Consultation on competition in the postal sector

Ofcom, the UK communications regulator is consulting on the impact of end-to-end competition on the provision of the universal service and whether regulatory intervention is necessary to ensure its ongoing provision. 

The consultation closes on 9th January 2013 and Ofcom is expected to publish guidelines in Spring 2013.

Overview

Ofcom's primary duty in relation to postal regulation is to carry out its functions in a way that it considers will secure the provision of a universal postal service in the interests of citizens, consumers and users of postal services. End-to-end competition has the potential to affect the provision of such a service, both positively and negatively. Where Ofcom considers that it gives rise to a threat to the provision of a universal service, Ofcom has powers to take proportionate regulatory action and will do so if it considers it is necessary and appropriate, in light of the evidence available to it.

The purpose of this guidance is to set out Ofcom's approach to assessing the need for regulatory intervention in relation to end-to-end competition in the postal sector, in light of the potential implications of such competition for the universal service. In the event of undertaking such an assessment, we would consider each case on its merits, based on the individual circumstances of the case. We also retain the ability to revisit this guidance at any point in the future.

This guidance sits within the framework set out in the Third Postal Directive (2008/06/EC) and the Postal Services Act 2011, which implements the Directive. The objective of the Directive, and of postal policy at the European level more generally, is to create a single market for postal services in the EU (via liberalisation), whilst ensuring a high quality universal service. The Postal Services Act 2011 reflects this by introducing a general authorisation to provide postal services, in place of the previous licensing regime. Given that the general approach of the Directive (which constitutes the final step in the gradual opening up of the postal services market) is one of market liberalisation, any regulatory intervention must be considered in light of this purpose.

This document is structured as follows:

  • Section 3 sets out Ofcom's relevant duties and legal powers in relation to the regulation of end-to-end competition in the postal sector.
  • Section 4 provides an overview of the current regulatory context for the postal sector. It looks at the current challenges facing the universal service, and describes, at a general level, the potential effect end-to-end competition may have on the provision of the universal service. It also describes the circumstances in which we would commence a review of the impact of end-to-end competition on the universal service to determine whether intervention was necessary.
  • Section 5 sets out the approach and financial analysis we would expect to undertake in establishing the extent to which Royal Mail's finances might be affected by entry or the expansion of end-to-end competition.
  • Section 6 sets out how, on the basis of the financial analysis, we would form a view as to whether the sustainability of the universal service is likely to be under threat from entry or the expansion of end-to-end competition. It also sets out how this would potentially affect the type of intervention that is appropriate, taking account of the factors contributing to Royal Mail's financial performance and the extent to which they are, or are not, largely within Royal Mail's control.
  • Lastly, Section 7 sets out the types of regulatory powers we could exercise were we to intervene in relation to end-to-end competition and the factors we would take into account when considering each form of intervention, given the relevant circumstances.

Further information