Royal Mail fined a record £50m by Ofcom for breaking law with price change

Watchdog says postal service broke competition law with proposed price rises in 2014

The postal service said it plans to appeal Ofcom's decision (Reuters)

Royal Mail has been fined £50m by the communications watchdog for a “serious breach” of competition law relating to a price change introduced in 2014.

It is the largest fine ever imposed by Ofcom, which is the result of an investigation following a complaint by delivery service Whistl over changes to wholesale prices.

At the time the price hike was proposed, Whistl, a customer of Royal Mail, was expanding its business to compete directly with the postal service in delivering business letters, or bulk mail, to certain parts of the UK.

Ofcom said the 2014 wholesale price increases meant that any of Royal Mail’s wholesale customers seeking to compete with it by delivering letters in some parts of the country would have to pay higher prices in the remaining areas where it used Royal Mail for delivery.

The regulator found that Royal Mail’s actions “amounted to anti-competitive discrimination against customers, such as Whistl, who sought to deliver bulk mail”.

Jonathan Oxley, Ofcom’s Competition Group Director, said: “Royal Mail broke the law by abusing its dominant position in bulk mail delivery.

“All companies must play by the rules. Royal Mail’s behaviour was unacceptable, and it denied postal users the potential benefits that come from effective competition.”

The postal service said it plans to appeal the fine, and “strongly refutes that it has acted in breach of the Competition Act”.

The company said the price change announced in January 2014 never came into effect, and added: “For an allegation of abusive price discrimination to be established, the law is very clear. The relevant prices must be actually paid. And, the party paying such prices must be placed at a competitive disadvantage as a result. In this case neither of these essential elements exist.”

Royal Mail also said the proposed increase had been “robustly stress tested” under competition law and the relevant regulation.