Royal Mail’s owner faces a new claim of £878mn for damages related to its delivery operations. This is adding to Royal Mail’s legal woes, as it prepares itself for the takeover by Czech billionaire Daniel Kretinsky.
Bulk Mail Claims Limited has announced that it filed a request to initiate proceedings against International Distribution Services, on behalf of UK organisations that sent bulk mail through Royal Mail. The application was made on Thursday.
This action is in response to a case worth PS600mn currently being brought by Royal Mail client Whistl . Whistl sorts bulk mail like utility bills before sending them to Royal Mail.
Ofcom discovered in 2018 that Royal Mail attempted to introduce a pricing model which would have increased delivery costs for Whistl. This prevented the customer from launching a competing letter service in 2014
Royal Mail stated this month that Whistl’s claim is “unsubstantiated” and “completely without merit”. We will continue to vigorously defend our position and, if needed, to trial.
Kretinsky’s preparations to purchase the company and transform it into an advanced parcel delivery service could be hampered by this latest multi-million-pound lawsuit over a historical issue with Royal Mail’s letter operation.
IDS reported a profit of £114mn before tax during the last financial year. Postal group also struggles with increasing competition on the parcels market. There are also complaints about service levels and discontented workers. Royal Mail is losing money and IDS is only profitable because of its Dutch parcel business GLS.
Royal Mail, the UK’s monopoly on bulk letter delivery after privatisation in 2013, had been fined £50mn in 2018 following Ofcom ruling. Royal Mail is bringing the latest claim after the Supreme Court denied Royal Mail’s appeal in 2022 against Ofcom’s ruling.
A newly launched website is urging any organisation that paid for bulk mailing services in the UK from 10 January 2014 to 7 June 2022 to participate and receive any future damages.
According to the website, the application for collective proceedings was filed with the Competition Appeal Tribunal. It is supported by the law firm Lewis Silkin as well as a “highly-experienced commercial litigation funder”, who will receive a commission from any damages awarded.
The complaint alleges that Royal Mail has acted in a way to prevent competition, which led to higher costs for businesses, charities and public agencies who depend on Royal Mail.
Royal Mail has confirmed that it received the Bulk Mail Claim Ltd application.
The group stated that “we consider [the claim] as being without merit and will vigorously defend it.”
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