Royal Mail loses monopoly

Friday, 18 February 2005 12:00 AM

Britain's postal service is to be opened up to competition 15 months ahead of schedule.

From January 1 next year, any licensed business will be able to deliver letters in the UK, postal regulator Postcomm announced today.

Until now, limited competition in the postal market has been allowed, but the complete end of Royal Mail's historic monopoly will see other operators provide a full mail service: setting up post boxes, collecting letters, and delivering them to business and residential customers.

Royal Mail will retain a special position, however, as it will have to continue providing one collection and delivery of first- and second-class mail each day at a standard price.

Nigel Stapleton, chairman of Postcomm, said: "After three months of consultation, a substantial majority gave the thumbs-up to competition. We can now look forward to a more innovative and efficient postal industry focused on providing customers with the services they want, rather than being told by a monopolist what services they can - and cannot - have."

He added that this was only the first step in deregulation and the commission hoped that market forces would begin to replace regulation "as the main driver of an efficient and effective mail industry."

While the move is certain to have an impact on Royal Mail's dominance of the UK market, the company said it was ready to face the challenge.

"We welcome faster competition as long as it comes without unfair restrictions on Royal Mail," said chief executive Adam Crozier.

The move has, however, been questioned by the Communication Workers Union (CWU), which represents Royal Mail staff. It is worried that competition could threaten Royal Mail's commitment to universal service.

General secretary Billy Hayes said: "We all know and accept that postal liberalisation is coming - but the CWU simply cannot understand why a British regulator seems so determined to place the nation's postal service at a competitive disadvantage to rivals that will not be subject to the same challenge in their own home markets.

"The Dutch and German post offices in particular must be rubbing their hands in glee at this ill-advised and regrettable decision. At a stroke they are being allowed the opportunity to compete head on with Royal Mail while still enjoying the benefit of strong protection in their home markets."

The CWU is also angry at the decision to move ahead with deregulation quickly, saying this is out of step with the "carefully managed approach set out in the European legislation, which took into consideration the danger of a headlong rush to de-regulation."

Mr Hayes added: "In so doing Postcomm has placed significant extra pressures on the Royal Mail Group at a time when it is undergoing far-reaching internal and external changes. The upshot will be to place very real pressures on Royal Mail's ability to meet its universal service obligations."

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