Royal Mail to deliver for rival

Royal Mail says it is pleased at the agreement

The Royal Mail has agreed to deliver letters processed on behalf one of its business competitors.

Business Post Group said its UK Mail subsidiary has signed an agreement with Royal Mail for access to its local sorting and delivery network.

The terms are confidential, but meet the format laid down by Postcomm, the independent postal industry regulator.

The agreement follows months of talks over how much Royal Mail can charge to carry rival organisations' mail.

Postcomm said it would postpone the publication of its proposals on the price Royal Mail should charge for access, until January, to allow the two firms to finalise the deal.

'Amicable agreement'

The regulator was asked to determine a price after talks between the two firms originally broke down.

"We welcome the prospect of an amicable agreement with the Royal Mail, which will be providing an integral part of UK Mail's service," Business Post chief executive Paul Carvell said.

Postcomm chairman Graham Corbett welcomed the deal, and said: "This is excellent news that should benefit both businesses and consumers."

He said it opened the way to "competitive innovation in service delivery" and would enable Royal Mail to earn money by delivering UK Mail's post.

Royal Mail chief executive Adam Crozier said: "We are very pleased at this agreement. Access arrangements are new territory for Royal Mail.

"I am confident we have the basis to proceed to an agreement that will work for Royal Mail and our postmen and women, as well as for UK Mail and business customers who will benefit from enhanced choice."

However consumer watchdog Postwatch said it hoped Postcomm would not look at the agreement in isolation.

'Customer choice'

Peter Carr, chairman of Postwatch said: "It is good news that UK Mail and Royal Mail have reached an outline agreement - we hope that this will result in a full agreement by the end of January.

"However, the regulator was due to announce a decision on Friday, 19 December, and this would set a standard for other companies wishing to compete in the UK postal market.

"It is important Postcomm publishes this information as planned so other operators can proceed now to make decisions on market entry. More than one competitor is needed to provide choice to customers."

But a spokesman for Postcomm said: "We had our document ready as a guideline for these two parties in case they could not reach agreement - it was not a code for other deals.

"As they have now reached a heads of terms agreement, we will give them until January to sort out the details.

"If they don't finalise agreement we will publish our original document.

"If they do, we will publish a new document, based on their arrangement, which will be a reference for other businesses to use as a model."