Royal Mail Rips Fine as 'Pythonesque'

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Royal Mail chairman Allan Leighton disputed a $3.8 million penalty proposed by Postcomm, calling the postal service regulator's report "almost Monty Pythonesque."

Postcomm issued the proposed fine on Royal Mail last week, saying the company has not taken adequate steps to ensure it gains no unfair commercial advantage in the United Kingdom's newly liberalized mail market. Royal Mail has 28 days to respond to Postcomm's report.

Royal Mail has a 97 percent share of the UK postal market. Since April 2004, it has charged some competitors a fee to deliver their mail under a "downstream access arrangement" in which Royal Mail is delivering more than 1 billion of these items yearly.

Postcomm said it began investigating these arrangements last year after three Royal Mail competitors -- Express Ltd., TNT Mail UK Ltd. and UK Mail Ltd. -- complained about aspects of Royal Mail's competitive behavior.

The regulator concluded that Royal Mail failed to install adequate measures in its wholesale and retail divisions to prevent its retail arm from using information obtained by the wholesale section to attract business.

"Many companies working for different clients have ... internal separation arrangements that prevent conflicts of interest and the exchange of confidential information between teams working on different projects," said Nigel Stapleton, chairman of Postcomm. "The commission is surprised that Royal Mail did not think it needed to do this in a fully professional manner."

Postcomm's report said Royal Mail is damaging confidence in the postal market because since July 2004 it has failed to identify all the risks of being able to obtain a competitive advantage through the supply of downstream access, both to competing operators and to its own business.

Leighton responded in a statement that the report "is full of unsubstantiated and subjective views, which are not based in fact.

"The simple truth is: no competitor has lost out, no customer has lost out and Royal Mail has made no gain from the way in which we operate access services -- so why any fine at all? This huge and arbitrary penalty is illogical -- it is regulation for the sake of regulation.

"This is almost Monty Pythonesque -- by Postcomm's line of thinking I have absolutely no doubt that later this year the regulator will fine us for delivering the best quality of service ever due to the fact that they decide it's anti-competitive."

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