Talking shop

Issue 31 November 30 2001 Fair trading from the OFT 4 Abbey take-over bid Verdict on why big four bank’s move was rejected 7 Cash machines Do the benefits outweigh anti-competitive effects? 17 Enterprise Bill OFT gears up for an important piece of legislation Talking shop Why whistleblowers have nothing to fear 8 Leniency programme for those involved in cartels is proving highly effective as a whole series of cases are set to come to light in the next few months 12 Funeral expenses Ensuring that the bereaved have access to good advice at a vulnerable time. Contents 8 8 Seeing the light Cartels Beware. The OFT’s leniency programme – with its incentives of immunity from prosecution or reduction in penalty – is actively encouraging whistle blowing. Cartels beware. Issue 31 November 2001 Fair Trading is published by the Office of Fair Trading. It aims to provide a useful update on OFT activity for anyone with an interest in consumer protection and competition policy. Editor Debbie Packman Trident Communications Tel 020 7536 8900 Fax 020 7536 8999 e-mail debbie.packman@ tridentcommunications.net If you wish to comment on anything in the magazine or to receive a personal copy, contact: Richard Bowdery Communications division Office of Fair Trading Fleetbank House 2-6 Salisbury Square London EC4Y 8JX Tel 020 7211 8897 Fax 020 7211 8882 e-mail richard.bowdery@oft.gov.uk Fair Trading is designed and produced by Trident Communications Trident House 3 Selsdon Way City Harbour London E14 9GL Printed by McCorquodale Confidential Print Ltd Stratford Road Wolverton Milton Keynes Buckinghamshire MK12 5LX Printed on material containing 75% post consumer waste and 25% ECF pulp. Cover photography: Tim Strange/TPS ISSN 0969-6741 10 All eyes on the competition A new division and increased rescources mean that the OFT will be able to take a more proactive approach to investigations. 15 Four expert advice The OFT, mindful that it does not have the monopoly on wisdom, set up an Advisory Panel in May – a welcome addition which will help create a more outward-looking organisation. 17 A major player 10 The Government’s proposed new Enterprise Bill is one of the most important pieces of legislation to affect the OFT in its 28-year history. The OFT prepares to meet the changes. Update 4 Divisional appointment Chief Economist’s new role 4 Lloyds-TSB bid for the Abbey The verdict 5 N Ireland energy guidelines Exclusion criteria established 6 Keeping fuel on tap Responses to public consultation 7 Cash machines Benefits outweigh anti-competitive effects 19 For the record Statistical update 17 Online www.oft.gov.uk Information about the OFT and its work, its major reports, useful links to other sites and electronic version of Fair Trading are all available on the internet address, left. Update 3 Consumer code sparks interest Fair Trading relaunch The OFT recently Fair Trading’s editorial team was delighted to receive confirmed plans for a such a fantastic response to the recent readership more challenging regime survey. Thank you to everyone who took the trouble for consumer codes of to fill it in and congratulations to the three winners of practice. our prize draw (see panel). The new approach has We were keen to see what you thought of Fair Trading at a time when the OFT itself is evolving to received support from the meet the exciting challenges Better Regulation Task ahead. Indeed, many of the Force which was among features in this issue outline 96 respondents to the some of the important consultation. This new developments that we have approach to codes and recently made in the way we work. Our special rigorous enforcement of Advisory Panel (page 15) is the law complement each a welcome addition to the other. Effective codes will OFT and draws on an help marginalize rogue impressive wealth of traders and make them experience. Our new division, Markets and easier for legislation Policy Initiatives (MPI), will lead the way in market enforcers to spot. Where investigations and research – MPI has just announced necessary, the OFT and the first three studies it will carry out to discover how other bodies will tackle well certain markets are working for consumers. rogue traders using all Competition is at the heart of Government available tools, such as economic policy. The proposed Enterprise Bill will have major repercussions for the OFT – and our the new Stop Now colleagues in other enforcement agencies. A feature Orders. outlining some of the key aspects of the Bill shows Priority sectors for the new approach to codes of practice are: how the OFT will be responding to its more dynamic used cars, car repair and servicing, credit (including debt designated role (page 17). management and credit repair), funerals, travel, estate agents and We are also incorporating the feedback you gave us in other ways: the features are shorter and the direct marketing. graphics and illustrations clearer. Print is still a much The OFT proposed its new two-stage scheme in February. At enjoyed and portable medium for our readers – after stage one, code sponsors promise to deliver on OFT’s criteria; at the seeing pieces in Fair Trading, over two-thirds of the second stage they will have to prove that their codes deliver on survey respondents say they order copies of reports that promise. At this second stage OFT will endorse the codes and or take further action. promote them to consumers. Our readers read Fair Trading from a range of perspectives and professional backgrounds. But our The Government has announced that the forthcoming Enterprise aim remains the same: to be as useful and as Bill will broaden OFT’s duties to promote self-regulation through relevant as we possibly can be. Please keep the codes of practice. feedback coming in. This will enable the OFT to implement fully the new regime and promote those ‘better trader’ codes that can be proved to deliver by compliance audits and evidence of effectiveness, dispute resolution Thank you again to and complaint handling. everyone who took the trouble to fill in our survey John Vickers, Director General of Fair and many congratulations to the three winners of Trading, said: “Our regime for codes of our prize draw: practice is deliberately challenging. We aim to Chris Chapman of Ripon wins the invaluable put the ‘self’ back into self-regulation. This Encyclopaedia Britannica 2001 on CD-Rom. approach will give self-regulation the best G King of Halifax and W A Payne of Brighouse chance of succeeding. “We hope that business will want to play both win Dorling Kindersley’s whopping 1500-pager its part in making our vision of competitive, 100 Years of News. fair-dealing markets a reality.” A brand new look Draw winners 4 Update New economic appointment Dr Amelia Fletcher has been appointed Chief Economist at the Office of Fair Trading. Amelia, 35, will head a branch in the new Markets and Policy Initiatives Division with responsibility for providing economic, statistical and financial analysis to the OFT in both competition and consumer protection cases. Amelia gained a doctorate in economics from Oxford University. For the last eight years she has worked in competition policy in the private sector with London Economics and Frontier Economics “After working with private companies and putting their case to the OFT, I wanted to see what it was like on the other side of the fence, a kind of poacher turned gamekeeper,” she said. The opportunity of working with her former university professor and current OFT Director General of Fair Trading John Vickers, was an added bonus, she said. Her private sector experience will be valuable in all aspects of the job, Dr Fletcher said. “I come with no preconceived notions and I’m looking forward to working in such a changing, forward-looking environment.” Abbey take-over would have reduced competition The take-over of Abbey National by one of banking’s big four could have led to higher prices and a loss of innovation in the personal banking sector. The Secretary of State for Trade and Industry, Patricia Hewitt, has decided that the proposed merger of the Abbey National plc with Lloyds TSB Group could have operated against the public interest. Ms Hewitt said she accepted the conclusions of the Competition Commission (endorsed by the Director General of Fair Trading) that the merger would reduce competition in the market for personal current accounts and banking services for small and medium sized enterprises. The effects would be adverse in both markets, she said, resulting in higher prices to customers and reduced competition. “The Competition Commission considered a range of remedies but concluded that prohibiting the merger was the only remedy capable of fully reported that the merger would lead to elimination of one of the most significant branch-based competitors to the largest four banks. “This (the merger) gives rise to a clear possibility of a substantial lessening of competition, primarily in the market for current accounts, where it would strengthen the position of what is already the largest provider,” he said. SIBELCO/FIFE MERGER The United Kingdom’s largest supplier of sand for glass manufacture has been ordered to divest itself of a former competitor. Major global quartz sand producer, SCR-Sibelco SA, had completed its acquisition of Fife Silica Sands Ltd (FSS) and Fife Resources Ltd (Fife) on September 22 last year. The merger saw Sibelco’s combined market share for sales of silica sand in the UK reach up to 90 per cent. In advice to the Secretary of State for Trade and Industry the Director General of Fair Trading, John Vickers, said the transaction had increased the already large market share of the Sibelco Group and removed a competitor in the supply of silica sand. The