Royal Mail has been forced to suspend its price rises for wholesale customers – which were due to increase by up to a third in October – after regulator Ofcom agreed to step in and resolve the dispute.
The increases caused uproar among Royal Mail’s bulk mail customers, such as UK Mail, Whistl and Citipost, who specialise in sorting and processing mail before handing it to Royal Mail for the final mile delivery.
The cost of sending a bulk mail letter weighing up to 100g using Royal Mail’s access mail business economy service – for less urgent mail, to be delivered within five days – was due to increase by 36.1%, while the cost of sending a large letter weighing between 101g and 250g using the standard access advertising mail service would rise by 11.4%.
Now, members of the Mail Competition Forum, which represents several of the UK’s access operators, have brought a dispute to Ofcom regarding the level of the hikes.
Under the Postal Services Act 2011, Ofcom can handle disputes between postal operators that commercial negotiations have failed, or are otherwise unable, to resolve. Such disputes do not constitute formal enforcement action against an operator.
Under Ofcom’s rules, Royal Mail must offer access to its postal network for bulk mail. The terms, conditions and charges for this access are set by Royal Mail, but they must be fair and reasonable.
In a statement on its website, Ofcom said: “We will be determining whether Royal Mail’s wholesale price rises constitute fair and reasonable terms, conditions and charges in accordance with our rules.
“In accordance with our guidelines, we intend to issue our decision on this dispute within four months. Under the terms of Royal Mail’s contracts, its wholesale price increases will be suspended pending our decision.”
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