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Royal Mail receives notice of French antitrust probe

Britain's Royal Mail has received notice from French competition authorities over a possible breach of antitrust law by one of its subsidiaries, which could result in a fine for the recently privatized group.

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Peter Macdiarmid | Getty Images

Royal Mail said on Wednesday that it had received a notice regarding an issue with the French arm of its GLS business, one of Europe's largest ground-based parcel delivery services.

"We are currently considering the notice received from the French regulator," it said. "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."

The company did not provide further specific details but said the matter was part of broader competition investigations in France. The French regulator declined to comment.

Royal Mail shares were down 1.8 percent at 480 pence in early trading.

Read MoreRoyal Mail sales boosted by parcel demand

Both FedEX Corp, the world's No.2 parcel delivery group, and Dutch logistics company TNT Express, have also released similar notice statements about their businesses in France.

FedEx said that French authorities were investigating anti-competitive behavior that is alleged to have occurred "primarily during trade association meetings" involving general managers of Tatex, which became FedEx Express France after the American company bought the business in July 2012.

Potential fines

TNT Express said it had cooperated with the investigation since it started in 2010.

Analysts at Espirito Santo said any fine would be relatively insignificant for Royal Mail but would represent worse news for TNT Express.

"French antitrust law permits a maximum fine of 10 percent of worldwide turnover," Espirito analysts said in a note.

Read MoreRoyal Mail's results deliver amid valuation worries

"This would lead to a worst-case scenario of around a 160 million pound ($274 million) fine for Royal Mail (10 percent of GLS revenue) and about a 670 million euro ($908 million) fine for TNT Express (group revenue of 6.7 billion euros).

GLS contributed about 17 percent of Royal Mail's 9.45 billion pound revenue for the year to March 30.

The GLS network covers 37 countries but its main markets are Germany, Italy and France, which account for 70 percent of sales.

Royal Mail is in the middle of a turnaround program in France, where its business made an operating loss of 27 million euros in its previous financial year. The group has exited its overnight courier service and is focusing on two to three-day parcel deliveries rather than an express service.

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