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Last Updated: Friday, 17 February 2006, 17:09 GMT
Royal Mail faces further 2m fine
Postman emptying letterbox
Royal Mail has 28 days to appeal against the fine
Royal Mail has been hit with its second multi-million pound fine in a week.

Regulator Postcomm proposed the 2.16m fine because the company had failed to take adequate steps to ensure it did not gain "unfair commercial advantage".

Royal Mail said it could take legal action and seek a judicial review to overturn the fine.

The fine follows a 11.4m penalty imposed over the amount of post being lost, damaged or stolen, which Royal Mail is also appealing against.

Private post companies Express, TNT Mail and UK Mail complained about Royal Mail's competitive behaviour in the newly-liberalised market last year.

Royal Mail charges a fee to deliver mail collected by its competitors.

We cannot allow any actions by Royal Mail that unfairly keep competitors out of the market
Postcomm chairman Nigel Stapleton

And it is alleged the company used sensitive information gleaned from these rivals to gain an unfair advantage.

Postcomm said Royal Mail was damaging confidence in the postal market by contravening its licence.

Chairman Nigel Stapleton said the regulator was surprised Royal Mail "did not think it needed to" impose "internal separation arrangements that prevent conflicts of interest and the exchange of confidential information between teams working on different projects... in a fully professional manner".

Royal Mail has a 97% share of the postal market.

And Mr Stapleton said that meant customers would never feel the benefit of the free market "unless the playing field is made as level as possible for the new operators".

"Postcomm has to enforce the rules for a postal market where, in the interests of customers, there is effective competition," he added.

Building customer and competitor confidence and ensuring a level playing field are essential if the UK postal market is to flourish
Postwatch chief executive Gregor McGregor

"We cannot allow any actions by Royal Mail that unfairly keep competitors out of the market."

Postwatch chief executive Gregor McGregor called it "astonishing and deeply worrying that Royal Mail has had to be told... to put in place internal structures that prevent competitors' commercially sensitive information being used to gain unfair advantage".

"Building customer and competitor confidence and ensuring a level playing field are essential if the UK postal market is to flourish," he added.

"The postal market is immature, but developing rapidly.

"It was essential that Postcomm take action to protect the competitive market and we are pleased it has."

The consumer watchdog added it expected any future penalties for anti-competitive behaviour to be substantially bigger.

This is almost Monty Pythonesque
Royal Mail chairman Allan Leighton

But Royal Mail chairman Allan Leighton said: "There are no substantiated complaints and no examples of Royal Mail failing to fulfil its access agreements, which allow rivals to use Royal Mail's sorting and delivery network in a way no other European postal company permits.

"The simple truth is no competitor has lost out, no customer has lost out, and Royal Mail has made no gain from the way in which we operate access services.

"This is almost Monty Pythonesque - by Postcomm's line of thinking I have absolutely no doubt that later this year the regulator will fine us for delivering the best quality of service ever due to the fact that they decide it is anti-competitive.

"This is a shoddy report from a grandstanding regulator who is looking to micro-manage the entire postal industry.

"It is full of unsubstantiated and subjective views, which are not based in fact.

Security measures

"This huge and arbitrary penalty is illogical - it is regulation for the sake of regulation."

"Our independent legal advice as to the strength of our case is extremely clear, and we will exhaust every possible route to ensure this ridiculous penalty is wiped out."

Royal Mail has 28 days to appeal against the fine.

On 10 February, Postcomm proposed an 11.4m fine after finding Royal Mail guilty of "serious breaches" of its licence in relation to mail security measures and staff vetting.

Royal Mail could also be fined 270,000 for poor delivery performance in London during 2004-5.

Under legislation passed in 2000, Postcomm has the right to fine Royal Mail up to 10% of its annual turnover if it is found to have breached its licence obligations.

Royal Mail was fined 7.5m in 2003 - the largest fine levied to date - after it was found to have missed performance standards for delivering business mail.

Royal Mail to appeal against fine
10 Feb 06 |  Business
Royal Mail fined for missing post
10 Feb 06 |  Business
Postwatch urges tighter controls
21 Dec 05 |  England
Postman is jailed for 20m fraud
23 Dec 05 |  London
Parcels boost Royal Mail profits
17 Nov 05 |  Business

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