| LONDON, April 9
LONDON, April 9 Britain's newly-privatised Royal
Mail warned an investigation into a rival's complaint
over wholesale mail price rises would lead to a long period of
uncertainty around the prices it charges other postal operators.
Royal Mail's regulator Ofcom on Wednesday said it would
investigate the complaint from Britain's No.2 postal operator,
TNT Post under its Competition Act powers, a process that can
take up to two years.
An enquiry under the alternative Postal Services Act would
normally take less than half that time.
TNT Post's complaint, made in February, is the latest in an
increasingly fierce battle between the two groups, sparked by
the former's plans to challenge Royal Mail's dominance by
rolling out its own complete British delivery network.
Royal Mail says such competition could threaten its ability
to sustain a six-days-a-week universal service, as TNT Post
targets only profitable areas. On Wednesday it called for Ofcom
to bring forward a review, planned for late 2015, of how it will
protect the service.
TNT Post has complained about Royal Mail's decision to
change conditions and increase the prices it charges to deliver
post collected and pre-sorted by its competitors, an agreement
known as an access contract.
Access contracts account for around half of the UK's inland
addressed mail, with TNT Post making up over half of this.
Royal Mail wrote to wholesale customers following TNT's
complaint to say its planned price hikes were suspended.
That, it said, would hamper the firm's ability to respond
commercially to market conditions, but not its rivals.
It also creates uncertainty for Royal Mail around its
pricing structure and for its customers, which as well as TNT
Post include UK Mail and banks like RBS and
Lloyds, now unsure what they will pay in future.
"We are concerned Ofcom's decision to investigate under its
Competition Act powers may create a period of uncertainty in the
UK postal market. We are keen the investigation is completed as
quickly as possible," Royal Mail said, adding its contract
changes were fair and TNT Post's complaint unfounded.
Ofcom did not give a time-frame for the investigation.
Royal Mail shares closed down 2 percent at 515 pence on
The price hikes, announced in January by Royal Mail as a
means to counter shrinking letter volumes, would see rises of
between 0.3 percent and 1.0 percent above inflation.
A discount would be given to access customers who could
supply the firm with monthly forecasts of mail volumes for up to
two years ahead, which would allow Royal Mail to save money by
being able to plan ahead more efficiently.
(Editing by Erica Billingham)