DGFT said the parties’ claims that Fife was no longer viable as a stand-alone business were unconvincing. Its holding of mineral and land assets, particularly a quarry in Scotland appeared to have significant value and a long potential life, he said. “I am not convinced that it is a failing firm or that there would be no alternative buyer of its assets,” he said. The acquisition was referred to the Competition Commission (CC) for consideration. The CC found that before the merger the two companies were competing and Fife would have remained a competitive force in the supply of glass sand if taken over by another purchaser. The CC’s conclusions that the merger would have adverse effects on competition and glass sand prices were supported by Secretary of State for Trade and Industry, Patricia Hewitt. “I accept the conclusions of the CC, endorsed by the DGFT, that the merger would be against the public interest. This is because without the competitive constraint of FSS, glass sand prices in the UK may be expected to be higher than would otherwise be the case.” Ms Hewitt decided that Sibelco should be required to divest the Fife companies to a purchaser approved by the Director General. addressing the adverse effects,” she said. “I accept conclusions that the merger would be against the public interest and should be prohibited.” The Commission noted that personal current accounts (PCAs) were the core product in personal banking. The merger would have increased the share of the PCA market held by the “big four” – Barclays, HSBC, Lloyds TSB and RBS/NatWest – from 72 per cent to 77 per cent. From that share Lloyds TSB, already the market leader, would have increased its share from 22 to 27 per cent. The Director General had ‘Predatory’ newspaper fined £1.3m A regional newspaper has been fined £1.3 million for predatory behaviour. The Director General of Fair Trading, John Vickers, made a decision that Aberdeen Journals – owned by the Daily Mail & General Trust subsidiary Northcliffe Newspapers – had seriously infringed competition laws by engaging in predatory pricing against its only rival, the Aberdeen & District Independent. The Director General found that Aberdeen Journals was dominant in the market for the supply of advertising space in local newspapers (paid-for and free) within the Aberdeen area. After the Competition Act 2000 came into force, it had continued its strategy of pricing advertising space in its free newspaper, the Herald & Post, below cost, in an attempt to drive its competitor from the market. The Director General concluded that Aberdeen Journals had abused its dominant position in breach of the Chapter II prohibition by doing so and imposed a penalty of £1,328,040. Aberdeen Journals has appealed against the Director General’s decision The appeal hearing is due to take place shortly. Update 5 PROFILE JUSTIN COOMBS DIRECTOR OF SERVICE INDUSTRIES – COMPETITION POLICY DIVISION After re-joining the organisation in July, Justin Coombs said his past experience as an OFT economist from 1991 to 1999 meant he was well prepared for his new position. After two-and-a-half years setting price controls for electricity and gas companies at the Office of Gas and Electricity Markets, he said he has returned to the OFT Competition Enforcement division with enthusiasm. ‘Clearly there is a lot of work going on at the moment with a lot of very interesting and high profile investigations. “During my previous time at the organisation, I helped prepare the OFT to put the new Competition Act 1998 into practice.” One of the biggest motivators for coming back is the variety of work at the organisation and the opportunity to work across a range of industries, he said. “My role covers the transport, financial services and professional services sector and here at the OFT I will be able to have a real impact, creating benefits for consumers.” According to Coombs, there is a lot of hard work going on in the service industries branch. “Although my role here already existed, there are a considerable number of new challenges, such as taking forward the results of the Cruickshank review of banking services and making sure we are focusing our efforts where we can bring the most benefits to consumers,” he said. Energy guidelines for N Ireland Guidelines for the operation of the Competition Act 1998 in Northern Ireland’s energy sectors and for establishing exclusion criteria have been published in association with the Office for the Regulation of Electricity and Gas (Ofreg). They can be downloaded from the OFT website (www.oft.gov.uk/comp-act/technicalguidelines/oft421.html) The guidelines set out the legal context under which Ofreg will be operating and explains its powers under the Act. The OFT is inviting feedback on draft Competition Act 1998 guidelines, “Services of General Economic Interest Exclusion.” Published with the Office of Gas and Electricity Markets (Ofgem), the document will provide advice and information about how the Director General will interpret and apply the exclusion for “services of general economic interest” and “revenue-producing monopolies.” This draft version can be downloaded from the web address shown above. Encouraging consumers to stop and think about credit and debt was the focus of National Consumer Week from November 12-16. An initiative of the Trading Standards Institute (TSI), supported by the Office of Fair Trading, the awareness week involved a campaign to encourage consumers to think carefully before using credit. Recent research into consumer behaviour shows that UK credit seekers do not often consider all the options when taking on credit, or compare lenders and APRs. Leaflets produced by the OFT and TSI urge consumers to shop around for credit and seek the advice of a trading standards office or Citizens’ Advice Bureau before making a commitment. PROFILE DAVID FISHER DIRECTOR OF RESOURCES AND SERVICES David Fisher brings substantial experience to his new role with the OFT. Having worked for the New Zealand Authority in the late 80’s, David joined the then Monopolies and Mergers Commission in 1990 as a reference secretary. He subsequently served as the Commission’s Head of Secretariat and, most recently, as an inquiry team manager. From day one at the OFT in late May, it was clear to David that these are challenging and exciting times for the OFT. Obtaining additional financial resources from Treasury, planning and managing the recruitment and training of around 100 additional staff and finding them somewhere to sit, poses serious challenges for R&S staff. “I have been very impressed by the level of commitment, professionalism and sheer hard work put in by staff in the division. I would have been lost without their support,” said David. National Consumer Week 6 Update PROFILE MIKE RICKETTS DIRECTOR OF COMMUNICATIONS Mike Ricketts is no stranger to the demands of effective communication and is full of ideas to bring the Office of Fair Trading into the public eye. With a varied history of information handling across Whitehall, Mike started his career in the publicity department of OXFAM before joining the government as a junior press officer. As deputy head of information at the Department of Transport throughout the late 1980’s he led innovative road safety campaigns before moving on to the Department of Trade and Industry. After taking on one special project as head of Government publicity for the Millennium Bug, he went on to establish and run the communications department for the Mayor of London either side of last year’s Elections. Mike took up his position as the OFT’s first Director of Communications in May after structural changes brought information technology and the information branch into one division. “Communications is one of the three cornerstones of OFT’s new Statement of Purpose, along with investigation and enforcement,” said Mike Ricketts. “We are committed to ensuring consumers understand better their rights and business their duties under competition and consumer law; and that everyone knows more about the OFT and what it can do for them. Communications Division is playing a vital role in helping markets work well and encouraging competition,” he said. Keeping fuel on tap in a crisis The Director General of Fair Trading has granted an exemption under the Competition Act to an agreement relating to emergency fuel supply. The exemption is subject to certain conditions and obligations designed to address public concerns which the OFT received over the anticompetitive nature of the Memorandum of Understanding (MoU). Concerns included the extent to which the supply of oil fuels to a customer’s normal supplier needed to be restricted during a crisis and the exchange of commercially sensitive information between market leaders. A request for an exemption was made after an MoU was signed between the Government, major oil companies, oil independents, road hauliers, the police and trade unions last September. The MoU stems from last year’s oil fuel crisis and is designed to protect supplies to essential users in the event of another disruption to fuel supply. The Director General of Fair Trading, John Vickers, opened the issue for public consultation in July as part of the formal procedure after the interest groups asked whether the MoU infringed the Act. The Director General decided that an exemption could be granted (under Section 9 of the Act) because the benefits of the agreement outweighed its possible anti-competitive effects. The MoU would improve the distribution of fuel during an emergency. Consumers would benefit from the priority given to essential users. The exemption is granted for a period of 10 years. Group stops fixing prices A Nottingham-based distributor has made assurances that it will