Royal Mail receives stock market hammering after competition complaints rejected by regulator
Royal Mail received a stock market hammering after its competition complaints were rejected by the regulator.
More than £120m was wiped from the company’s value after Ofcom said that the Universal Service – which requires Royal Mail to deliver post six days a week across the UK – was not ‘under threat’.
Royal Mail had complained that rivals were cherry-picking lucrative work delivering business mail such as bills in dense urban areas.
Deliverance: More than £120m was wiped from Royal Mail's value after Ofcom said that the Universal Service was not ‘under threat’
It was accused of ‘scaremongering’ after warning that increasing competition would make its UK operations unsustainable.
But Ofcom yesterday disagreed and slapped down the claim.
However, it promised to look into factors that would affect Royal Mail’s ability to fulfil its obligation.
In a separate ruling, Ofcom said that Royal Mail’s productivity rate ‘was flat on the previous year and below the company’s own targets’.
Royal Mail took almost nine hours to respond to Ofcom’s ruling, released at 7am. A spokesman said: ‘Royal Mail is disappointed that Ofcom does not share its view on the threat that unfettered direct delivery poses to the future sustainability of the Universal Service.’
He added: ‘Royal Mail welcomes competition and operates in the most liberalised postal market in the EU.’
Shares, which have fallen almost 30 per cent in a year, slipped 12.6p to 405.5p.
They were sold at 330p by ministers last October but instantly soared, climbing as high as 615p in January.
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