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Royal Mail successfully blocks Christmas strike action with High Court injunction

The postal carrier claimed that the strike ballot had suffered from “potential irregularities”, citing evidence that some CWU members had been pressured to vote in favour of the move

Royal Mail PLC - Royal Mail hit with £50mln fine as it loses appeal over breach of competition law

Royal Mail PLC (LON:RMG) has successfully blocked strike action over the Christmas period by members of the Communications Workers Union (CWU) after an injunction was granted by the High Court.

The FTSE 250 postal carrier had claimed that the strike ballot by the union had suffered from “potential irregularities”, citing evidence that some CWU members had been pressured to vote in favour of the move.

If the strike had gone ahead, it would have been Royal Mail’s first national stoppage in ten years and during a critical period for delivery firms.

Responding to the judgment, CWU general secretary Dave Ward said its members were “extremely angry and bitterly disappointed that one judge has granted Royal Mail an injunction to invalidate our ballot for strike action”.

“This injunction is not only a massive injustice to our members it’s also an injustice to every worker in the country”, he added.

Ofcom fine upheld

However, Royal Mail’s legal fortunes were not all positive on Wednesday after it failed to overturn a £50mln fine from Ofcom in the Competition Appeal Tribunal (CAT) for breaking competition rules.

The regulator had originally handed down the penalty last August on the grounds that the firm had abused its position in the market to discriminate against its largest rival, parcel delivery firm Whistl.

“Royal Mail had a special responsibility to ensure its behaviour was not anti-competitive. We hope that our fine, which has been upheld in full by the Tribunal, will ensure that Royal Mail and other powerful companies take their legal duties very seriously”, said Ofcom’s spokesman.

In an announcement after the close on Tuesday, Royal Mail said it was “disappointed by the CAT’s judgement to uphold Ofcom’s decision” and was considering whether to appeal the decision.

Fine decision “very negative outcome”, says broker

In a note on Wednesday, broker Peel Hunt said the CTA ruling was “a very negative outcome” for Royal Mail as it not only upheld Ofcom’s fine but appeared to support “inevitable legal action from Whistl where awarded damages could also be significant”.

Analysts added that the threat of CWU strike action, even if actual strikes did not materialise, “may have impacted volumes and therefore revenues” on top of what they said were already significant declines in margins and operating profits in the group’s UK parcels and letters business since 2016.

They also said the “highly confrontational stance of the CWU” was “clearly not conducive to a working relationship whereby the required substantial future improvements in productivity and efficiency can be achieved”.

In late-afternoon trading, Royal Mail shares were 1% higher at 230p.

--Adds details on strike action injunction and updates share price--

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Price: 215.008 GBX

LSE:RMG
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Market Cap: £2.15 billion
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