Dutch post retreat harms Royal Mail deregulation

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The Dutch post office is threatening to tear up its plans to set up in direct competition with Royal Mail, claiming that the Government's deregulation proposals are flawed.

TPG Post, which owns the TNT delivery service, already has a licence to deliver mail in the UK and is expected to be the biggest threat to the loss-making Royal Mail when the market is fully open by 2007.

But in a letter to the postal regulator, Postcomm, TPG warns that, as the proposals stand, it will "have to fundamentally reconsider its business plans for establishing an alternative delivery network".

TPG wants to set up an entirely new seven-day postal operation. But it is concerned about Postcomm's proposals to allow Royal Mail to charge rival companies to use its sorting and delivery network. TPG claims this so-called "access charge" is set too low, in effect making its own plans to set up a rival network uneconomic.

TPG's letter, which is marked "strictly confidential", says: "Postcomm may, in a genuine effort to kick-start competition through 'access', actually kill real competition before it has even had time to develop."

Charles Neilson, a director of TPG Post UK, told The Independent on Sunday: "If the access price remains, then our board will have to look at the investment required to set up the network. It may well decide that it has all sorts of other places for the investment where it can get a better return, places which don't have access."

Royal Mail is also objecting to Postcomm's proposals. The state-owned company believes it will cost it between £500m and £1.2bn.

Postcomm will make a final ruling by the end of the year.