On 14 November 2019, Ofcom issued an infringement decision under Article 101 TFEU and Chapter 1 Competition Act 1998 against Royal Mail and The SaleGroup Limited ("TSG") finding that a parcel delivery services agreement was anticompetitive. This was swiftly followed by a decision to open a separate investigation under Article 101/Chapter 1 in the parcels sector.
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- Royal Mail and TSG admitted entering in to an illegal market-sharing agreement; Royal Mail received immunity following a leniency application.
- Leniency applications can only be made to the CMA. The CMA then passed the investigation on to Ofcom to exercise its concurrent competition law powers as a sectoral regulator
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The investigation
In May 2018, Royal Mail reported to the CMA that it had entered into an agreement with an online reseller of parcel delivery services, Despatch Bay (the trading name of TSG). Under the agreement, neither company would offer parcel delivery services to the other company's business customers. These customers were mainly small and medium businesses and the agreement was in place between August 2013 and May 2018. The Competition and Markets Authority ("CMA") passed the case on to Ofcom (the UK regulator for the communications services, including postal services).
Ofcom found that the parties were in regular email correspondence and that the agreement operated by one party asking the other to withdraw a quote provided to particular customers. It found that TSG also shared its customer list with Royal Mail to ensure that each company could avoid offering services to customers belonging to other party.
Ofcom found that the agreement was designed to restrict competition through the sharing of customers and prevented some customers from being able to purchase parcel delivery services from their chosen provider, which in some cases led to them paying higher prices.
Royal Mail was granted immunity from fines for revealing the agreement to the CMA under its leniency policy. TSG also admitted to breaking competition law and agreed to a settlement of £40,000 with Ofcom.
Its decision in this case was swiftly followed by an announcement, on 22 November 2019, that it had opened another investigation under Article 101/Chapter 1 into the parcel and pick-up delivery sector. Ofcom stated that the probe will examine whether there are agreements between providers which establish minimum prices and impose online sales restrictions.
Comment
This case provides a reminder that market sharing agreements are regarded as among the most serious forms of competition infringement. At a procedural level, it also provides an illustration of the operation of the case allocation mechanisms between the CMA and sectoral regulators. In the UK, sectoral regulators such as Ofcom have concurrent powers with the CMA to investigate suspected breaches of competition of law. However, only the CMA can grant leniency. Ofcom's parcel delivery investigation (and Ofcom's further investigation announced in November) are further examples of sectoral regulators increasingly exercising those concurrent powers, and of their close cooperation with the CMA.
With thanks to Robert Anderegg of Ashurst for his contribution
