Royal Mail has strongly criticised its latest fine by the British postal regulator, describingit as “Monty Pythonesque”. The fine for unfair commercial advantage over new postal market entrants
comes just a week after a heavier penalty for poor service standards.Postcomm, the UK postal service regulator, said it had proposed a £2.16 million financialpenalty and enforcement order on Royal Mail because the company was failing to take adequate stepsto ensure it did not gain an unfair commercial advantage over its competitors in the fast-growing ‘access to the last mile’ market. Royal Mail had not installed “Chinese walls” between its retailand wholesale departments to ensure that information about access customers was prevented fromreaching the retail department. The investigation of so-called downstream access arrangementsfollowed complaints by three competitors – Express Ltd, TNT Mail UK Ltd and UK Mail Ltd.
Nigel Stapleton, chairman of Postcomm, said: “Many companies working for different clientshave ‘Chinese walls’ – internal separation arrangements that prevent conflicts of interest and theexchange of confidential information between teams working on different projects. The Commission issurprised that Royal Mail did not think it needed to do this in a fully professional manner.”
But Royal Mail issued a strongly-worded response, saying no customers or competitors had beenfound to have been disadvantaged. “This is a shoddy report from a grandstanding regulator who islooking to micro-manage the entire postal industry,” declared Royal Mail chairman Allan Leighton. “It is full of unsubstantiated and subjective views, which are not based in fact. The simple truthis: no competitor has lost out, no customer has lost out, and Royal Mail has made no gain from theway in which we operate access services – so why any fine at all? This huge and arbitrary penaltyis illogical – it is regulation for the sake of regulation.”
Royal Mail said that downstream access services have become an incredibly successful marketwhich has grown to more than one billion letters over the last year – four years ahead of forecastsby Postcomm, which had predicted an access market of this size in 2009/2010.
Mr Leighton said: “By any standard, Downstream Access services have been a success. The marketis based on commercial agreements freely entered into between Royal Mail and its competitors – yetPostcomm’s response is to slap a fine of more than £2 million on Royal Mail. This is almost MontyPythonesque – by Postcomm’s line of thinking I have absolutely no doubt that later this year theregulator will fine us for delivering the best quality of service ever due to the fact that theydecide it’s anti-competitive.”
