Postal rivals intensify their fight for customers

25 March 2007
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26 March 2007 | Antony Barton

Royal Mail's campaign to prevent rivals winning business customers intensified last week with conflicting requests on postal prices.

In a statement Royal Mail argued for the power to raise charges to deliver mail collected by competitors. It claimed this year alone rivals were carrying around 600 million more letters than regulator Postcomm had anticipated when it set a price control.

The statement followed findings from indicating the price Royal Mail is allowed to charge doesn't cover costs.

It adds: "The basis on which the price control was set simply isn't working under the current market conditions - conditions that are clearly going to get even tougher in the future."

One of the Royal Mail's rivals TNT Post responded to Royal Mail's statement asking Postcomm to strengthen the current rules that prevent Royal Mail from squeezing its rivals' margins. Nick Wells, the CEO of TNT Post, said: "Royal Mail recently stated that it costs their business 8 pence to deliver a letter and yet they are charging us around 13 pence, as part of a commercial agreement reached a couple of years ago.

"It is unbelievable that they are now seeking to charge us even more. An increase in wholesale price could destroy our business and we want tougher controls which stop Royal Mail from doing this in the first place. "

Postcomm said it would consider both requests and present the conclusions of its review within the next six months.

SMmar2007

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