Why Not Call a Margin Squeeze a Margin Squeeze? The Strange Case of UK Mail Delivery

Abstract

After almost 5 years of investigation, on the 26 October 2018, the UK Office of Communications (‘Ofcom’)1 issued its first infringement decision under the Competition Act 1998.2 It found that Royal Mail (RM), the UK postal incumbent, abused its dominant position in the market for delivery of bulk mail and imposed a £50 million (approx. EUR 56 million) fine. Ofcom found that RM deliberately excluded Whistl by engaging in price discrimination. The case is currently under appeal in front of the Competition Appeal Tribunal (CAT).3 This article considers this decision a step backwards in the approach to exclusionary behaviour. The approach, analysis, and information in Ofcom’s decision do not allow the reader to conclude whether an exclusionary abuse has taken place. This would have only been possible if Ofcom had framed the case as RM potentially abusing its upstream dominant position in Rural and Sub Urban zones by engaging in a margin squeeze in a downstream nationwide bulk mail delivery services market.