The Royal Mail Group has admitted a breach of competition law that led to an investigation by Ofcom.
The delivery giant acknowledged “being part of an illegal anti-competitive agreement” for more than four years with SaleGroup, a re-seller of Royal Mail’s business parcel delivery services, that left customers paying higher prices.
Last year, Royal Mail Group informed the Competition and Markets Authority that its Parcelforce division had an agreement with the smaller firm in which they would not offer services to each other’s customers.
Parcelforce Worldwide had the agreement with SaleGroup – trading as Despatch Bay – where they shared customer data to avoid approaching one another’s customers, Ofcom said.
After Royal Mail informed the regulator of the situation, Ofcom said it found that the agreement between the businesses had broken the law in restricting competition by sharing customers.
The regulator said that after gathering correspondence from at least 90 customers, it found the two companies enforced an agreement to share customers from August 2013 to May 2018.
They did this through regular email correspondence, where one partner would ask the other to withdraw a quote provided to certain customers.
Parcelforce’s partner SaleGroup is an online re-seller – arranging deliveries for small and medium-sized business customers by employing multiple parcel operators – rather than carrying out deliveries itself.
Some of these offers had undercut the price a customer was paying at the time so that once offers were withdrawn, customers were left paying the higher price.
Gaucho Rasmussen, Ofcom’s director of investigations and enforcement, said: “Anti-competitive agreements like the one between Royal Mail and the SaleGroup are designed to restrict competition, and they often lead to customers paying higher prices as a result.
“This kind of behaviour is a serious breach of competition law and unacceptable.”
A Parcelforce Worldwide spokesman said: “Parcelforce Worldwide welcomes competition and takes compliance very seriously.
“We have been fully co-operating with Ofcom throughout its investigation.”
SaleGroup was fined £40,000 by the regulator.
Royal Mail was granted immunity from paying a fine in this instance because it came forward to the competition watchdog.
But Ofcom hit the company with a £50m fine almost exactly a year ago for a “serious” competition law breach.
The watchdog said the delivery giant abused its dominant position by discriminating against its wholesale customer Whistl, which was setting up to compete in delivering letters.
Whistl complained to Ofcom after Royal Mail introduced price increases to its wholesale customers’ contracts in early 2014.
And in 2015 Royal Mail agreed to pay €55m (£40m) to settle a probe by competition authorities into the French subsidiary of its General Logistics Systems (GLS) business.
The group was among 20 delivery companies, along with FedEx and DHL’s french operations, fined a total of €672m (£487m) for colluding on price increases over a six-year period.
Royal Mail at the time said the fine had been reduced after it agreed not to contest the allegations.