stop advising retailers how much their stock should cost. The CDA Group, which buys electrical goods from manufacturers and sells them to retailers, was investigated by the Office of Fair Trading for recommending retail prices (RRPs). The Group was found to be in breach of the Government Order preventing RRPs and has now informed all of its customers that they are free to sell, advertise and display goods at any price they choose. The assurances state that the CDA Group will not publish or otherwise notify RRPs to customers. If the Group does not stick to these assurances the OFT will take court action. A Government Order preventing suppliers of certain domestic electrical goods from setting RRPs has been effective since September 1998. Update 7 PROFILE JESSICA FARRY Cash machine fees decision The Office of Fair Trading has decided that the benefits of LINK’s rules on interchange fees for using cash machines (ATMs) outweigh their potentially anti-competitive effects. This decision from the Director General of Fair Trading, John Vickers, follows a request from LINK on whether its rules infringe the Competition Act. LINK, which is owned by the major banks and building societies, asked for an exemption to be granted under the Act if an infringement was found. While LINK members are free to negotiate charges to other members for using their ATMs, only a few actually do. LINK’s rules do not cover retail charges by individual members to consumers for the use of ATMs. The OFT found that one element of LINK’s rules does infringe the Act: the centrally set multilateral interchange fee. This is the fee paid by the card issuer to other members of the network when a cardholder uses an ATM owned by another card issuer. The fee, which is cost-based, is currently 28 pence for branch ATMs and 40 pence for ATMs in other locations, such as supermarkets and shopping centres. However the OFT believes that this fee arrangement brings benefits that would not otherwise be achieved and that an individual exemption can, therefore, be granted. A formal consultation was held in accordance with the provisions in the Act. No substantive responses were received when the consultation phase finished on September 4. LEGAL DIRECTOR FOR CONSUMER AFFAIRS BRANCH Last month marked Jessica Farry’s eighth year as a lawyer for the OFT and she is brimming with enthusiasm for her job. She joined Legal division as a competition lawyer from private practice. Recently she completed an eight-month secondment at the Home Office, before returning to the OFT as second legal director advising on Consumer Affairs. “Having started off as a competition lawyer and now working in Consumer Affairs I have seen both sides of the Office’s work. That does bring benefits in that it gives you an all-round view of the OFT’s role,” she said. “As well as advising on a great variety of casework, what is a great boon for a lawyer here is the hands-on involvement in policy-making that you would never get as a lawyer outside the OFT. Being a creature of statute, everything the OFT does must have a legal basis.” Monopolist test backed Benefits of the LINK agreement: s Greater availability of ATMs to UK cardholders – regardless of which bank or society they are with. s By spreading the cost for providing services among all the members the number of ATMS can be increased, and smaller card issuers are not disadvantaged. s Without the interchange fee arrangement several hundred separate agreements would have to be negotiated between all LINK members. An independent study has concluded that the OFT should not adopt a new framework for defining markets in the assessment of monopoly and dominance enquiries. The study, carried out by National Economic Research Associates (NERA), concluded that use of such tools as the hypothetical monopolist test “provides the appropriate framework for defining relevant markets.” Assessments of dominance and monopolies begin with studies by OFT officials to define the market in order to better understand the role of players within it and the dimensions to competition. “The increasing importance assumed by the definition of the relevant market raises an important issue of how relevant markets should be defined in theory and practice,” says the NERA report, adding that there is “growing consensus” that the hypothetical monopolist test remains appropriate as a tool. 8 TITLE TO FEATURE REPORT NAME HERE Seeing the light Cartels are a damaging, insidious form of anti-competitive behaviour which can affect the wider economy. Companies face fines up to 10 per cent of UK turnover for infringing the regulations. The OFT’s leniency programme for those involved is already proving highly effective . LENIENCY PROGRAMME REPORT MIKE MARTIN 9 W ithin the next few months the first of several OFT cartelbusting cases will be made public. Often secretive and closed, cartels can be extremely difficult to detect and even harder to unravel but the OFT’s leniency programme – with its incentives of immunity from or reduction in penalty – is actively encouraging whistle blowing among those actually involved in the cartels. “The fact that we have already got seven cases on the books since last year suggests that cartels might be widespread in this country,” says Adrian Walker-Smith, Director of cartel investigation at the OFT. Cartels are a particularly damaging and insidious form of anti-competitive behaviour. A “successful” cartel can increase and maintain artificially high prices, stop new products entering the market and limit production. Aggressive cartels can prevent young businesses from competing in the market – and they obviously harm consumers. Cartels also affect the wider economy: when competition is suppressed markets become sluggish, complacent and expensive. A key part of the 1998 Competition Act is to stop cartel activity. Under the Act the OFT, along with other regulators, has increased powers to investigate suspected cartels. Investigators can require business through the courts and any unlawful agreements that have been entered into will be void. The first member of a cartel to come forward with relevant information will be offered total immunity from financial penalty provided that the information is given before an OFT investigation has started and provided that the OFT does not already have enough evidence about that particular cartel. There is discretionary immunity if the OFT has already started its investigation but has yet to give written notice of the specific infringements. There could be a reduction of up to 50 per cent on any penalties imposed if: s a business is not the first to come forward – but still does so before the OFT has given written notice about any infringements, or s a business would have qualified for total immunity had it not been the instigator or leader of the cartel, or compelled others to join. In either case, a business wanting to take advantage of the leniency programme must: s provide the OFT with all information, documents and evidence available to it regarding the existence and activities of the cartel; The leniency programme has another advantage as the OFT’s cartel investigator, Adrian Walker-Smith, explains: “Members of a cartel meet regularly. But at one meeting, one member fails to show up. He says he has a cold but nobody can be sure. Has he gone to the OFT seeking immunity? They don’t know. It may prompt one of the others to come forward to try to cover themselves. “The leniency programme creates this kind of uncertainty and that is exactly what we want. We are seeing a similar pattern emerging here as in the United States where the same programme has been very effective.” For more information www.oft.gov.uk There is a wide range of information about 1998 Competition Act on the home page of the OFT’s website. Easy-to-follow links guide users through the leniency programme and appropriate OFT guidance – all of which can be downloaded. The OFT also produces a number of useful publications about the Competition Act and the leniency programme. Information leaflets include: What your business needs to know – a general introduction to the Competition Act. q Cartels and the Competition Act 1998 – a guide to help customers identify cartel activity. q Leniency in cartel cases – a guide to the leniency programme. q The benefits of coming clean documents to be produced and can enter and, by warrant, search premises. If the Director General decides that an agreement infringes the Act, he has the power to give directions to bring the infringement to an end. A business involved in cartel activity can be fined by up to 10 per cent of its UK turnover for up to three years. Any third party harmed by cartel behaviour can sue for damages through the courts. Moreover, under the proposed Enterprise Bill the penalties will be even tougher (see page 17). For the first time, individuals may be faced with prosecution for taking part in cartel activities. The OFT believes that the long term interests of consumers – and business – justifies the leniency policy and that the best way to root out cartels is to urge those involved to come forward voluntarily. Leniency will not affect the rights of any third parties who are seeking damages s maintain continuous and complete cooperation throughout the investigation; s not be the instigator or leader of the cartel and not have compelled others to join; s cease its involvement in the cartel from the time it comes forward with information. If a business is already co-operating with a cartel investigation, but comes forward with more information that enables it to be granted total immunity in relation to a second cartel, that business could also receive an additional reduction in any penalty resulting from the first