Copenhagen Economics has conducted a study on the consumer impact of competition in the UK postal market for Whistl.
UK regulator Ofcom has a primary duty to secure the provision of a universal postal service, which must be not only financially sustainable, but also provided efficiently. For this reason, Ofcom stated that if Royal Mail’s profitability is under excessive pres-sure, this could trigger regulatory intervention on end-to-end competition – unless Royal Mail’s profitability is affected by an inappropriate management of efficiency.
Ofcom’s future evaluation of end-to-end competition would include an assessment of Royal Mail’s commercial response to end-to-end competition, including the impact of stronger incentives to improve efficiency.
It is therefore relevant to ask how will competition affect efficiency at Royal Mail. We conclude that:
- Competition promotes efficiency
- Royal Mail has considerable scope for greater efficiency
- Only competition guarantees consumer benefit
For further information, please contact Partner Henrik Ballebye Okholm