Postcomm publishes it's 'minded to' decision on Tailor Made

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Postcomm publishes it's 'minded to' decision on Tailor Made Incentives

19 December 2008

Postcomm has today published its ”minded to” decision document on “An Investigation into Royal Mail’s offering of Tailor Made Incentives (TMIs) on Mailsort 2 products and its compliance with Condition 21(5)” (pdf, 187 KB). http://www.psc.gov.uk/postcomm/live/new ... vFINAL.pdf

This document was served to Royal Mail on 15 December 2008. In accordance with Postcomm’s Enforcement Guidance http://www.psc.gov.uk/policy-and-consul ... dance.html, Royal Mail has the opportunity to submit any written representations by 8 January 2009, and also has the opportunity to have an oral hearing in the week commencing 12 January 2009.

Postcomm’s Enforcement Guidance states that it will consider any representations from third parties made in relation to the published “minded to” decision document. Third party representations should be submitted to Hannah Steel by 16 January 2009.

Following consideration of these representations, Postcomm expects to publish the final decision document in spring 2009.
Notes to editors:

* TMIs http://www.psc.gov.uk/competition/anti- ... tives.html are a scheme offered by RM which it regards as encouraging customers to make further use of postal services for marketing and promotion purposes. If RM considers that customers are using its services in an “innovative way” (against certain criteria), it offers a rebate relating to the innovative mailing activity (a percentage of the value of the mailing) in the form of a postage credit.
* Under Condition 21(5) http://www.psc.gov.uk/postcomm/live/new ... vFINAL.pdf of RM’s licence, the minimum percentage level of headroom between the access price and the analogous retail price which the licence requires to be “reduced by the maximum amount of all discounts available” is set, for each weight step for the duration of the 2006-2010 price control. The intention of this restriction is to prevent a margin squeeze between RM’s retail and access services. Without the headroom control, there would be potential for RM to reduce the margin between its retail and access prices to prevent access operators from competing in the upstream activities of its business. RM is required to take “all reasonable steps” to ensure compliance with the Condition.
* Timetable of the investigation:
1. In August 2008 Postcomm began its preliminary assessment;
2. On 4 September 2008 a letter was sent to RM asking for data to allow further calculations of the access headroom, in relation to a number of TMI offerings identified by Postcomm;
3. On 26 September 2008 Postcomm opened a full investigation and a Scope of Investigation was published on its website (link to this);
4. On 6 October 2008 a Requirement to Furnish Information served under Condition 17 of RM’s licence (link to RM’s licence) was sent to RM;
5. In November 2008 Postcomm met with RM; and
6. On 15 December 2008, Postcomm issued its “minded to” decision document to RM, allowing Royal Mail until 8 January 2009 to submit its written representations and giving the opportunity for an oral hearing in the week commencing 12 January 2009.