investigation. The OFT also understands that any business wanting to come forward under the programme might be worried about the reaction of the other cartel members. The OFT will try, whenever possible, to keep confidential the identity of anyone who comes forward. There are also some helpful guidelines including: q The Major Provisions (OFT 400), a general guide to the Competition Act. q Chapter I Prohibition (OFT 401), covers agreements which might affect trade within the UK and which might prevent, restrict or distort competition. q Chapter II Prohibition (OFT 402), covers abusive behaviour such as cartels. Offers guidelines as to which behaviour will or may be regarded as “abusive”. q Market Definition (OFT 403), how the OFT defines markets under the Act. q Powers of Investigation (OFT 404). An explanation of the OFT’s powers of investigation under the Act. q Director General of Fair Trading’s Guidance as to the Appropriate Amount of a Penalty (OFT 423), which outlines how penalties under the Act are calculated and deals with the conditions for granting lenient treatment. These and many others are available by phoning 0870 60 60 321 or by e-mailing oft@eclogistics.co.uk 10 OFT’S NEW MPI DIVISON REPORT MIKE MARTIN C Duty onsumer IT goods and services, pharmacies and extended warranties for electrical goods are the first three sectors that the OFT’s newly established Markets and Policy Initiatives (MPI) division will study over the next few months. The results of the study and any recommendations will be made public. “Our job of making markets work well for consumers goes beyond enforcing competition and consumer protection laws,” explained Director General John Vickers. “Our new division, MPI, will undertake probing examinations of markets, practices and regulations to explore whether the needs of consumers are being well served.” Under the proposed Enterprise Bill, the OFT will have more powers – and greater authority in enforcing consumer and competition regulation. The OFT has a duty under the Fair Trading Act to review commercial activities relating to goods and services in the UK and identify any practices which might hurt consumers. In its recent White Paper Productivity and Enterprise: a World Class Competition Regime, the Government announced plans to extend the OFT’s duties, so that, for example, the OFT can review how possible future plans or legislation might affect markets or market sectors. (For more information about the proposed Enterprise Bill, please see page 17) In the meantime, the OFT is being more proactive by investigating specific markets and sectors and then making recommendations about any future action that needs to be taken. It is this new division that will be spearheading such investigations – with the help of colleagues across the whole of the OFT. Understanding John Vickers is all too aware of how an investigative remit could appear to business and he is keen to point out that the studies are: “Purely exploratory – they are not inquisitions. No one is in the dock. We just want the best possible understanding of how markets are working. But if a study shows that there is a need for further investigation or enforcement action – we will act accordingly.” There might be enforcement action by the OFT, a reference to the Competition Commission, a recommendation for a change in regulations or an awareness raising campaign targeted at consumers. If a market receives a clean bill of health and no further action is recommended, that decision – and the thinking behind it – will also be open to public scrutiny. John Vickers is also keen to explain Sharp focus on the markets The OFT’s new Markets and Policy Initiatives division is launching its first three studies to discover how well – or not – certain markets are working for consumers. that the OFT does not hold a “monopoly of wisdom” about markets and that the OFT will not be approaching an investigation with any hidden agenda. Instead, investigation teams will be highly receptive to a range of opinion and input. In other words, as he summarised it, there will be “no hats and no blinkers”. The new Markets and Policy Initiatives division of the OFT has launched three new market studies. IT products and services Consumer IT, products and services – ranging from PC hardware and software to after sales service and support – have grown rapidly and brought many benefits to consumers. More than 40 per cent of households now have personal computers. ILLUSTRATION DANIEL MACKIE 11 The new Markets and Policy Initiatives Division has three branches Branch 1 provides a resource base of economic and statistical advice and financial analysis for the whole of the OFT, and manages the OFT’s economic research programme. It works closely with Branch 2 on market investigations and with the OFT’s consumer regulation and competition enforcement divisions in their work. Branch 2 focuses on the five market investigations planned for the first year. It is also responsible for the OFT’s response to super-complaints, the new fast-track route for consumer organisations to raise issues of immediate concern. This branch also assesses the impact on markets of new and existing laws and regulations. Branch 3 monitors initiatives taken in government and advises on their implications for competition and consumers. It is also preparing for the OFT’s future role as regulator of payment systems – such as charges for using credit cards, cheques, direct debits and ATMs (cash machines). A call centre helps consumers with enquiries and concerns. Although the OFT cannot take on individual cases, callers are advised where to turn to for specialised help about a particular problem. OFT’s crucial role – by new director The new director of MPI is Jonathan May, who takes up his post later this year. He is currently Director of UK Competition Policy at the Department of Trade and Industry and he worked on the Government’s recent competition White Paper Modern Markets, Confident Consumers. He is looking forward to joining the OFT: “It has an increasingly crucial role in ensuring markets work to the benefit of both consumers and dynamic business and, through that, in raising the UK’s productivity.” But getting to grips with IT is often a daunting and confusing business. Buying a PC with basic software and a printer is just the start. There are several areas of consumer concerns including the availability of information to compare different deals, the small print in the contract terms and what exactly customers are getting in terms of support, including the cost of back-up services like telephone helplines. The study – which will cover hardware, software and related services – will examine these and other aspects of the markets that deliver consumer IT services. The better these markets and sectors work the greater will be the potential for people to appreciate the benefits of new technology in their homes. Retail pharmacy services This study will examine the market in retail pharmacy services and, in particular, whether consumers are best served by the present system that regulates where pharmacies can open. Since 1987 all pharmacists in the UK have had to obtain a contract from their local health authority to dispense NHS prescriptions. This work is essential for the business of chemists and drug stores, whose overall turnover last year was worth £18.7 billion. Many consumers want to buy medicines over the counter with the benefit of a pharmacist’s advice, or they need frequent repeat prescriptions, so it is important that a convenient service is readily available. Restrictions on where chemists can open potentially have an effect on competition. The existing system will be reviewed to see how the restrictions affect competition and consumers’ interests and whether there are better ways of achieving the public interest objectives. Electrical goods warranties This study involves a wide-ranging examination of a fast-growing market worth over £1 billion a year – having grown from £650m in 1994. The market is also changing rapidly with the introduction of cashback warranties and a far more widespread use of noninsurance backed warranties. Issues to be considered include whether there is evidence of high pressure selling; whether these products represent value for money; and the degree of competition and price transparency. “We just want the best possible understanding of how markets are working. But if a study shows that there is a need for further investigation or enforcement action – we will act accordingly.” 