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By Rory Gallivan

LONDON--Royal Mail PLC (RMG.LN) will face a review by the U.K.'s communications industry regulator to ensure it faces adequate competition after competitor Whistl's withdrawal from the direct-delivery letters market.

Ofcom announced the review on Tuesday after Whistl said earlier in the month that it is withdrawing from the U.K. market for the direct delivery of letters, where an operator collects, sorts and delivers bulk mail using its own network.

PostNL AV (PNL.AE), which owns Whistl, said it was withdrawing from the U.K. direct-delivery letters market after private equity company LDC, part of Lloyds Banking Group PLC (LLOY.LN), decided not to invest in Whistl's direct delivery activities.

Ofcom said the withdrawal leaves Royal Mail without any competition in the direct delivery market, adding that its review will ensure the company continues to offer a universal postal service in the U.K., charging the same price for delivery of letters and parcels to any domestic address.

Ofcom added that competition remains strong in other postal markets such as parcels and "access mail," where operators collect and sort mail before handing over to Royal Mail to complete delivery. Royal Mail's competitors include Dutch company TNT Express N.V. (TNTE.AE) and online retailer Amazon.com Inc. (AMZN), which has its own delivery network.

Royal Mail said it will participate fully with the review, adding that there is a need for regulatory clarity in the letters market given that it is in structural decline.

The company was previously the state postal service but was partly privatised in 2013. The government said on June 10 it had sold half of its 30% stake, after it outlined its intention to sell the whole stake.

At 0859 GMT Royal Mail's shares were down 10 pence, or 1.9%, at 495 pence, valuing the company at 4.95 billion pounds ($7.56 billion).

Write to Rory Gallivan at rory.gallivan@wsj.com; Twitter: @RoryGallivan

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