UK postal operator Royal Mail has criticised proposals into the regulation ofits pricing policy by UK industry regulator Postcomm. The company warned that the proposals would,if implemented, lead to the inexorable decline of Royal Mail by ensuring it could not compete inthe open market. Royal Mail also said that Postcomm’s proposed massive extension ofregulation into all aspects of its pricing would threaten the Universal Service and encouragewidespread cherry-picking by rivals from April next year. The company added that, unless theproposals are substantially changed to give Royal Mail a level playing field, it will have noalternative but to go to the Competition Commission.
Royal Mail chairman Allan Leighton said: “These proposals will literally starve Royal Mail ofvital investment and so wreck the quality of service we have fought so hard to improve. We cannotaccept them. It’s as simple as that.” According to Royal Mail, Postcomm’s proposals would starve Royal Mail of fundsneeded to modernise its operations leading to the inexorable decline of quality of service as wellas more than halve Royal Mail’s profits from current levels. It would force Royal Mailto subsidise competitors by compelling it to carry rural letters at a loss – leaving rivals tocherry-pick mail that is easy to deliver – and so threaten Royal Mail’s ability to maintain theUniversal Service. Opening the UK market at least three years before the rest of Europe would leaveRoyal Mail vulnerable to more profitable competitors.
