Royal Mail's Parcelforce arm admits breaching competition law

Royal Mail’s Parcelforce Worldwide division and a reseller of its business parcel delivery services – the SaleGroup, which trades as Despatch Bay – have admitted being part of an illegal anti-competitive agreement.

Royal Mail's Parcelforce Worldwide arm was in breach of competition regulations.
Royal Mail's Parcelforce Worldwide arm was in breach of competition regulations.

Regulator Ofcom said it had provisionally found that the agreement broke competition law because it aimed to restrict competition by sharing customers and has handed out a £40,000 fine to the Sale Group, which was described as “significant”, given the small size of the company.

In May 2018, the company reported to the Competition and Markets Authority (CMA) that its ParcelForce division had an agreement with one of its resellers – Despatch Bay – that meant neither company would offer parcel delivery services to each other’s business customers.

Ofcom gathered correspondence between Royal Mail and the SaleGroup, relating to at least 90 customers, which demonstrated that the two companies implemented, monitored and enforced an agreement to share customers, lasting from August 2013 to May 2018. The evidence shows this applied both to direct and indirect customers.

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.”

Ofcom added: “Ofcom has issued its provisional decision to Royal Mail and the SaleGroup. Both companies have admitted to breaking competition law, and the SaleGroup has agreed to settle the case.”

A Parcelforce Worldwide spokesperson said: “Parcelforce Worldwide welcomes competition and takes compliance very seriously. We have been fully cooperating with Ofcom throughout its investigation.”