The Memo: The latest competition class action to hit the headlines: a royal pain for Royal Mail?

Royal Mail can’t seem to catch a break. Most recently, the owner of Royal Mail is facing a class action claim of almost £900m due to accusations that it is abusing its dominant market position. To put it simply, Royal Mail’s dominant position is defined by the amount of bulk mail it sends out. Think bank statements, council tax letters, and energy bills – the kind of mail you’re never excited to open.  

A newly formed company named Bulk Mail Claim Limited has brought the £878m action to the International Distribution Services (IDS), Royal Mail’s parent company. Bulk Mail Claim Ltd has said it represents approximately 290,000 customers who claim they have been overcharged because of Royal Mail’s behaviour. The class action claim has been filed with the UK Competition Appeal Tribunal.  

How can Royal Mail sending out our unwanted phone bills end up in a massive claim, you ask? It all comes down to anti-competitive behaviour. The claim states that Royal Mail prevented competition, subsequently raising the prices for the collection, sorting and delivery of bulk letters. This, in turn, denied customers the benefit of a competitive market, such as lower prices.  

This is not Royal Mail’s first accusation of anti-competitive behaviour as, back in 2018, industry regulator Ofcom fined it £50m for the exact same issue this claim has raised. Any appeal brought by Royal Mail, however, has been unsuccessful. In fact, it faces a separate £600m claim brought by the postal company Whistl.  

If the class action is successful, claimants will be entitled to compensation. This case raises questions of what other sectors may face allegations of anti-competitive practices. Considering Royal Mail’s previous unsuccessful appeals for the same issue, it appears that this claim could also be successful at the Competition Appeal Tribunal.