Players in the retail industry should try their best to foster a healthy competition for the sake of their customers.
Practicing price discrimination to curb competition, for fear of being surpassed by others, does one’s business no good.
Royal Mail made headlines recently as communications regulator Ofcom slapped them with a £50 million fine following their investigation of Whistl’s complaint about the courier company’s price increase.
According to Ofcom, Royal Mail raised their wholesale prices back in 2014, but informed their customers who were also offering postal service that they would have to pay higher prices in the areas where they used Royal Mail for delivery.
Because of the price hike, Whistl had to scrap their expansion plans in the UK.
Jonathan Oxley, competition group director at Ofcom, said:
‘Royal Mail broke the law by abusing its dominant position in bulk mail delivery. All companies must play by the rules. Royal Mail’s behaviour was unacceptable, and it denied postal users the potential benefits that come from effective competition.’
Royal Mail’s side of the story
Ofcom may not tolerate any form of anti-competitive practices, but Royal Mail aren’t about to take their decision sitting down.
The company said they won’t pay the fine imposed on them, saying they did not breach the competition law by simply notifying their customers of a price change.
In response to the allegation against them, the company wrote:
“For an allegation of abusive price discrimination to be established, the law is very clear. The relevant prices must be actually paid. And, the party paying such prices must be placed at a competitive disadvantage as a result. In this case neither of these essential elements exist.”
Royal Mail will file an appeal against Ofcom’s decision with the Competition Appeal Tribunal within the next two months.
Do you agree with Ofcom’s decision that Royal Mail violated the competition law? Share your thoughts with us in the comments below.
As always, to your continued success,
Dave & Matt