ASA Adjudication on Royal Mail Group Ltd

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Royal Mail Group Ltd
100 Victoria Embankment
London
EC4Y 0HQ
Date: 24 April 2013
Media: Circular
Sector: Business
Number of complaints: 1
Complaint Ref: A12-209843
Background
Summary of Council decision:

Five issues were investigated and all were Not upheld.

Ad
A circular for the Royal Mail was headed, "Royal Mail: a key part of your community". It stated, "Dear Royal Mail Customer, I am writing to you on a subject that we are very concerned about. That subject is the future of the postal service in West London and, by extension, the rest of the UK. A company called TNT Post UK, a subsidiary of the Dutch postal service, is now collecting, sorting and delivering their customers' mail to all West London addresses. This could include your home ... Royal Mail supports fair competition. The UK is already the most competitive postal market in Europe. It has been for sometime [sic]. But if other service providers 'cherry-pick' profitable areas - as TNT is doing in West London - Royal Mail still has to delive at great cost to all 29 million addresses in the UK. This includes the most unprofitable areas. Clearly this threatens the sustainability of the universal service".

The reverse side of the circular was headed, "THE FACTS"; it contained a table comparing the services of Royal Mail in one column with those of TNT Postal UK in the other. Under "Royal Mail" the "Mail delivered" section stated, "We deliver a minimum of once per day. 6 days a week, including on Saturday". The "Mail collected" section stated, "We collect from 1,480 post boxes and businesses in West London at least once a day". The "Redirections" section stated, "We offer a full redirection service when a customer moves home or business". Under "TNT Post", the "Redirection" section stated, "TNT has not confirmed publicly whether they offer a redirection service".

Issue
TNT Post UK Ltd (TNT) challenged whether:

1. the claim "Clearly this threatens the sustainability of the universal service" was misleading;

2. the claim that West London was a "profitable area" could be substantiated;

3. the claim "We deliver a minimum of once per day, 6 days a week, including on Saturday" was misleading, because they understood that Royal Mail did not deliver parcels on Saturdays;

4. the claim "We collect from 1,480 post boxes and businesses in West London at least once a day" was misleading, because they understood that Royal Mail did not collect on Sundays; and

5. the comparison of the "Redirection" services was misleading because Royal Mail did not provide TNT Post UK Ltd with the necessary data to be able to offer a redirection service.

CAP Code (Edition 12)
3.13.33.333.353.63.7
Response
1. TNT objected to the claim, "Clearly this threatens the sustainability of the universal service" on the grounds that Ofcom, in a statement of 25 July 2012, said it found no reason to restrict the activities of Royal Mail's competitors, notwithstanding its duty to assure the provision of the universal service.

Royal Mail said the leaflet was a response to information disseminated by TNT. Royal Mail felt the complaint ignored the context of their claim, and did not truly reflect the nature of Ofcom's statement. They said it was clear from the leaflet that the claim was a general one, which highlighted the fact that whilst other service providers could choose the areas in which to compete, Royal Mail had to deliver, at a great cost, a service to all 29 million addressees in the UK, including the most unprofitable areas. They said the logical result of this was that lost volumes for Royal Mail in the profitable areas seriously threatened the financial sustainability of the universal service. This was expressed as a contingent scenario in the leaflet through the use of conditional language.

Furthermore, Ofcom was monitoring the situation concerning Royal Mail's competitors on an ongoing basis and had neither dismissed the possible threat to the universal service nor ruled out exercising its regulatory powers in this respect.

Royal Mail said, at the time of their response, that Ofcom was consulting on direct delivery competition in the postal sector and its proposed guidance for intervention. They said that the Consultation specifically recognised that the universal service was under threat, that Royal Mail was the only operator capable of providing the universal service in the UK and that the financial sustainability of the universal service was closely linked to Royal Mail's financial position. They also said the consultation acknowledged that direct delivery competition could mean a loss of market share and lower revenues for Royal Mail, which could result in Royal Mail being unable to cover the costs of providing the universal service. According to Royal Mail, the Consultation said this could mean Royal Mail being unable to earn a rate of return consistent with Ofcom's view of financial sustainability. Royal Mail submitted Ofcom's July public statement on the matter in support of their argument.

2. Royal Mail did not believe that the description of West London as a "profitable area" was in any way misleading. The statement reflected their own viewpoint and was based on their own experience. Furthermore, they said it was widely accepted that, in terms of direct delivery mail services, urban areas with high population density were typically more profitable than remote and isolated rural areas with low population density.

3. Royal Mail maintained that the statement, "We deliver a minimum of once per day, 6 days a week, including on Saturday" was accurate. Furthermore, it was part of their universal service obligation, with which they complied.

