Sunday 25th Sep 2016 - Logistics Manager

Ofcom plans new rules to stop Royal Mail subsidising parcels business

Mail regulator Ofcom is proposing new rules for Royal Mail and postal operators, to tighten rules in the ‘access’ market, and ensure that Royal Mail does not cross-subsidise is parcels business through its letters network.

Ofcom plans new rules to stop Royal Mail subsidising parcels business

The ‘access’ market, where rival operators collect and sort mail before handing it over to Royal Mail to complete delivery, accounts for about 56 per cent of all letters in the UK.

Ofcom wants to stop shorter notice periods around contractual terms being imposed by Royal Mail on access operators. Second, to respond within six weeks when a wholesale customer requests a product similar to one already sold by Royal Mail.

Ofcom also believes that Royal Mail has the potential to cross-subsidise its parcels business through its letters business – where it has a much larger market share and an established delivery network – in a way that might disadvantage other parcel operators.

As a result its plan to monitor whether Royal Mail is appropriately allocating its costs between parcels and letters.

It is now consulting on its Review of the Regulation of Royal Mail. This will close on 3 August, and Ofcom expects to publish a statement on its final decisions later this year.