The battle between Royal Mail and TNT Post intensified yesterday with each side making demands for changes to the way prices are controlled.
Royal Mail argues that it needs to be allowed to charge competitors more to compete in the key business mail market. It says the existing price structure "simply isn't working".
TNT Post claims Royal Mail already charges too much and allowing Royal Mail to increase its wholesale price would squeeze out competition.
The access price is crucial for both sides in the battle for the business mail market. Royal Mail is allowed to charge 13p for each letter handled under the access agreements.
Under current rules Royal Mail has to allow outside access to its network. Rival competitors can collect bulk mail from business customers, pre-sort it, and then use Royal Mail to take it the "final mile", without having to set up their own delivery networks.
TNT Post, says: "Royal Mail is trying to squeeze us out of the market without justification. It costs Royal Mail 8p to deliver a letter and yet they are charging us around 13p. It is unbelievable that they are now seeking to charge us even more.
Royal Mail says: “At 13p a letter, it lost money on delivering rivals' mail. The market is opening up to competition faster than expected. Competitors will carve out a 25% share of the business mail market this year, handling some 2.5bn letters”.
“We cannot compete fairly for business mail because the price control dictates that when we offer to lower our prices we have to reduce the amount we charge rivals to use our network by the same degree."
Royal Mail said rivals had no interest in handling stamped mail such as personal letters because they lost money, but Royal Mail had to subsidise the stamped mail service from its business revenues. |