12 FUNERALS – ENSURING A FAIR DEAL AT A VULNERABLE TIME MIKE MARTIN REPORTS But was the final service good enough? Bereaved people are at their most vulnerable when faced with the task of arranging a funeral – and the OFT has been working to ensure that customers have access to the right advice. RIP B uying a funeral is a unique purchase. You’re distressed and under pressure and yet you don’t have the option to put the purchase off or time to research the best buy. Most buyers have no complaints but, as people buy funerals when they are vulnerable, there is a case for studying the industry to look at value and service to consumers. The results of an Office of Fair Trading inquiry into the industry suggested a range of ways to improve the experience of buying a funeral. Improvements suggested include: s prominently displayed price lists s written estimates for services s spelling out who has ultimate ownership of individual funeral businesses (see panel for full list). The OFT is working with the National Funerals College to provide independent advice on funerals. Encouraging the funeral trade associations to incorporate the recommendations into their codes of practice is also seen as key. “The representative associations for the industry were very co-operative during the inquiry and we are hoping that these recommendations will be adopted,” says Debbie Samosa, investigations officer in the OFT. “We also hope that the trade associations will seek approval for their codes under the OFT’s guidelines to codes of practice.” The new report fulfils that pledge. What makes the purchase of funerals different is that people rarely shop around, use funeral businesses recommended to them and tend not to ask too closely about the cost. The report found that sometimes the first people learn about the ›› The funeral market s In 1999 there were 630,000 deaths in the UK. s In 1998 three-quarters of funerals were cremations; one-quarter burials. The cost of a cremation is significantly lower than a burial. s Last year, the average cost of a funeral, including burial, was £2,048 compared to £1,215 for a cremation but there are significant regional differences in costs. s There are about 3,000 funeral directors operating out of 4,200 outlets. s Of these round 65 per cent are independently owned. s The Co-operative movement has the largest number of outlets with a single brand name in the UK. s Private individuals form the largest group of clients – but local health authorities, hospitals and coroners’ offices also use funeral firms’ services. s Funeral directors are not subject to licensing or control nor do they need to have professional qualifications or be registered. s A steady decline in the death rate means the only scope for growth in this industry is provision of additional services. Reputation is a key factor in building business. Pledge A previous OFT inquiry into the UK’s £800 million-a-year funerals industry focused on competition in the market and promised a future report looking at the scale and nature of the problems people face when arranging a funeral. 13 14 ‹‹ cost of a funeral is when they get the bill afterwards. Debbie Samosa says: “It is important that information is available at an earlier stage in the purchase so that people make informed choices. “We hope that, as a result of this work, people will have easier access to information about arranging funerals than they have had in the past.” Launched last year, the inquiry invited comment from industry representatives, local authorities, NHS Trusts and 400 individuals with experience of arranging a funeral. Nearly 200 submissions were received and 2,000 funeral outlets responded to an OFT questionnaire. THE PSYCHOLOGY OF LOSS As part of its inquiry, the OFT commissioned a study* to assess the emotional and psychological impact of death on those arranging a funeral and whether this affected people’s ability to make informed choices. People are particularly vulnerable arranging a funeral when they have never done so before – or if they did not have an opportunity to discuss arrangements with the deceased before they died. q People look to others for advice and in doing so seem susceptible to influence. q People do not understand the process of arranging a funeral or the organisations involved – nor indeed their own responsibilities. They rely on the funeral director to tell them. q The language of “shopping around”,”cost”, “prices” and ”purchases” is incongruous with the way in which many bereaved people think and feel. q Money is often not a principal concern. The bereaved do not see meeting the funeral director as a business transaction but as a service. q People preferring a more independent approach might find it hard to sort through the options. q People do not behave like normal consumers looking for value or exercising choice. q There is a strong need to feel that people are “doing the right thing” by the deceased person. q Emotional factors Some 96 per cent of those arranging funerals were content, saying they were satisfied or very satisfied with the service. Official complaints about funeral services are few but, as the report indicates, “complex emotional factors are involved, particularly the desire to ‘move on’, so the actual level of dissatisfaction may be understated.” Emotional pressures and the fact that few people have experience of arranging funerals act as a dampener to competition, says the report. This makes it “all the more important that measures are in place to give consumers protection and encourage long-term changes to increase the overall competitiveness of the market.” The inquiry found that while there is a lot of information around, from a wide variety of sources, it often fails to focus on the practicalities of arranging a funeral. At a time of stress people need advice about how to choose a funeral director and what type of funerals are available. For example, some funeral directors didn’t detail prices, written estimates and information about the ultimate ownership of the business. “Failure to provide adequate information on these matters means that people have to make decisions without seeing the full picture,” says the report. Rights The report identifies important changes in the funerals market that could inhibit consumer choice if people are not made aware of their rights. These include: s The increased use by local authorities of single funeral firm contracts for the removal of bodies on behalf of coroners. s Contracts between hospitals and funeral directors for mortuary facilities. *The Psychology of Death: an exploration of the impact of bereavement on the purchases of at-need funerals, co-ordinated by Professor Malcolm Johnson of the University of Bristol. “We hope that, as a result of this work, people will have easier access to information about arranging funerals than they have in the past.” Such trends may lead to situations where individuals are unaware that they have a choice over the funeral business they use and the type of funeral. Although the report concluded that people are vulnerable to unfair trading practices, the OFT takes the view that recommending new legislation is a “disproportionate” solution. Consumer safeguards can best be achieved by using the OFT’s new guidelines for encouraging trade associations to develop robust industry codes of practice. The OFT will be working closely with the three trade associations over the coming months to encourage them to take on board the recommendations and to obtain approval for their codes of practice under the new codes guidelines. Funerals will never be an easy thing for people to arrange, but in future the hope is that consumers will have the information they need earlier to make more informed choices. Funeral inquiry The main recommendations: q Price lists, including the price of each coffin, should be prominently displayed, given to people to take away and to customers during home visits. Fully itemised written estimates and invoices, in plain English, should be given out during a first meeting with a customer. Every funeral outlet should prominently publicise details of the organisation which has ultimate control of the business. Local authorities and hospitals should ensure that funeral businesses, contracted on their behalf, do not attempt to influence the customer’s final choice of funeral director. They must ensure that written information is given to the bereaved at the time the body is removed, setting out the consumer’s rights in respect of choosing a funeral director. q Any contracted funeral business should give written information to the person arranging the funeral about their rights. The relevant trade associations should get OFT approval for their codes under the OFT’s new approach to codes of practice. Funeral businesses offering credit to their customers should find out whether or not they need to get a consumer credit licence from the OFT. The literature produced by local authorities and NHS trusts should be more widely available in places where those arranging a funeral are likely to visit – especially the Registrar’s Office. q q q q q q 15 John Mills Chief Executive (Policy and Resources) in Jersey Sir Geoffrey Owen Former Financial Times Editor Four expert advice... Michelle Childs Head of Policy Research and Analysis at the Consumers’ Association Richard Whish Professor of Law at London’s Kings College The structure of the Office of Fair Trading is changing rapidly and an Advisory Panel set up in May is a welcome addition which is adding to its wealth of wisdom and helping to create a more outward-looking organisation. A lthough the OFT is fortunate to have a wealth of experience and expertise in dealing with all sorts of different markets and consumer issues, it has never pretended that it somehow holds a monopoly of wisdom about the ways in which different markets – or market sectors – work. The OFT is aware that it must be open and receptive to the ideas and ›› OFT ADVISORY PANEL REPORT ELIZABETH COLLINS 16 ‹‹ concerns of a wide range of interests including business and industry as well as consumer groups and the wider public. The structure of the OFT is also changing rapidly. Not only has it been given greater powers of enforcement under recent legislation, but it is also becoming far more proactive as it promotes and strengthens a competitive business culture. To help the OFT become more outwardlooking and responsive to fresh perspectives and new ideas, the Director General, John Vickers, announced in May that there would be a special Advisory Panel to assist him and his senior managers in developing the OFT’s future strategy. The four panel members, from a wide range of backgrounds and experience, bring with them a wealth of skills from the legal, economic, consumer affairs and academic communities. The members of the Advisory Panel are: q John Mills, the OFT’s former Director of Consumer Affairs and now Chief Executive (Policy and Resources) in Jersey; q