Competition Act investigation regarding business parcel delivery services

Ofcom has today published a non-confidential version of the final infringement decision (PDF, 1.7 MB) issued to Royal Mail and TSG on 14 November 2019.

Ofcom has issued an infringement decision to Royal Mail Group Limited (“Royal Mail”) and The Salegroup Limited (“TSG”) confirming that they have breached UK and EU competition law.

Ofcom has found that Royal Mail and TSG agreed not to offer or supply parcel delivery services to each other’s customers, who were mainly small and medium businesses. Both parties proactively implemented, monitored and enforced this agreement between at least August 2013 and May 2018.

We have concluded that this agreement breached competition law because its object was to restrict competition through the sharing of customers in the relevant market. The agreement between Royal Mail and TSG prevented some customers from being able to purchase parcel delivery services from their chosen provider and, in some cases, led to them paying higher prices.

Ofcom has confirmed its decision to impose a financial penalty of £40,000 on TSG (following TSG’s agreement to settle the case). Royal Mail has been granted immunity under the CMA’s leniency policy and, given its cooperation during Ofcom’s investigation, has not been fined.

Ofcom will make available a public version of the infringement decision as soon as possible.

Ofcom has issued a statement of objections alleging that Royal Mail Group Limited and The SaleGroup Limited have breached UK and EU competition law.

For further information, see the accompanying press release.

Ofcom has opened an investigation under the Act into suspected market sharing and/or customer allocation arrangements between operators in the business parcel delivery sector in the UK and/or European Union.

Section 2 of the Act prohibits agreements between undertakings that have as their object or effect the prevention, restriction or distortion of competition, where this may affect trade within the UK (the “Chapter I prohibition”). Similarly, Article 101 of the TFEU prohibits agreements between undertakings that have as their object or effect the prevention, restriction or distortion of competition, where this may affect trade between Member States.

The purpose of the investigation is to establish whether there has been one or more infringements of the Chapter I prohibition and/or Article 101 of the TFEU by operators in the business parcel delivery sector.

Process

This investigation will follow the procedures set out in our published Enforcement Guidelines (PDF, 1007.1 KB). In the first phase of the investigation, Ofcom will gather further information using its powers under the Act. The analysis of this information will help inform Ofcom’s view on how to proceed further with the investigation.

This investigation is at an early stage and we have not reached a view on whether there has been a breach of competition law. If Ofcom finds there is sufficient evidence of one or more breaches, we will issue a Statement of Objections to the relevant operators. We will keep this page updated with key developments as the case progresses.