(Adds company comment)
By Rory Gallivan
LONDON--Royal Mail PLC (RMG.LN) will face a review by the U.K.'s
communications industry regulator to ensure it faces adequate
competition after competitor Whistl's withdrawal from the
direct-delivery letters market.
Ofcom announced the review on Tuesday after Whistl said earlier
in the month that it is withdrawing from the U.K. market for the
direct delivery of letters, where an operator collects, sorts and
delivers bulk mail using its own network.
PostNL AV (PNL.AE), which owns Whistl, said it was withdrawing
from the U.K. direct-delivery letters market after private equity
company LDC, part of Lloyds Banking Group PLC (LLOY.LN), decided
not to invest in Whistl's direct delivery activities.
Ofcom said the withdrawal leaves Royal Mail without any
competition in the direct delivery market, adding that its review
will ensure the company continues to offer a universal postal
service in the U.K., charging the same price for delivery of
letters and parcels to any domestic address.
Ofcom added that competition remains strong in other postal
markets such as parcels and "access mail," where operators collect
and sort mail before handing over to Royal Mail to complete
delivery. Royal Mail's competitors include Dutch company TNT
Express N.V. (TNTE.AE) and online retailer Amazon.com Inc. (AMZN),
which has its own delivery network.
Royal Mail said it will participate fully with the review,
adding that there is a need for regulatory clarity in the letters
market given that it is in structural decline.
The company was previously the state postal service but was
partly privatised in 2013. The government said on June 10 it had
sold half of its 30% stake, after it outlined its intention to sell
the whole stake.
At 0859 GMT Royal Mail's shares were down 10 pence, or 1.9%, at
495 pence, valuing the company at 4.95 billion pounds ($7.56
billion).
Write to Rory Gallivan at rory.gallivan@wsj.com; Twitter:
@RoryGallivan
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