High Court orders Royal Mail to cough up £50m fine

royal mail 1 (2)Royal Mail’s has failed in its attempt to overturn a £50m fine – issued by Ofcom last year – for a serious breach of competition law against arch-rival Whistl, after the Competition Appeal Tribunal ruled the postal giant must cough up the cash.

The long-running saga actually dates back over five years, and centred on whether Royal Mail abused a dominant position when it proposed to put up prices in January 2014, even though the rises were never implemented.

At the time, Whistl (then TNT Post) had launched its own end-to-end service but Ofcom found that Royal Mail price rises meant any of its wholesale customers seeking to compete with it would have to pay higher prices in the remaining areas where it used Royal Mail for delivery.

As a result, Whistl suspended plans to extend delivery services to new parts of the country and eventually ditched end-to-end deliveries altogether. At the time, boss Nick Wells accused Royal Mail of trying to “strangle” the firm.

Commenting on the ruling, an Ofcom spokesperson said: “We found that Royal Mail pursued a deliberate strategy of pricing discrimination against Whistl, which was its only major competitor for delivering business mail. Royal Mail had a special responsibility to ensure its behaviour was not anti-competitive.

“We hope that our fine, which has been upheld in full by the Tribunal, will ensure that Royal Mail and other powerful companies take their legal duties very seriously.”

Whistl said it was considering whether to seek damages. It added: “Royal Mail’s actions had a hugely negative impact on investment in, looking and the competitive health of, the UK postal sector.”

The ruling comes as Royal Mail is seeking a High Court injunction to halt the proposed industrial action by members of the Communications Workers Union, amid claims that that the union ballot had “potential irregularities”.

A strike threatens to cause havoc in the run-up to Christmas as well as scupper the main parties’ General Election direct mail campaigns and even postal votes.

The ruling is expected imminently.

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Royal Mail gets all-clear but awaits fate in Whistl ruling
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