Postcomm says “no” to Royal Mail

| February 28, 2007 | 0 Comments

Postcomm says "no" to Royal Mail

Postal regulator Postcomm fired back at Royal Mail within hours of the Royal Mail request on Tuesday to be allowed to raise prices for stamps and reduce delivery services. The regulator said that the problem was not Royal Mail’s inability to compete with other postal companies, but its inability to curb costs and deal with its pension fund deficit. The Postcomm chairman said that in the six months ending in September 2006, Royal Mail had raised prices by over 4 percent but was only able to generate 1 percent in extra revenues to pay labor and pensions costs. He also said that considering the fact that Royal Mail delivers more than 90 percent of addressed letters and more than 99 percent of all mail in the UK, its ability to compete is not in question.

Royal Mail representatives said they were surprised at the vehemence of Postcomm’s response to its proposals and said they were merely responding to the regulator’s review of the industry. Postcomm, however, claimed that Royal Mail had not asked for an increase in stamp prices in its formal response to the review, submitted six weeks ago, but had instead waited until Tuesday to present its proposals.

Criticism of Royal Mail’s proposals did not come just from Postcomm, however. Consumer watchdog group Postwatch accused Royal Mail of using the media to pressure Postcomm into granting its wishes. However, the Mail Competition Forum, the representative for Royal Mail’s UK rivals, said that it sympathized with Royal Mail’s request to be able to raise prices.

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