Royal Mail agrees big French fine

Days before celebrating a turbulent first year as a listed company, Royal Mail has put aside £18 million after reaching a settlement with the French Competition Authority in relation to alleged breaches of antitrust laws. It's probably a smart move as whatever fine the regulator does eventually decide to impose will, at least, be reduced.

The investigation into the breach by its subsidiary GLS France is still on going, and the amount Royal Mail has to pay in a fine is expected to be finalised during the second half of the financial year ending March 2016.

Ahead of its half-year results in November, the group said in a statement: "Royal Mail has made a financial provision of £18 million in its financial statements for the half year ended 28 September 2014, comprising £12 million in respect of the current estimate of any fine and £6 million in respect of estimated legal costs associated with the investigation and the costs of the compliance commitments."

The breach related to a period that ended before the end of 2010 and is part of a wider investigation. TNT Express and Fed Ex are also being probed by the Autorité de la Concurrence.

At the time of the initial announcement, analysts from Espírito Santo Investment Bank estimated a worst-case scenario of £160 million, 10% of GLS's revenue.

Read this weekend's Interactive Investor newsletter for in-depth analysis of Royal Mail one year after its highly controversial IPO.