Sir Geoffrey Owen, former Editor of the Financial Times and a Senior Fellow at the Institute of Management at the London School of Economics (LSE); q Richard Whish, Professor of Law at King’s College, London. John Vickers said he was delighted to welcome such a distinguished group of people on board and that the members would bring: “new and complementary perspectives to the OFT’s work.” At the panel’s most recent meetings, areas for discussion have included criteria for in-depth market investigations, consumer regulation and enforcement, the public’s perception of the office and its external communications strategy. Discussions also covered criminalisation of cartels’ behaviour and the responsibilities of the future OFT board. Other items on the panel’s agenda have included considering a review of the relationship between consumer protection initiatives at national and local level, and assessing the OFT’s experience of enforcing the Competition Act. “The panel is an excellent development,” summed up John Mills. “All organisations benefit from having some sort of quality check strategy, which I see as the panel’s main role. Our task is certainly not to usurp the Director General’s leading role or that of his senior staff, but rather to act as a critical friend,” he said. Powers At present the Director General has ultimate responsibility for decision-making but under the proposed Enterprise Bill, the Government plans to confer corporate status on the OFT and to establish a board of management structure with executive powers. The Advisory Panel, which has no executive powers, will help guide the new reforms but, as John Vickers explained, the panel should not be regarded as a “shadow board”. Panel member Richard Whish, who has considerable experience in competition law in the UK and EU said he hoped the panel would make a constructive contribution to the new reforms. “The OFT’s work is crucial in protecting the interests of the consumer. But it is just one element in the broader strategy of ensuring that markets work well.” He emphasised the importance of having one agency: “dedicated to the promotion of consumers’ interests.” Sir Geoffrey Owen’s current research at the LSE, is examining the impact that national institutions and government policies have on business. With hands-on experience of mergers and big industry – he worked at car manufacturer British Leyland – he has closely followed UK competition policy for over 30 years. “The strengthening of competition policy, with the OFT playing a central role, is of very great interest,” he said. q Michelle Childs, Head of Policy Research and Analysis at the Consumers’ Association; Distinguished panel: (from left) John Mills, Deputy Director General Penny Boys, Sir Geoffrey Owen, Director General John Vickers and Michelle Childs. Richard Whish is absent Protection “By using its competition powers to prevent exploitation of consumers, together with its powers to tackle rogue traders, the OFT is increasingly a guardian of consumer protection.” Michelle Childs brings longstanding experience in consumer affairs to the panel and, as she pointed out: “By using its competition powers to prevent exploitation of consumers, together with its powers to tackle rogue traders, the OFT is increasingly a guardian of consumer protection.” But she was also quick to point out that the agenda is: “Also good for business because it helps create a level playing field. It is a demanding agenda and if it is delivered, it will make a genuine difference to consumers’ lives.” It has been, she reflected, a particularly exciting time for panel members to be associated with the OFT as it assumes a more prominent and dynamic role. ENTERPRISE BILL REPORT MIKE MARTIN ILLUSTRATION CHRIS WINN 17 A major player The Government’s proposed new Enterprise Bill is perhaps one of the most important pieces of legislation to affect the OFT in its 28-year history. Perceptions that the OFT is an organisation without teeth will be swept away with this legislation which will enable it to respond quickly to concerns about markets and market sectors. Encouraging a world-class competition regime means stronger independent competition authorities. The proposed Enterprise Bill will change the OFT’s role in important ways – making it a more proactive and outward-looking organisation. If there has been a perception in the past that the OFT is an organisation without many teeth, this bill is going to give the organisation considerable bite. The 1998 Competition Act was the first step towards giving the OFT new powers to enforce competition law. The proposed Enterprise Bill will take this a step further, making the OFT a powerful enforcement body at the heart of decision-making activities across a wide range of consumer and competition issues. The OFT becomes less of an adviser – more of a player in its own right. This means that the OFT will be able to respond more quickly and effectively to concerns about markets and market sectors raised by our colleagues in trading standards departments and other consumer organisations – the people who are dealing daily at street-level with consumers’ problems. As a precursor to drafting the Enterprise Bill, the Government’s White Paper Productivity and Enterprise – A World Class Competition Regime, was published in July and set out a blueprint for the way forward. The White Paper emphasised the importance of raising the profile of competition policy and its contribution to the UK’s economic performance. Underpinning the changes is the emphasis on independent competition authorities generally, and the OFT in particular. Not only will the OFT become more involved in enforcing competition and consumer protection legislation, it will also become more proactive in investigating markets and communicating its findings and recommendations to different audiences: business, consumer-oriented organisations and other competition authorities. ›› “Instead of simply being an enforcement body we will really begin studying how markets work and how markets might work more effectively for consumers.” 18 ENTERPRISE BILL REPORT MIKE MARTIN ‹‹ The OFT has been given greater resources and, after the bill is passed, it will also have more powers to pursue its goal of making markets work well for consumers. Under the new proposals it will be possible, for the first time, to prosecute individual people who set up and maintain cartels. If someone is found guilty they could face a jail sentence, a hefty fine or both. At present, it is the company that bears the brunt of the financial penalty – though this too can be substantial, being up to 10 per cent of UK turnover for up to three years. These proposals might seem severe, but they would apply only to the cynical and deliberate manipulation of the market by a cartel – highly damaging to other businesses as well as consumers. Compliance Deputy Director General, Penny Boys, explains that a similar system is already working well in the United States. “They achieve really good compliance through a combination of leniency for whistleblowers together with effective penalties.” There will also be clear legal obligations on the OFT to promote a competitive culture across markets and market sectors. Other named consumer bodies – with whom the OFT already works closely – will have rapid access to the OFT to voice “super-complaints” – concerns about markets not operating well and therefore operating to the detriment of consumers. The OFT will have to respond, in public, to such concerns within 90 days. Another important proposal is the removal of ministerial involvement in merger cases. In future, the final decision as to whether or not a company merger should go ahead will be left to the OFT and to the Competition Commission. Government ministers would only get involved in merger cases when there is exceptional public interest, such as those involving national security. The OFT will become a statutory authority under the Bill. This means that the Director General will chair a Board with wide-ranging consumer and competition expertise. Over the past year, the senior management team has been reorganising the OFT’s structure and recruiting new staff in order to meet the challenges of the future. There are now three main operating divisions at the OFT instead of two. Competition Enforcement (CE) and Consumer Regulation Enforcement (CRE) focus on the enforcement of consumer and competition legislation. The third division, Markets and Policy Initiatives (MPI) is newly created and will be responsible for, among other things, investigating markets and market sectors. An essential aspect of MPI’s What they said about the Government proposals on enterprise: “Today’s proposals will strengthen the role, independence and accountability of the OFT. They mark a major advance towards our goal of making markets work well for consumers. A competitive and productive economy is an economy that works for consumers.” John Vickers, Director General of Fair Trading “I want the UK to get to the future first – an environment which encourages enterprise is central to that.” Patricia Hewitt, Trade and Industry Secretary “The most significant items will probably be the new powers awarded to the Office of Fair Trading and the Competition Commission. Mr Brown (Chancellor of the Exchequer) has deliberately looked to the United States for inspiration. That country combines strict regulation… with a strong bias in favour of the consumer. This is a credible path for Britain to follow.” The Times “I believe that a step change in competitive pressures within the British economy is essential if we are to reach for US levels of productivity growth.” Gordon Brown, Chancellor of the Exchequer “The Enterprise Bill means that