Ofcom decides against price controls for Royal Mail

Communications regulator Ofcom has stopped short of imposing price controls on Royal Mail following a review into the postal market.

Ofcom said the declining letters market and increased competition in parcels means it sees no need to "impose new price controls on Royal Mail's wholesale or retail products".

It said: "Concerns prompted Ofcom to introduce a new framework for postal regulation in 2012, with greater commercial freedom for Royal Mail - alongside a safeguard cap on stamp prices to protect vulnerable consumers. Ofcom is today proposing to leave this framework, and the safeguard cap, in place."

The regulator said Royal Mail had been under "significant financial pressure" after years of falling letter volumes, and was making a loss of more than £100 million in 2011.

Ofcom added that the postal operator "could do more" to improve performance at its delivery offices, which have "variable efficiency".

The regulator also proposed measures aimed at improving competition in the "access market", where rival operators collect and sort mail before handing it over to Royal Mail to complete delivery.