Royal Mail control of direct mail prices worries DMA

Royal Mail: DM prices worries DMA
Royal Mail: DM prices worries DMA

The DMA has greeted Ofcom's proposals to free Royal Mail to set its own prices for bulk mail with concern, pointing out a lack of safeguards for bulk mail users against Royal Mail abusing its monopoly.

Ofcom yesterday published proposals for a seven-year regulatory framework it said was designed to ensure UK consumers continue to benefit from a "universally-priced, affordable postal service, six days a week".

Having taken over the regulation of the postal market from Postcomm on 1 October, as mandated by the coalition Government, Ofcom wants to sweep away the regime of price controls on business and most public mail delivery charges.

The DMA's head of postal and environmental affairs, Alex Walsh, who is critical of Postcomm's over-complicated approach to price controls, mostly welcomed Ofcom's "fresh approach".

Walsh accepted Ofcom's decision to allow Royal Mail to set its own prices, saying the DMA "understands the need for Royal Mail to have more commercial freedom".

However, he added, "we are concerned that there doesn't appear to be safeguards for bulk mail users against potential abuses of that monopoly".

Ofcom is consulting the industry on its proposals, which include monitoring Royal Mail's performance closely, particularly the provision of universal service, efficiency, profitability and pricing.

Royal Mail would also be required to continue to provide competitors, such as TNT Post, with access to its delivery network.

It would have the freedom to set the wholesale price for access but would be subject to rules regarding the allowed margin between the wholesale and retail prices.

This was welcomed by Walsh, who said: "Customer choice has contributed to sustaining bulk mail volumes and funding the Universal Service."

TNT Post UK gave a cooler reception to the proposals, which did not refer to any removal of Royal Mail's VAT exemption, which it has long called for.

TNT said: "We are also pleased that Ofcom recognises that competition in principle brings substantial benefits, especially in terms of increasing pressure on Royal Mail to improve efficiency.

"To enable End to End competition to take place in the UK, the Government needs to level the competitive landscape in terms of VAT immediately, as currently Royal Mail is exempt from charging VAT on business mail services, unlike its competitors.

"We are concerned however that Royal Mail has more freedom to price at individual customer level and need to analyse the detail of the proposals."

Follow Daniel Farey-Jones on Twitter @danfareyjones

Discussion

Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus
Brand Republic Jobs

subscribe now

Latest

John Lewis walks consumers through its history to celebrate 150 years of business
Waitrose boosts content strategy with 'Weekend Kitchen with Waitrose' C4 tie-up
Hottest virals: Cute puppies star in Pedigree ad, plus Idris Elba and Fruyo
Amnesty International burns candles to illuminate new hope
Toyota achieves the impossible by calming angry Roman drivers
Tom of Finland's 'homoerotic' drawings made into stamps
YouTube reveals user habits to appeal to 'older' marketers
Ex-M&S marketing chief Steven Sharp consulting at WPP
Wolff Olins reveals new CEO after Apple poaches Karl Heiselman
Glasgow offers £30,000 prize to best digital idea for 2014 Commonwealth Games
Google's revenues surge but shares drop as it grapples with transition to mobile
Facebook beats Twitter to most 'marketing friendly' social media site crown, says DMA
Fableists believe children like Finn should be outdoors enjoying life
Homebase, Baileys and Camelot join the line-up at Media360
MasterCard renews Rugby World Cup sponsorship to push cashless message
Lynx unleashes £9m 'Peace invasion' campaign
Social Brands 100 Youth: Pizza Hut most social youth brand in UK
Cheryl Cole is wild and arresting in new L'Oreal work
Morrisons told not to show alcohol ads during YouTube nursery rhymes
O2 head of brand Shadi Halliwell departs after 23 years at company in restructure
Tesco hit by further sales decline as it turns to digital Clubcard and social network
Branding guru Wally Olins dies aged 83
Duracell short film captures epic Transatlantic voyage
Ash runs Tinder experiment to show smokers are less desirable to opposite sex
British Airways teams up with Gerry Cottle Jnr for summer of rooftop film screenings
Arklu says 'girls can be superheroes too' with doll design competition
Coke enters squash market with Oasis Mighty Drops
Virgin Galactic signs up Land Rover as space flight sponsor
Motorola marketer Andrew Morley departs as Google gears up for sale to Lenovo
US Airways apologises after tweeting obscene image at a customer