Postal service competition inquiry launched by MPs

Royal Mail has complained about competition from rival like Whistl - formerly TNT Post

A committee of MPs has announced an inquiry into competition in the UK postal sector.

It is in response to complaints from Royal Mail, which says it is facing unfair competition from rival firms such as Whistl - previously TNT Post.

The Business Committee said its inquiry would look at how competition was affecting Royal Mail's obligation to provide a universal service.

Royal Mail says the obligation gives rivals an unfair advantage.

Competitors such as Whistl do not have to provide delivery to the whole country, or guarantee deliveries six days a week, as Royal Mail must continue to do under the Universal Service Obligation, despite its privatisation last year.

Royal Mail says this allows Whistl to "cherry-pick" easy-to-serve urban areas that are more profitable than rural areas, and choose to deliver easy-to-process mail.

"We will play our full part in the committee's inquiry into the key issues for the Universal Service and the UK," a spokesman for Royal Mail said.

Benefits of competition

"Unfettered direct delivery competition threatens to undermine the one-price-goes-anywhere, universal postal service. New entrants are cherry-picking both the populous urban areas and bulk business mail.

"We fear that a point could be reached where direct delivery competition leads to the universal service being unviable."

A spokesman for Whistl rejected the criticism, arguing that Royal Mail's problems were more about its own efficiency.

"We are happy to take any opportunity to explain the benefits of competition in the UK postal sector and its important role in ensuring Royal Mail continues to work towards meeting its productivity targets, which it has so far failed to do," he said.

"We are proud to deliver innovative, quality and value-for-money services that our clients want and are creating much-needed new jobs across the UK."

Whistl is the second biggest postal service in the UK, delivering to 1.2 million addresses in Manchester, London and Liverpool, although its delivery volumes are still tiny in comparison to Royal Mail's, representing less than 0.4% of the addressed mail market.

The committee has requested written evidence to be submitted before 24 October.

Both Royal Mail and Whistl are likely to be called to give evidence at subsequent hearings, though it is not clear when they will be held.

The market regulator Ofcom has so far resisted calls from Royal Mail to hold a similar inquiry.