Ofcom has fined Royal Mail £50m for breaking competition law. It found the company had abused it's dominant market position by discriminating against a major competitor.
Whistl (previously called TNT Post UK), was a wholesale customer of Royal Mail. They made a complaint to Ofcom which focused on the changes that Royal Mail made to its wholesale customers' contracts in 2014.
Royal Mail changed its pricing to different price plans for wholesale customers. The pricing model depended on whether they were able to hit mail volume targets for areas covering the whole of the UK.
Ofcom found that the price difference between the price plans would have had a material impact on a delivery competitor’s profits, making it significantly harder for new companies to enter the bulk mail delivery market.
As a result it determined that Royal Mail's actions amounted to anti-competitive discrimination against customers who sought to deliver bulk mail.
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Analysts at Liberum said even if the fine was upheld, it would not damage Royal Mail's profits - but could limit its expansion: "Although the fine itself is not material, and the competitor that brought the complaint has long since withdrawn from the market, we see broader potential implications. "Importantly, we believe this is a reminder that Royal Mail must act with restraint given its dominant market shares in both letters and parcels, and this limits the group's ability to grow parcels revenue over the long term."