OFCOM To Deliver Review Of Royal Mail Dominance

A fundamental review of Royal Mail's regulation has been announced after the withdrawal of Whistl from the direct delivery letters market left it without national competition.

Communications watchdog OFCOM review will assess whether the current regulation remains "appropriate and sufficient".

It will also look at whether retail and wholesale prices are affordable for customers and will cover the costs of running a universal service.

On 10 June, Whistl - the Dutch-owned letter deliver service - announced that it was withdrawing from the direct delivery market putting 1,800 jobs at risk.

OFCOM said that its review "will assess Royal Mail’s efficiency; consider its performance in the parcels market; and assess the company’s potential ability to set wholesale prices in a way that might harm competition"

Before adding: "the review will address the implications of Whistl’s withdrawal, which represents a significant change in the direct delivery market".

Although Royal Mail now faces no competition in the letters market, parcel delivery remains competitive with firms such as Yodel and TNT offering choice to customers.

Royal Mail last year questioned the financial feasibility of operating a universal postal service given that competitors could pick and choose the areas in which they operated, while it shoulders the higher costs of delivering letters to rural and remote areas.

OFCOM will outline its initial thoughts and begin seeking formal submissions from industry, consumer groups and other stakeholders in July.

The review is expected to be completed, and a revised regulatory framework put in place, during 2016.

Last week the government announced its plans to sell its remaining 15% stake in Royal Mail .

Royal Mail shares were 2.1% lower in early trading.