The owner of Royal Mail, International Distribution Services (IDS), is set to face a £1.2bn class action lawsuit after UK competition authorities approved a legal challenge over alleged anti-competitive practices in the bulk mail market. The Competition Appeal Tribunal (CAT) has granted Bulk Mail Claim Ltd (BMCL) permission to proceed with the case, which represents around 290,000 customers who claim they were overcharged.
Bulk Mail Customers Claim Overcharging
BMCL, a recently established company, argues that Royal Mail abused its dominant position in bulk mail services, leading to inflated prices for businesses, charities, and local authorities. Bulk mail includes important correspondence such as council tax and bank statements, charity appeals, magazines, and energy bills.
Andrew Wanambwa, a partner at Lewis Silkin, the law firm representing BMCL, stated:
“Royal Mail’s abuse of its dominant position resulted in the overcharging of hundreds of thousands of bulk mail customers – including local authorities, charities, and small businesses. The tribunal’s decision means we are one step closer to securing compensation for those affected.”
Regulatory History and Previous Penalties
This lawsuit follows a £50m fine imposed by Ofcom in 2018 after the regulator found that Royal Mail violated competition laws in bulk mail delivery. Ofcom concluded that Royal Mail’s actions blocked competition, depriving postal users of potential cost savings. Despite multiple appeals, Royal Mail was unable to overturn the ruling.
Impact on Royal Mail and IDS Takeover Bid
The legal action comes as Czech billionaire Daniel Křetínský’s EP Group moves forward with a £3.57bn bid to acquire International Distribution Services (IDS), the parent company of Royal Mail. The lawsuit and potential financial liabilities could influence investor confidence in the deal.
Other Legal Challenges in the Postal Market
BMCL’s lawsuit follows a separate £600m claim brought by Whistl, a competitor that attempted to challenge Royal Mail’s monopoly but withdrew from the market in 2015, resulting in 2,000 job losses. That case was settled last month.
A spokesperson for Royal Mail responded to the lawsuit, stating:
“Royal Mail believes Bulk Mail Claim Ltd’s claim is without merit, and we will defend it robustly.”
The case now moves to trial, where BMCL will seek compensation for affected bulk mail customers.
