INTERNATIONAL: UNITED KINGDOM - COMMUNICATIONS REGULATOR - ABUSE OF DOMINANCE - FINE - PRICE DISCRIMINATION - MARGIN SQUEEZE

UK: Why not call a margin squeeze a margin squeeze?

At the end of October 2018, Ofcom issued its first abuse of dominance infringement decision and fine under the Competition Act 1998 against Royal Mail. Perhaps surprisingly, Ofcom did not examine the behaviour as either a margin squeeze or a refusal to supply, the types of cases one would expect in post (and communications) services. Instead, it looked at it under the old-fashioned banner of price discrimination. We consider that the way Ofcom approached the analysis is unlikely to provide helpful guidance to the industry and critically does not provide a useful basis for concluding whether Royal Mail’s behaviour has led to exclusion and consumer harm. Instead, Ofcom should have examined RM’s behaviour as a margin squeeze.

I. Introduction 1. After almost five years of investigation, on 26 October 2018, Ofcom issued its first infringement decision under the Competition Act 1998 (Ofcom, 2018). [1] It found that Royal Mail (RM), the UK postal incumbent, abused its dominant position in the market for delivery of bulk mail and issued a £50 million fine. Ofcom found that RM deliberately excluded Whistl, known as TNT at the time of the complaint, by engaging in price discrimination. The case is currently under appeal to the Competition Appeal Tribunal (CAT). [2] 2. This article is organised as follows: Section II provides some context to postal services, which is helpful to better understand Ofcom’s decision; Section III summarises the approach taken by Ofcom in this decision; Section IV critically assesses

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Pietro Crocioni, UK: Why not call a margin squeeze a margin squeeze?, September 2019, Concurrences Review N° 3-2019, Art. N° 91603, www.concurrences.com

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