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Ofcom probes delivery sector over competition after £50m Royal Mail fine

The UK communications regulator has launched an investigation into parcel delivery companies in the UK and EU over suspected breaches of competition law.

Ofcom announced that it would be investigating operators in the sector under UK and European law for suspected market sharing or customer allocation arrangements.

Further details of the specific offences or operators involved were not disclosed. The probe will focus on where two or more operators in a given market agreed to conduct themselves in a way that ensured they were not competing with each other for business.

The relevant laws are Section 2 of the Competition Act 1998, which prohibits agreements between companies which might prevent or distort competition in the UK, and Article 101 of the Treaty on the Functioning of the European Union, which does the same across the EU.

Ofcom said it has not yet reached a view on whether there has been wrongdoing.

The first phase of the investigation will see the regulator gathering information to inform how it will proceed further with the investigation. If it finds sufficient evidence of breaches it will issue a statement of objections outlining the breach to the relevant operators.

Ofcom would not disclose details of why it had launched the investigation. However, it can open cases for a number of reasons, including following self-referrals by companies that believe they have committed a breach or in response to a complaint by an industry stakeholder or whistleblower.

The announcement comes the week after Ofcom fined Royal Mail £50 million for abusing its dominant position by discriminating against its only major competitor in letter delivery, Whistl.

Royal Mail increased its prices for wholesale customers in 2014, meaning that those who wanted to compete with it in certain parts of the country would have to pay higher prices in those areas where it relied on Royal Mail.

Jonathan Oxley, director of Ofcom’s competition group, said: “Royal Mail broke the law by abusing its dominant position in bulk mail delivery.

“All companies must play by the rules. Royal Mail’s behaviour was unacceptable, and it denied postal users the potential benefits that come from effective competition.”

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