Royal Mail’s parent company International Distributions Services PLC (LSE:IDS) is facing a £600 million Supreme Court showdown with competitor Whistl over alleged abuse of its monopoly position.
Royal Mail is accused of using anti-competitive practices to squeeze out Whistl, which was forced to significantly reduce its workforce and operations nearly a decade ago.
The dispute's roots trace back to Whistl's plans to deliver business mail to a significant portion of UK households.
Royal Mail's decision to hike prices for third-party deliveries rendered Whistl (then called TNT Post)'s expansion plans uneconomical, forcing it to suspend final-mile deliveries in 2015.
Whistl's initial complaint to Ofcom led to Royal Mail being fined £50 million, a decision upheld by the Supreme Court in July of the previous year.
According to Whistl, Royal Mail made three failed attempts to challenge the outcome, including in the Supreme Court, before paying the fine.
Now, Whistl is seeking damages.
“We are very confident as to the merits of our claim against Royal Mail following its anti-competitive behaviour and the level of damages we expect, now in excess of £600m and accruing interest at £50m per year,” Whistl said in a statement.
Nick Wells, executive chairman of Whistl, wrote: “Royal Mail’s behaviour is symptomatic of a historical culture within the organisation which has been prepared to deliberately abuse its dominant position and then brazenly deny any wrongdoing, regardless of the impact on its stakeholders including mail users, staff and shareholders.”
Whistl's claim, supported by litigation funder Vannin Capital, is now heading for a preliminary High Court hearing, potentially in the next year.
Ofcom fines Royal Mail again
Also today, Ofcom has slapped International Distributions Services with yet another fine over its failure to meet delivery targets over the past year.
The £5.6 million penalty comes despite Royal Mail’s contention that union disputes and adverse weather conditions were the causes of package delays.
Amid these challenges, Evri, formerly known as Hermes, is capitalising on Royal Mail's tarnished reputation.
Evri recently announced a £46 million push to invest in its customer service and operations ahead of the holiday season.
This move comes shortly after Royal Mail lost its 360-year monopoly on delivering Post Office parcels, with Evri and DPD taking over.
Habitually the lowest-rated delivery company in recent years, Evri's efforts to improve its service quality and customer experience are seen as a direct response to Royal Mail's recent struggles and the opportunity to enhance its market position.