How we're regulated
Royal Mail is regulated by Ofcom under the Postal Services Act 2011. Parts of the Postal Services Act 2000 also apply.
Ofcom put in place a new regulatory framework in 2012. It was intended to be in place for 7 years.
In 2015 Ofcom started a fundamental review of the regulation of Royal Mail to ensure the regulatory framework remained appropriate and sufficient to secure the efficient and financially sustainable provision of the Universal Postal Service. Ofcom concluded in March 2017 that the current regulatory framework should remain in place until 2022.
Royal Mail operates under a regulatory framework that imposes certain obligations and restrictions on Royal Mail as the Universal Service Provider.
As the UK’s Universal Service Provider, Royal Mail is regulated significantly more closely than other postal operators in the UK.
Neither GLS nor Parcelforce are subject to material regulatory oversight by Ofcom.
Universal Postal Service
Ofcom has a primary duty to secure the provision of the UK’s Universal Postal Service – the six-day a week, one price goes anywhere postal service that Royal Mail delivers to 30 million UK addresses.
Ofcom must have regard for the need for the Universal Service to make a reasonable commercial rate of return on the costs of providing the activities to deliver the Universal Service, including 6 days a week collection and delivery for letters, and 5 days for parcels, to all addresses in the UK. It must also ensure that the Universal Service becomes efficient within a reasonable period and then remains efficient, and delivers the minimum requirements set out in the Postal Services Act 2011.
It is our policy to compete both vigorously and honestly, to comply with competition laws in all the countries where we do business and to make sure that we do not compromise our commercial activities and reputation by anti-competitive practices.
We have in place robust internal competition law compliance policy and guidance that apply to all individuals working for Royal Mail and its subsidiary companies, including the General Logistics Systems B.V. group of companies (the “GLS Group”) and other subsidiaries. Individuals include employees, casuals, agents, professional interims, agency workers, contractors, consultants, officers and any other representative.
Our policy and guidance stress the importance to Royal Mail of compliance with competition law rules, the damaging consequences that could flow from a competition law breach (both for the company and the individual, including the possibility of disciplinary action), the key issues and processes to bear in mind to remain competition law compliant and the help available where there are concerns. They are supported by training initiatives and regular internal communications.
Regulatory product oversight
Royal Mail is subject to two types of regulatory product oversight from Ofcom:
- A direct price cap on stamped Second Class letters, large letters and parcels up to 2kg; and
- A margin squeeze test
Access to our network
Ofcom requires that Royal Mail offers mandatory access to the postal network at our Inward Mail Centres for the purposes of providing Letter and Large Letter services that aim to deliver two working days (or later) after collection from the sender.
This allows other postal operators to collect mail from customers and then use Royal Mail’s delivery network to deliver to the final address (or the ‘final mile’). The UK Access market is the biggest in the EU.
Royal Mail can also offer access to our network for non-mandated services (e.g. certain parcel services) on commercial terms.