March 12, 2015 / 12:05 AM / 2 years ago

UK lawmakers warn Royal Mail against further price hikes

LONDON, March 12 (Reuters) - A committee of British lawmakers on Thursday warned postal operator Royal Mail not to increase its prices to help the firm meet its state-mandated delivery obligations, and to instead focus on improving efficiency.

Royal Mail, in which the government retained a 30 percent stake after its privatisation in 2013, is the country's chosen postal operator tasked with delivering mail across the country, six days a week, at uniform prices - the so called "Universal Service Obligation" (USO).

"Royal Mail should not increase prices in an attempt either to increase its own profit levels or to protect the Universal Service Obligation, without continuing to increase the efficiency of its operations," the report said.

The committee acknowledged Royal Mail's concerns that the financial pressure of meeting the USO could rise quickly in the face of competitors who were able to focus their efforts on profitable routes.

But the report concluded that Royal Mail's ability to deliver on the Universal Service Obligation was not under threat, although it recommended closer monitoring by industry regulator Ofcom to ensure this remained the case.

Last month Royal Mail said stamp prices would rise as it tries to offset the impact of a steadily falling number of letters to deliver each year. It also raised prices in 2014.

In response to the committee report, Royal Mail said there was still much more it needed to do to match the most efficient postal operators.

Reporting by William James, editing by David Evans

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