we can have, and be seen to have, a far more powerful impact than in the past.” role is liaising with other regulatory bodies in the UK and internationally to ensure that there is a consistent and co-operative approach among the enforcement bodies. Jonathan May, currently director of UK Competition Policy at the Department of Trade and Industry, was recently appointed The main points of the Government’s White Paper on competitiveness are: s Greater independence for the Office of Fair Trading (OFT) together with clear legal duties to promote competitition. s A board will be created for the OFT chaired by the Director General. s Together with the Competition Commission, the OFT will no longer act in an advisory role for ministers, but will act independently in most cases. The two bodies will work together on mergers and markets issues. s It will be a criminal offence for individuals to agree dsihonestly to fix prices, share markets and rig bids. s The OFT will work proactively to keep markets under review rather than just reacting to complaints. Several special investigations are scheduled for the first year. s More power to consumers through the introduction of “super-complaints” where consumer bodies can raise issues of concern that must be investigated and reported on by the OFT within 90 days. as MPI’s first Director. Several market investigations are planned for the coming year. (There is more about MPI’s work on page 10.) “The Enterprise Bill”, says Caroline Banks, Director of CRE, “means that we can have, and be seen to have, a far more powerful impact than in the past. “Although we already have close links with other consumer groups we hope those links will be far stronger in the future,” she explains. “The named bodies who can approach the OFT with super-complaints, are likely to include groups like the Consumers’ Association and the National Association of Citizens Advice Bureaux (NACAB), which have unparalleled experience of certain areas such as personal debt problems. They also have great knowledge about disadvantaged groups.” Competitive With the introduction of any new legislation that is ultimately designed to benefit consumers, business communities sometimes feel as if they are being overlooked. But the new legislation will also support and encourage business by ensuring that markets and market sectors are open, fair and competitive. A competitive culture encourages innovation that in turn attracts customers to new products and ideas which boost productivity. Business will be even better equipped to compete in a tough global marketplace. For the record 19 Consumer Credit Act 1974 1 October – 31 December 2000 Notes on this table The recipient of an adverse determination has 28 days in which to appeal against the determination after which, if there is no appeal, the revocation or refusal becomes effective. Where a licensee appeals, the licence continues until the appeal is determined. The following lists include a number of cases where as at 31 December 2000 the appeal period had not expired. Date of determination is given under each entry. Refusals s 28-day appeal period expired s 28-day appeal period expired Mr Anthony Austen (secondhand cars), 6 Vanessa Walk, Riverview Park, Gravesend, Kent DA12 4PL 12 October 2000 P C Collections Limited (ancillary credit business), 22 Ewart Road, Bowring Park, Liverpool, Merseyside L16 2L 16 November 2000 Premier Motor Company Limited (secondhand cars), 31a Bridge End Road, Stratton St Margaret, Swindon, Wiltshire SN3 4PD 20 November 2000 s Granted in different term Mr Roy Marsh (other business services) 335 Revidge Road, Blackburn, Lancs BB1 8DF 23 October 2000 s Where an Appeal has been determined Evans Arnold Limited (secondhand cars), 8 Nottingham Road, Daybrook, Nottingham NG5 6JG 4 October 2000 abandoned Arun Car Sales Limited (secondhand cars), 3 High Street, Billingshurst, West Sussex RH14 9PL 19 December 2000 dismissed Claymind Limited (secondhand cars), 3 High Street, Billingshurst, West Sussex RH14 9PL 19 December 2000 dismissed s Where an appeal has been lodged Mr Brian Laurence Ferguson (motorcycles and repair), 43 Glenstall Road, Balnamore, Ballymoney, Antrim BT53 2QN 23 November 2000 New Forest Commercials (secondhand cars), 21 Porchester Road, Bournemouth, Dorset BH8 8JT 4 October 2000 Mr Owain David Beman (secondhand cars), CWM Farm, Rogerston, Newport NP10 9GQ 11 October 2000 Mr Percival George Cunningham (major appliances), 159 Orford Lane, Warrington, Cheshire 6 October 12000 Baronsmeade Finance Limited (ancillary credit business), Baronsmeade Suite, Greenfield Business Centre, Greenfield, Holywell, Flintshire, CH8 7QB 20 November 2000 Miss Wendy Denise Davies (ancillary credit business) 22 Broadstone Road, Reddish, Stockport, Cheshire SK5 7AE 20 November 2000 Mssrs JW and WR Capon and Parish (secondhand cars), 1-13 Medway Street, Chatham, Kent, ME4 4HG 23 November 2000 First Vehicle Contracts Limited (secondhand cars), First House, Coychurch Road, Bridgend, South Glamorgan CF31 3AP 23 November 2000 s Where an appeal has been lodged Ms Lena Ann Murray (other business services), Parker House, Parker Centre, Mansfield Road, Derby DE21 4SZ 6 November 2000 Revocations s 28-day appeal period not expired at December 31 2000 Money Order Limited (Prev. Meren Investments Limited, other financial services), 172 Fratten Road, Portsmouth, Hampshire PO1 5HD 21 December 2000 20 Update Mergers 1 January – 31 March 2001 Notes on this table This table lists the merger cases that have been examined under the merger provisions of the Fair Trading Act 1973. It shows the cases cleared to go ahead; those for which undertakings have been provided in lieu of reference to the Competition Commission; and those that have been referred to the Competition Commission. The cases are shown in date order. s Completed acquisition By Alamo Group (EUR) Limited of Twose of Tiverton Limited 5/1/01 By Bourne Leisure Holdings Limited of The Rank Holiday Division 9/1/01 By Balfour Beatty plc of the electrification business of Daimler Chrysler Rail Systems GmbH (Adtrantz FIX) 9/1/01 By Land Securities plc of Trillium Investments GP Limited 9/1/01 By Northern and Shell Group of the Express Newspaper Business 7/2/01 By Close Brothers Group plc of Transamerica Insurance Finance Company (Europe) 27/2/01 By Nomura Bank International plc of Principal Hotels Limited 13/3/01 By Kingspan Group plc of Tate Global Corporation 13/3/01 By Securicor plc of the security business of AHL Services Inc 13/3/01 By Sinclair Collis Ltd (a subsidiary of Imperial Tobacco Group plc) of Mayfair Vending Ltd 27/3/01 s Proposed joint venture Between the Northern Ireland liquid milk and cream businesses of Express Dairies plc and Golden Vales plc 14/2/01 Between The Society of Lloyd’s, The International Underwriting Association of London and Xchange BV 27/3/01 s Proposed joint acquisition By The Charles Schwab Corporation and TD Waterhouse Group Inc of Aitken Campbell Limited 28/2/01 s Proposed merger Between Abbey National plc and Bank of Scotland 5/2/01 Between Shire Pharmaceuticals Group plc and Biochem Pharma Inc 27/2/01 s Completed merger Between Frontline Limited and Attic Futura (UK) Limited in respect of the distribution of consumer magazines 31/1/01 Between the Boeing Company and Jeppesen Sanderson Inc 1/2/01 Between Symantec Corporation and Axent Technologies Inc 6/2/01 Cases cleared s Proposed acquisition By Thomson-CSF (now known as Thales) of Avimo Group Ltd 4/1/01 By Abbey National plc of Scottish Provident Institution 9/1/01 By Pillar Property plc of Wates City of London Properties plc 9/1/01 By Thomson-CSF plc of the fuzes business of Royal Ordnance plc 9/1/01 By Amerada Hess Corporation of Lasmo plc 16/1/01 By iSOFT Group plc of ACT Medisys Limited 31/1/01 By Finning International Incorporated of Hewden Stuart plc 31/1/01 By Focus Do It All Group Limited of Great Mills (Retail) Limited 31/1/01 By Princes Limited of Beta Foods Limited 31/1/01 By Allied Domecq plc of Mumm / Perrier Jouet 1/2/01 By KBC Bank NV of Peel Hunt plc 1/2/01 By Scottish Power UK plc of Rye House Power Station 27/2/01 By Taylor Woodrow plc of Bryant Group plc 1/3/01 By Algroup Trade Finishing Limited (trading as Celloglas) of Protecta Print Limited 1/3/01 By SCA Packaging International BV of Tuscarora Inc 9/3/01 By Persimmon plc of Beazer Group plc 13/3/01 By Sanyo Electric Co Ltd of the nickel metal hydride (NiMH) rechargeable batterybusiness of the Toshiba Group of companies 13/3/01 By the Royal London Mutual Insurance Company Limited of the Scottish Life Assurance Company 13/3/01 By Smith & Nephew plc of the advanced wound care business of Biersdorf AG 13/3/01 By the Travelex Group of Thomas Cook Global and Financial Services Division 13/3/01 By Manchester Airport plc of East Midlands International Airport Limited and Bournemouth International Airport Limited 21/3/01 By Innogy Holdings plc of Yorkshire Power Group Limited 23/3/01 By The Thompson Corporation of assets currently owned by Harcourt General Inc, namely its Higher Education Group and certain assets of its Corporate and Professional Services Group businesses 27/3/01 By Canada 3000 Inc of Royal Aviation Inc 30/3/01 s Acquisition By Hicks, Muse, Tate & Furst Limited of Burton’s Gold Medal Biscuits Limited 9/1/01 By Silentnight Holdings plc of Ducal Ltd and proposed acquisition by Silentnight Holdings plc of Cornwell Parker plc 16/2/01 By Gala Group Ltd of Ladbroke Casinos 27/2/01 By Transocean Seco Forex Inc of R&B Falcon Corporation 27/2/01 By the Go-Ahead Group plc of British Midland Handling Services and British Midland Airport Services (Holdings) Ltd 13/3/01 By John Menzies plc of Ogden Ground Services 13/3/01 By Sanitec Corporation of Caradon Bathrooms Ltd 13/3/01 By Becker