Frontier Economics advises Postcomm on the Scope of Royal Mail's Price Control

Postcomm, the UK postal regulator, is currently undertaking a review of Royal Mail's price control, for the introduction of a new cap from April 2006. As part of the review Postcomm is considering whether to introduce a number of separate controls for different groups of products. In addition, the regulator is considering whether all retail products should be covered by the control or whether there is a case for excluding some on the grounds that they are constrained by competitive forces in the market. A Frontier Economics (London) report, published by Postcomm in November 2004, analyses the extent to which each individual product faces competitive constraints. This is done by comparing the product characteristics to a set of factors that are expected to be more conducive to competition than others. The report also reviews the case for introducing sub-controls and argues that the scope for excluding products may be increased if substitute products are included in these sub-controls. The issue is currently open to consultation, with updated price control proposals due to by published by Postcomm in April 2005. A link to the report can be found on the Postcomm website, and the report can be downloaded by clicking the icon below.