Royal Mail Agrees UK Mail Price Rise Proposals

24 March 2003

British postal operator Royal Mail Group has agreed the price rise proposals issued by regulator Postcom ending a drawn-out dispute between the two.

The duo have been haggling for nearly a year over increasing the price of first and second class mail by a penny. Postcom originally wanted to impose price controls on other areas of Royal Mail’s delivery operations – a move that infuriated the operator, which is currently bleeding about £1 million ($1.6m; €1.5m) a day.

Last month Postcom agreed to the price rises (28p for first class and 20p for second) and suggested a revised series of price controls [WAMN: 06-Feb-03].

Initially Royal Mail chairman Allan Leighton threatened to refer the matter to the Competition Commission, but having studied the proposals has now agreed to them.

“After eleven months of detailed discussion with Postcom we are now able to agree to the new deal,” said ceo Adam Crozier. “The original proposals left a £460m hole in Royal Mail’s finances, rather than the £170m annual benefit from the penny price increase.”

Postcom will formally ratify the price increase at the end of the month.

Data sourced from: Times Online (UK); additional content by WARC staff