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Business & Competition & antitrust

Ofcom has fined Royal Mail £50 million for abuse of dominance



The fine follows a complaint made by Whistl after Royal Mail changed its wholesale customer contracts in 2014. At the time, Whistl (then known as TNT) was expanding its business to compete with Royal Mail in the delivery of business letters (“bulk mail”) in some parts of the UK. The contract change increased the prices Whistl had to pay Royal Mail to deliver such letters in the parts of the UK that Whistl did not itself cover. As a result, Whistl decided to suspend its plans to extend its bulk mail delivery.

Royal Mail has indicated it will challenge the decision. For its part, Whistl is seeking damages. If the decision is not overturned, Whistl will be spared the need to prove Royal Mail’s liability in the litigation, as Ofcom’s decision will be binding on the Court.

Such “follow-on” damages actions by victims of anticompetitive conduct are becoming increasingly popular. At present, the breach of competition law which is spawning by far the most follow-on actions is the price-fixing agreement by Europe’s leading truck manufacturers. The first action in England against the trucks cartel was brought by … Royal Mail.