4. Royal Mail said it was clear from the context of the leaflet that the claim referred to the six days a week on which Royal Mail provided its postal services. This was clear from the factual comparison between Royal Mail and TNT and also from the text box in the cover letter of the leaflet. Notwithstanding this, Royal Mail believed it highly unlikely that the average consumer would have read the statement literally and inferred that "once a day" included Sundays. It was widely known and well-publicised that Royal Mail collected mail on Monday to Saturdays only. It was also stated very clearly on all Royal Mail post boxes that collection times did not include Sundays.

5. Royal Mail said that at the time the leaflet was disseminated, the statement, "TNT has not confirmed publicly whether they offer a redirection service" was factually accurate, objective and not misleading. Furthermore, the leaflet was a response to a TNT flier that contained no reference to the redirection services.

Assessment
1. Not upheld

The leaflet stated, "But if other service providers cherry pick profitable areas - as TNT are doing in West London - Royal Mail still has to deliver at great cost to all 29 million addresses in the UK. This includes the most unprofitable areas. Clearly this threatens the sustainability of the universal service".

The ASA noted the conditional nature of the text preceding the claim and that it referred to the variability of other service providers, such as TNT, competing with Royal Mail in the 'end-to-end' market. We considered it was clear from the ad that the claim communicated the logical concern that, due to Royal Mail’s unique position in the UK and its responsibility to provide basic postal services to the entire population of the UK, direct delivery competition in the most profitable areas, put Royal Mail at a disadvantage and therefore represented a threat to the sustainability of the universal service provider.

We also considered that the claim would be understood as a general statement by Royal Mail, related to direct delivery competition generally and not to TNT’s activity in West London specifically. For these reasons we concluded that the claim was unlikely to mislead.

On this point we investigated the ad under CAP Code (Edition 12) rules 3.1, 3.6 (Misleading advertising) and 3.7 (Substantiation) but did not find it in breach.

2. Not upheld

The leaflet highlighted the difference between the Royal Mail as the universal service provider and its competitors in that the Royal Mail had an obligation to provide a service to every address in the country. We considered that recipients would understand the description "profitable area" in this context and understand it referred to the advantage that Royal Mail’s competitors had in being able to choose where they operated.

On this point we investigated the ad under CAP Code (Edition 12) rules 3.1, 3.3 and 3.7 (Misleading advertising) but did not find it in breach.

3. Not upheld

Because we understood that Royal Mail delivered at least once per day, six days a week, including Saturday and that this included non-letter items such as parcels, we concluded that the claim was not misleading.

On this point we investigated the ad under CAP Code (Edition 12) rules 3.1 and 3.3 (Misleading advertising) and 3.7 (Substantiation) but did not find it in breach.

4. Not upheld

Although the leaflet referred to collections "at least once a day", we noted that this claim was made on only two occasions, and each time directly after a claim that had referred to Royal Mail delivering six days a week. We therefore considered that consumers would understand the claim in this context. Furthermore, we agreed that it was generally well known that Royal Mail did not provide postal services on Sundays. For these reasons we concluded that the claim was not misleading.

On this point we investigated the ad under CAP Code (Edition 12) rules 3.1 and 3.3 (Misleading advertising) but did not find it in breach.

5. Not upheld

We noted TNT objected to the comparison of redirection services as featured on the leaflet on the grounds that Royal Mail were withholding redirections information from them, thus making it impossible for them to provide this service. However, we understood there was no statutory or other regulatory obligation on Royal Mail to provide redirections data to third parties. Ofcom had a legal power to impose conditions requiring postal operators to provide access to postal infrastructure, which could include redirections data, subject to certain criteria being satisfied; but we understood that currently Ofcom had not exercised that power.

Nevertheless, we also understood that Royal Mail did offer access to a Redirections Database. Although TNT might object to the terms of access to that information, in the absence of any statutory or other regulatory obligation on Royal Mail to provide redirections data under any particular terms, or indeed at all, and in light of the fact that we understood the claim, "TNT has not confirmed publicly whether they offer a redirection service" to be factually accurate, we concluded that the comparison of redirections services as provided in the leaflet was not materially misleading, nor had it excluded material information .

On this point we investigated the ad under CAP Code (Edition 12) rules 3.1 and 3.3 (Misleading advertising), 3.7 (Substantiation) and 3.33 and 3.35 (Comparisons with Identifiable Competitors) but did not find it in breach.

Action
No further action necessary.

[Pat Ostman]

TNT thought we didn't delver parcels on Saturday?

[Mr Rush]

5. the comparison of the "Redirection" services was misleading because Royal Mail did not provide TNT Post UK Ltd with the necessary data to be able to offer a redirection service.

I hope one day to set up a business where I get my competition to do everything for me.