Royal Mail’s refusal to supply

Here is the sub-heading from the report in today’s Daily Telegraph: “Royal Mail is limiting the number of stamps it supplies to retailers now to ensure it profits from record price rises later this month.” The report goes on “Royal Mail confirmed on Thursday that it had imposed a cap on the number of stamps every shop could buy. Retailers said it was refusing to restock them when they exceeded their allocation.” Ian Murray, the shadow postal affairs minister, says that he will be writing to regulator Ofcom about this rationing of supplies.

There has been particularly heavy demand for stamps ahead of the 30% price rise at the end of the month from small businesses who still rely on postal deliveries. The BBC gives the example of an optician in Scotland who sends out 5,000 reminders a year to patients; the owner is planning to buy 10,000 stamps before the end of the month thus saving £1,400.

The reports include some good examples of classic response to a shortage of supply: not exactly a black market, but an unofficial market is developing on e-bay, where a sheet of 100 first-class stamps can be bought for £50. This is £4 above the current face value - but from the end of the month the sheet will be worth £60.

Is Royal Mail’s action to limit supply to retailers an abuse of monopoly power, and how would it be dealt with if the Royal Mail were a private sector enterprise? Discuss.