Own-initiative investigation into Royal Mail Group Limited concerning compliance with Designated USP Condition 1.9.1 regarding the quality of service performance of D+1 universal service mail

20 May 2016

Complainant: Ofcom own-initiative investigation
Investigation against: Royal Mail Group Limited (“Royal Mail”)
Case Opened: 13 May 2016
Case closed: 20 October 2016
Issue: Whether Royal Mail had complied with its obligation under Designated USP (“DUSP”) condition 1.9.1 to achieve specified performance targets in the provision of certain end to end USO priority services (D+1 universal service mail as set out in DUSP condition 1.6.1(a))
Relevant Instrument: DUSP conditions 1.6.1(a) and 1.9.1

Update note: 20 October 2016

Ofcom has concluded, having taken account of Royal Mail’s submissions, that Royal Mail has contravened DUSP condition 1.9.1 by failing to achieve minimum quality of service standards as required by the condition.

Ofcom has however decided not to impose a financial penalty on this occasion.  In arriving at this decision we have taken into consideration in particular our finding that Royal Mail missed the relevant standards by relatively small margins and the steps taken by Royal Mail to address the issues identified as reasons for the breach.

See related items for the non-confidential version of Ofcom’s decision to conclude this investigation.

End of update note

Update note: 20 May 2016

Ofcom has determined that there are reasonable grounds for believing that Royal Mail has contravened relevant quality of service obligations under DUSP condition 1.9.1 because it has not met specified performance targets associated with the provision of certain end to end USO priority services.

Accordingly, on 19 May 2016 Ofcom issued a notification to Royal Mail under paragraph 2 of Schedule 7 to the Postal Services Act 2011 which sets out the determination made by Ofcom. Royal Mail may make representations to Ofcom on the matters contained in the notification by 27 June 2016.

End of update note

Ofcom has opened this own-initiative investigation following Royal Mail’s announcement of 13 May 2016 that it has not met specified quality of service targets associated with the provision of certain end to end USO priority services. (See Royal Mail’s announcement)

DUSP condition 1.6.1(a) requires Royal Mail to provide end to end USO priority services with a target routing time of one working day for conveying postal packets from the date of collection to the date of delivery (“D+1 universal service mail”). This is provided by Royal Mail as its First Class mail service.

DUSP condition 1.9.1 requires Royal Mail to meet specified performance targets associated with the quality of service of the provision of universal service products.

This condition requires Royal Mail to achieve an overall performance for D+1 universal service mail of 93% (that is 93% of relevant mail must be conveyed within one working day) and, in respect of stamped and metered mail, 91.5% in each postcode area of the UK (apart from three excluded postcode areas). This is measured as an average performance level on an annual basis excluding the Christmas period.

Royal Mail has announced that in the financial year 2015-2016 it did not meet the overall performance target as it delivered 92.5% of First Class mail within one working day and that it did not meet the postcode area target in 14 of 118 postcode areas.

In light of this Ofcom’s investigation will examine whether there are reasonable grounds for believing that Royal Mail has failed to comply with its obligations under DUSP condition 1.9.1 in respect of the financial year 2015-2016.

Case Leader: Ian Strawhorne (email: ian.strawhorne@ofcom.org.uk)
Case Reference: CW/01183/05/16