Judgment of the Tribunal in relation to an appeal against a decision of the Office of Communications (“Ofcom”) entitled “Discriminatory pricing in relation to the supply of bulk mail delivery services in the UK” issued on 14 August 2018 and addressed to Royal Mail plc (“Royal Mail”) (the “Decision”).
As set out in the Decision, on 10 January 2014 Royal Mail announced the introduction of differential prices for bulk mail operators for access to its final delivery service, without which they could not operate.
Whistl UK Limited (formerly TNT Post), a bulk mail operator, planned to set up its own final delivery service and establish an end-to-end bulk mail service in competition with Royal Mail. Whistl complained to Ofcom that the new differential access prices made its end-to-end operations and future plans uneconomic.
Royal Mail’s new prices were suspended, in accordance with their terms, when Ofcom announced its decision to open an investigation on 21 February 2014, and were formally withdrawn the following year.
Ofcom found that Royal Mail had infringed the Chapter II prohibition under the Competition Act 1998 (“CA 1998”) and Article 102 of the Treaty on the Functioning of the European Union (“TFEU”). Ofcom imposed a fine of £50 million on Royal Mail.
For the reasons given in the judgment, the Tribunal dismissed Royal Mail’s arguments that:
- Ofcom erred in law and in fact by concluding that, when Royal Mail announced the new prices, prices were applied for the purposes of Article 102(c) TFEU and section 18(2)(c) CA 1998.
- Ofcom erred in concluding that transactions undertaken between Royal Mail and all of its different access customers were equivalent in all material respects, and that the price differential could not be justified.
- Ofcom erred in its assessment of whether the price differential was likely to give rise to a competitive disadvantage and/or a restriction of competition because it failed to have proper regard to the impact of the conduct on an ‘as efficient competitor’.
- Ofcom erred in finding that any abuse was not objectively justified under Article 102 and/or Article 106(2) TFEU by reference to the need to preserve the viability of the universal service under economically acceptable conditions.
- Ofcom committed a fundamental procedural error by basing its findings of a likely competitive disadvantage in the Decision on evidence and analysis that was not previously included, or relied upon, in the Statement of Objections, or otherwise put to Royal Mail during the administrative phase.
- Ofcom erred in imposing a £50 million fine on Royal Mail.
The Tribunal accordingly upheld the Decision.
