17th Jul 2015 09:18
LONDON (Alliance News) - UK media and communications regulator Ofcom outlined the scope of its review into the regulation of postal service operator Royal Mail PLC, including whether any price controls should be imposed on the company given the lessening of competition in the postal services market.
The review will examine whether any changes to the current postal regulatory framework could be appropriate in order to maintain the universal postal services and will study how to ensure Royal Mail continues to become more efficient given the absence of any significant end-to-end competition for the letters market.
Ofcom also will examine whether Royal Mail's wholesale costs and retail prices are affordable and sufficient to cover the costs of the universal service and will consider whether the company's commercial flexibility remains appropriate within the changing market, including whether wholesale or retail charge controls may be appropriate.
It expects to complete its work and any revised regulatory framework to be put in place in 2016.
Royal Mail shares fell to the bottom of the FTSE 100 following Ofcom's announcement, down 2.0% to 516.50 pence to the worst performer in the blue-chip index.
By Sam Unsted; [email protected]; @SamUAtAlliance
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