Row grows over ‘toothless’ Ofcom

The backlash against Ofcom for giving Royal Mail carte blanche to hike up postal prices shows no sign of abating,
with one business group branding the regulator a ‘toothless dog’.
The Forum of Private Business added to DMA criticism by claiming small companies would be driven towards the slower second class mail system to avoid “unaffordable” first class mail rates, hitting first class volumes further.
The Forum’s chief executive Phil Orford said: “Simple economics suggests this will, ultimately, force the cost of first higher as increasingly fewer people use the ‘premium’ service.
“The quickest way for the Royal Mail to decline further is by pricing businesses out of their service. The costs of business are already high. There needs to be some respite not further crude hikes.”
Orford claimed Ofcom had turned itself into a “toothless dog”. “Exactly how far down the path of prices rises would it go before weighing in and asking Royal Mail to think again?” he asked. “Surely it would have been better for Ofcom to have more of a direct say in any price increases rather than relinquishing this power?”
Ofcom’s decision, revealed yesterday, has already drawn a swift reponse from the DMA, which claimed its concerns had been ignored.
And, although the price rises for direct mail have been far less than for first and second class mail, there are fears that now the postal operator has free reign, businesses will ultimately face huge increases.
One industry source warned: “If Royal Mail has no qualms about pushing first class stamps up by 30% and second by 48%, what’s to stop it doing the same for its Advertising Mail products?
“Of course, this is all about making it more attractive to potential buyers, but it must tread carefully. Hit business customers too hard and there won’t be anything left to sell.”

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