) share price has been dealt a blow after the French competition authority accused the UK firm of breaching anti-trust laws.
As part of a broader investigation into alleged activities in the industry, Royal Mail admitted that losses from potential wrong-doing at its GLS subsidiary "could be material". TNT Express and Fed Ex (FDX) are also under investigation by the Autorité de la Concurrence.

After floating at 330p a share in October, Royal Mail's share price topped 600p. It has tumbled by almost a fifth since mid-May and attempts at reclaiming previous highs look more remote than ever.

Analysts from Espírito Santo Investment Bank estimate that the total French parcels market is worth around €3.8 billion (£3 million), noting that Royal Mail generated €210 million of revenue in France last year and made an operating loss of €30 million.

"French Antitrust law permits a maximum fine of 10% of worldwide turnover," said Espírito Santo. "This would lead to a worst case scenario of around a £160 million fine for Royal Mail (10% of GLS revenue) ... In our view, this maximum fine is relatively insignificant for RMG, at around 3% of market cap. We therefore reiterate our 'Neutral' recommendation and Fair Value of 505p."

Head of research at Accendo Markets Mike van Dulken agrees that a large hit is unlikely.

"While still early days, and linked to a broader investigation into the French postal industry which dates back to 2010 (Dutch group TNT has been assisting all along) this could weigh on the shares in the short term, hampering recovery of the recently lost ground. The statement this morning that fines/losses could be material sounds ominous but likely just cautious at such an early stage, but after all the talk of the group being sold off too cheap last October it just goes to show that even previously nationalised entities (still 30% government owned) aren’t whiter than white and represent risks to investors."

Royal Mail's share price fell over 2% to 478p in response to the news, valuing the letters and parcels business at £4.8 billion.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

[NWpostie]

This is merely a money grab by a financially crippled administration that slapped 70% tax on incomes of the rich, some ex pats in France have complained to me about the additional expense, complex administration and fines for getting it wrong in France.

[k979aaa]

This is merely a money grab by a financially crippled administration that slapped 70% tax on incomes of the rich, some ex pats in France have complained to me about the additional expense, complex administration and fines for getting it wrong in France.

Or maybe they have the balls to say f**k big business and the EU sorry forgot France is the EU!

[NWpostie]

This is merely a money grab by a financially crippled administration that slapped 70% tax on incomes of the rich, some ex pats in France have complained to me about the additional expense, complex administration and fines for getting it wrong in France.

Or maybe they have the balls to say f**k big business and the EU sorry forgot France is the EU!

Don't get me started on the Common Agriculture Policy which really a French farming subsidy plan funded by the EU and some of the rebate surrendered by Blair on the promise there would be a "review" of that policy which unsurprisingly didn't happen we gave our money away for nothing.

Time to get out of the EU and enter into a free partnership only with the EU.