Under the Initial Conditions, Royal Mail Group Ltd ("Royal Mail") must seek Ofcom's approval to make material changes to its costing methodology for regulatory reporting purposes, as set out in its Costing Manual.
The Initial Conditions require Ofcom to assess whether the changes are consistent with the Costing Methodology Guiding Principles and the Methodological Principles. If we are satisfied that the changes are consistent with such principles, we are required to provide our consent to the proposed change by direction in writing.
In February 2012, Royal Mail informed Ofcom that it wanted to make changes to aspects of its costing methodology and consequently to its Costing Manual. Having considered Royal Mail's proposed changes we issued a consultation on 18 April 2012 in which we presented the proposed changes and explained that we considered the changes to be consistent with the Costing Methodology Guiding Principles and the Methodological Principles. We therefore proposed to give our consent to the changes, but sought views from stakeholders before reaching a final decision.
We received one response which did not, however, raise issues directly relevant to this consultation. We have therefore decided to consent to the proposed changes. In this statement we set out our decision and provide notification of Ofcom's consent by direction in writing. This document should be read in conjunction with our consultation document where our original analysis was set out in full.