Belfast Telegraph

Wednesday 27 August 2014

Royal Mail faces £160m fine following French investigation

Royal Mail faces being fined by the French competition watchdog over its parcels business GLS France
Royal Mail faces being fined by the French competition watchdog over its parcels business GLS France

Royal Mail is facing a fine estimated by analysts at up to £160m after it announced that its loss-making French parcels operation was being investigated by competition authorities.

The FTSE 100 firm, privatised last year, disclosed that it was facing allegations of "breaches of antitrust laws" by GLS France.

It said the notice from the Autorite de la Concurrence was in connection with a broader investigation into "alleged activities within the industry" in the country. Rival TNT Express issued a similar statement.

Royal Mail said: "We are currently considering the notice received from the French regulator. Given the early stage of this matter, we cannot yet determine the amount or range of potential loss; however, it is possible that it could be material."

GLS is a Europe-wide parcel delivery service acquired by Royal Mail in 1999, that bought its French unit the following year.

Results for the 12 months to the end of March this year showed that the wider GLS business reported operating profits of £108m on revenue of £1.65bn.

But they showed that GLS France, which is in the midst of a turnaround programme, made a €27m (£21m) loss, though this had been reduced by €3m (£2.4m) from the year before as the business cut costs.

Analysts at Espirito Santo Investment Bank said the worst-case scenario from the probe could see GLS fined 10% of turnover, or £160m, but that this would still be "relatively insignificant" for the wider Royal Mail group.

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