Acroma Ltd of Granyte Surface Coatings plc 15/3/01 By the Boots Company plc of the Clearasil and Biactol Brands 16/3/01 Update 21 Assurances and Undertakings 1 January – 30 June 2001 Notes on this table Given below is the action taken in the relevant period for the Acts listed. Where there has been no action this is also noted. Fair Trading Act 1973 s Assurances given to the Director General under Part III of the Fair Trading Act 1973: Paul Baksh 16 January 2001 Studio For Hair Additions 15 February 2001 s Breaches of Undertakings: No breaches during this period s Assurances given under the monopoly provisions of the Fair Trading Act of 1973: No assurances were given during this period s Undertakings given under the monopoly provisions of the Fair Trading Act of 1973: No undertakings were given during this period Control of Misleading Advertisements Regulations 1988 s Assurances given: Metropolitan Tenants House Purchase Advisory Bureau 2 April 2001 s Court orders granted: None in this period s Court orders (interim) obtained: None in this period Competition Act 1998 1 April – 30 June 2001 Notes on this table A party to an agreement who thinks that it may infringe the Chapter I prohibition or a person who thinks that their conduct may infringe the Chapter II prohibition may notify the Director General of Fair Trading of the agreement or conduct and apply to him for a decision. The summary of the notifications for decision is maintained in the Competition Act 1998 public register on the OFT website at www.oft.gov.uk/html/compact/case_register/notifications.html and a copy is held in paper form at OFT premises for public inspection. s Notifications for decision No notifications in this period s Infringement decisions Napp Pharmaceutical Holdings Limited 5/4/01 1 s Non-infringement decisions Consignia and Postal Preference Service Limited 15/6/01 BT Surf Together and BT Talk & Surf Together pricing packages 4/5/012 DSG Retail Ltd (‘Dixons’)/Compaq Computer Ltd/Packard Bell NEC Ltd 18/4/01 Swan Solutions Ltd/Avaya ECS Ltd 6/4/012 1 The Napp decision is currently subject to an appeal to the Competition Commission Appeals Tribunal (CCAT). 2 Both the BT Surf Together and the Swan Solutions decisions were made by the Director General of Telecommunications. 22 For the record Consumer complaints 1 October 2000 – 31 December 2000 Trading practices key: Notes on this table Consumer complaints as reported by trading standards departments. Complaints are categorised by type of goods or services, by their nature and by their source (see the key right). 1. Defective goods or substandard service. 2. Non-delivery of goods and delay or non-competition of services. 3. Selling techniques: s misleading claims, representations or advertisements (price, quality etc) s presentation of goods or services (availability, labelling and packaging) s lack of information. 4. Difficulty of getting faults put right or offers of inadequate redress. 6. Unfair terms and conditions, including attempts to restrict liability. 8. Safety. A Age-restricted sales. P Prices and pricing (including value for money). Trading Practices (see key above) Group A: House fittings and appliances AA AB AC AD AE AF AK AL AM AN AO AP House construction Home maintenance, repairs and improvements Double glazing products and installation Furniture, pictures etc Upholstered furniture Floor coverings Textiles and soft furnishings Radio, TV and audiovisual equipment etc Personal computers and related hardware Large white goods and major fixed appliances Other electrical domestic appliances Repairs to domestic appliances equipment AA AB AC AD AE AF AK AL AM AN AO AP 1 560 11,398 3,979 2,477 5,799 2,077 766 5,379 6,705 5,242 2,430 1,160 2 74 1,977 629 937 1,603 266 195 774 2,165 483 231 341 3 153 2,917 1,055 660 943 385 251 1,388 1,476 658 531 240 4 116 2,193 1,156 439 1,078 302 131 1,088 1,442 1,029 402 257 6 15 276 119 111 166 59 29 201 183 117 80 38 8 16 145 52 125 111 7 35 51 32 297 534 29 A 0 43 8 9 7 2 3 17 4 7 4 4 P 12 886 94 141 128 77 86 297 205 144 121 168 Group total: Total 946 19,835 7,092 4,899 9,835 3,175 1,496 9,195 12,212 7,977 4,333 2,237 83,232 Group B: Other household requirements BA BB BC BD BE BF BH BJ BM BN BO BP BQ Food and drink Domestic fuel Gas Electricity Water Postal services Laundry and dry cleaning DIY materials and tools Telecommunications (excluding mobile phones) Mobile phones and services Internet service providers Hardware, cleaning materials etc Plants, garden furniture, equipment, tools, services BA BB BC BD BE BF BH BJ BM BN BO BP BQ 1 1,680 140 673 246 95 81 647 360 985 3,310 344 706 542 2 135 12 99 41 14 50 44 71 158 382 195 222 123 3 2,844 147 1,052 554 88 68 69 228 752 1,447 335 291 162 4 70 14 134 68 20 17 92 59 271 687 50 93 66 6 148 11 79 201 11 7 6 36 102 258 53 40 9 8 742 16 56 9 3 0 2 70 6 10 4 237 34 A 101 3 8 4 3 1 2 2 8 5 4 6 0 P 1,030 49 188 89 36 15 9 84 223 182 51 84 69 Group total: Total 6,750 392 2,289 1,212 270 239 871 910 2,505 6,281 1,036 1,679 1,005 25,439 *In addition Energywatch reported the following complaints: BD Electricity BD 612 443 *In addition the Office of Water Services (OFWAT) reported the following complaints: BE Water BE 717 270 680 141 3 2,253 487 268 526 244 377 150 451 3,885 0 314 4 656 98 53 180 9 300 165 29 656 140 655 6 403 41 24 86 7 90 29 16 274 28 0 8 107 79 143 22 37 23 245 0 439 2,509 281 A 29 11 10 11 221 2 0 0 81 0 0 P 412 114 74 104 43 94 24 3 513 Group total: 4,412 2,378 Total 8,697 1,699 1,108 2,244 660 3,352 1,690 751 11,050 31,251 Group C: Personal goods and services CA CD CE CF CH CK CL CM CZ Clothing and clothing fabrics Pharmaceutical products and other medical services Toilet articles, perfumery, hairdressing etc Jewelry, silverware, clocks and watches Tobacco Footwear and footwear repair Nursery goods and services Homeworking schemes Other personal goods and services CA CD CE CF CH CK CL CM CZ 1 4,208 731 493 1,132 76 2,340 1,019 138 3,719 2 629 138 43 183 23 126 58 114 1,483 For the record 23 Group D: Professional and financial services DA DB DE DF DG DL DM DN DO DP DQ DY DZ Personal banking (excluding credit) Hire and credit (unsecured) Ancillary credit business Life insurance Non-life insurance (including holiday insurance) Mortgages and other secured credit Credit ‘repair’ services Pensions excluding occupational Extended warranties and extended guarantees Estate agency, house purchase, surveying etc Letting agencies and management Other professional services Other financial services DA DB DE DF DG DL DM DN DO DP DQ DY DZ 1 308 595 281 65 791 123 50 14 122 267 192 844 222 2 22 169 66 32 290 51 30 6 65 46 53 309 60 3 172 1,405 438 78 827 242 64 14 114 584 119 1,243 366 4 55 222 45 16 237 33 8 4 67 26 42 162 39 6 66 450 57 21 335 62 13 5 66 49 53 110 76 8 2 8 0 1 6 0 0 0 0 2 23 25 1 A 2 3 0 1 5 1 0 0 1 1 0 8 1 P 30 123 26 3 116 17 0 3 11 29 19 116 44 Group total: Total 657 2,975 913 217 2,607 529 165 46 446 1,004 501 2,817 809 13,686 Group E: Transport ED EE EF EG EH EK EM EN EO EY EZ New motor vehicles Secondhand motor vehicles Motor vehicle repairs and servicing Motorcycles and repairs Bicycles and repairs Petrol and oil Road, rail, air and sea travel (excluding car hire) Freight, shipping and removal services Motor vehicle spare parts, tyres and accessories Boats, caravans, trailers, motorised buggies etc Other motoring costs ED EE EF EG EH EK EM EN EO EY EZ 1 1,808 9,069 3,911 733 406 294 300 112 760 381 573 2 320 403 233 51 104 14 102 45 167 37 103 3 724 3,438 727 204 120 382 206 42 247 163 310 4 295 1,478 518 133 65 18 41 14 134 76 105 6 67 280 95 32 24 12 79 12 32 19 157 8 39 167 65 30 82 62 33 6 63 27 28 A 9 14 15 6 0 8 1 0 0 0 8 P 154 261 334 24 33 213 103 24 52 16 118 Group total: Total 3,416 15,110 5,898 1,213 834 1,003 865 255 1,455 719 1,402 32,170 *As of 1 October 2000, Energywatch has taken over from the Office of Gas & Electricity Markets (OFGEM) to report complaints. In addition the London Transport Users Committee dealt with 89 complaints and suggestions concerning London Bus Services; 144 complaints/suggestions were received about London Underground; a further two about Croydon Tramlink and one about the Docklands Light Railway. However, these figures do not represent the number of complaints, as some complaints relate to more than one category within the LTUC’s coding systems. Group F: Leisure FC Travel agents FD Holiday caravan renting and caravan sites FE Time sharing FG Books, newspapers and magazines FH Entertainments, catering and accommodation FK Holidays FL Sports goods, hobbies and camping equipment FM Toys, games and video consoles (exc. software) FN CDs, audio and video tapes, records, video games FO Pets, pet foods and veterinary goods and services FP Betting, competitions and prize draws FQ Photography (equipment, film processing, services) FZ Other recreational goods and services 1 208 65 225 266 407 1,466 464 669 507 516 287 450 850 2 77 14 38 201 128 289 138 188 263 47 162 147 281 3 273 47 706 594 459 1,551 264 448 871 273 1,838 148 1,027 4 36 12 19 65 54 215 85 85 96 34 31 68 203 6 59 21 46 45 69 179 45 46 61 19 61 10 132 8 2 4 3 8 117 15 97 682 2 156 2 1 437 A 7 1 1 9 15 4 8 17 22 1 3 0 217 P 59 12 14 106 157 201 54 185 132 44 12 42 163 Group total: FC FD FE FG FH FK FL FM FN FO FP FQ FZ Total 721 176 1,052 1,294 1,406 3,920 1,155 2,320 1,954 1,090 2,396 866 3,310 21,660 Source: Office of Fair Trading, based on figures supplied by local authority trading standards departments (includes complaints notified to trading standards departments by Citizens Advice Bureaux and other advice agencies) and the Northern Ireland Department of Economic Development Trading Standards Branch. s More information on the analysis of consumer complaints is available from 020 7211 8509