Royal Mail whacked by £900m claim over market abuse

legal 2A group of bulk mail users – which includes retailers, utility companies, charities and publishers – is seeking nearly £900m in compensation from Royal Mail in what is believed to be the first class action claim chasllenging the postal giant’s domination of the market.

In a filing to the UK Competition Appeal Tribunal, newly formed Bulk Mail Claim says it represents an estimated 290,000 customers who maintain they were overcharged as a result of Royal Mail’s monopoly; it is demanding £878m in compensation.

The group argues that organisations which bought bulk mail services after 2014 suffered owing to “anti-competitive” behaviour by Royal Mail. It insists that the postal giant prevented competition, pushing up prices for the collection, sorting and delivery of letters in bulk, including charity direct mail, council tax and bank statements, magazines and energy bills.

In 2018, Ofcom slapped Royal Mail with a record £50m fine for a serious breach of competition law over plans to hike prices in January 2014, even though the new rates were never imposed.

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.

Royal Mail appealed against the fine to the Competition Appeal Tribunal, but this was rejected in November 2019. An appeal of that judgment was dismissed by the Court of Appeal in 2021. An appeal at the Supreme Court has yet to be heard.

Royal Mail also faces a separate £600m claim, brought by Whistl which is expected to reach the High Court next year.

Robin Aaronson of Bulk Mail Claim said: “Where there has been an abuse of dominant position, as has occurred in this case, it is important that those suffering loss are able to obtain redress.

“A collective claim is the only fair and efficient form of redress in this case, given that there are hundreds of thousands of affected customers and it would be commercially unviable for them to bring individual proceedings.”

Andrew Wanambwa, a partner at Lewis Silkin, the law firm handling the case, added: “Royal Mail abused its dominant position, resulting in hundreds of thousands of bulk mail customers being overcharged. The purpose of this claim is to hold Royal Mail accountable for its actions and secure compensation for affected customers.”

In response, a Royal Mail spokesperson said: “We confirm that we have received an application for a collective proceedings order from an entity called Bulk Mail Claim which we consider to be without merit and we will defend it robustly.”

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