Royal Mail PLC Royal Mail response to Ofcom's statement (6815A)
21 Februar 2014 - 5:15PM
UK Regulatory
TIDMRMG
RNS Number : 6815A
Royal Mail PLC
21 February 2014
21 February 2014
Royal Mail Plc
Royal Mail response to Ofcom's statement on Access contract
changes
Royal Mail plc (RMG.L) has been notified by Ofcom, this
afternoon, that it has decided to open an investigation following a
complaint brought by TNT Post UK about certain changes to Royal
Mail's Access contracts due to come into effect from 31 March
2014.
Royal Mail believes TNT Post UK's complaint is unfounded. Royal
Mail will cooperate fully with Ofcom and will share with it the
comprehensive and robust rationale for our proposals. We considered
carefully our legal and regulatory obligations before notifying
Access customers of the changes. We believe that the changes are
fair, reasonable and proportionate. They are an important part of
Royal Mail's commercial response to both changing market conditions
and to Ofcom's comments in its March 2013 guidance document on
end-to-end competition in the postal sector(1) . In that guidance
document, Ofcom noted Royal Mail could use its commercial freedom
to amend the pricing and terms of Access contracts, to ensure they
are reflective of relevant market costs. We wish to see this matter
resolved as quickly as possible so that these planned changes can
be put into effect to help secure the sustainability of the
Universal Service.
We believe that the introduction of RPI related tariff increases
for all Access customers is not impacted by this complaint. They
will come into effect on 31 March 2014. Under the terms of our
Access contracts, the price changes subject to Ofcom's
investigation are suspended until the outcome of that
investigation. They are:
-- The introduction of a 0.25p price per item differential between:
a) a price plan that requires customers to provide monthly
volume forecasts including significant changes for up to 2 years
ahead, based on a national mailing profile across 86 local
districts and,
b) price plans that do not require that forecast information,
therefore providing additional flexibility for customers.
The price differential reflects the cost benefit Royal Mail
would gain by being able to plan more accurately at a local level
and deliver greater efficiencies.
-- Changes to the zonal price differential between our four
zones (London, Urban, Suburban and Rural), so they are more
reflective of relevant costs and market conditions.
ENDS
For further information please contact:
Media Relations
Mish Tullar
Phone: 07423 524154
Email: mish.tullar@royalmail.com
Investor Relations
Phone: 020 7449 8297
Email: investorrelations@royalmail.com
Notes
1 Ofcom: End-to-end competition in the postal sector: Final
guidance on Ofcom's approach to assessing the impact on the
universal postal service - (27 March 2013):
"Royal Mail could change its commercial strategy (i.e. pricing
and terms). In particular, under the current regulatory regime
Royal Mail has the ability to change the prices it charges access
operators. This includes the ability to change how access prices
are set for different geographic areas (currently the "zonal access
pricing regime") to ensure they are reflective of relevant costs.
This is particularly important given that in general an end-to-end
competitor will still need to rely on access to Royal Mail's
network to offer its customers full coverage of all addresses in
the UK. Royal Mail's flexibility in setting zonal access prices can
enable it to ensure that end-to-end competitors pay a cost
reflective price for Royal Mail delivering mail in the areas where
it has chosen not to enter (which may be the harder to reach, and
hence less profitable parts of the UK). In this way, Royal Mail may
be able to mitigate the impact on the universal service from an
entrant 'cherry picking' by delivering in lower cost areas and
handing over the rest of the mail to Royal Mail to deliver. In
addition, Royal Mail has the flexibility to negotiate changes to
its contracts both with its retail and access customers (subject to
competition law and the existing ex ante regulatory conditions on
access)."
About Royal Mail plc:
Royal Mail plc is the parent company of Royal Mail Group
Limited, the leading provider of postal and delivery services in
the UK and the UK's designated universal postal service provider.
UK Parcels, International and Letters (UKPIL) comprises the
company's UK and international parcels and letters delivery
businesses operating under the "Royal Mail" and "Parcelforce
Worldwide" brands. Through the Royal Mail Core Network, the company
delivers a one-price-goes-anywhere service on a range of parcels
and letters products. Royal Mail has the capability to deliver to
more than 29 million addresses in the UK, six days a week
(excluding UK public holidays). Parcelforce Worldwide operates a
separate UK network which collects and delivers express parcels.
Royal Mail also owns General Logistics Systems (GLS) which operates
one of the largest ground-based, deferred parcel delivery networks
in Europe.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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