OFT advises Competition Commission to remove electrical goods regulation

24 Jun 2011 02:58 PM

The OFT recently advised the Competition Commission that the Domestic Electrical Goods Order and associated undertakings, which cover everyday goods such as televisions and washing machines, can be removed.

Following an investigation by the then Monopolies and Mergers Commission (MMC) in 1997, specific regulation was introduced to promote competition between retailers of domestic electrical goods, particularly by preventing suppliers from recommending resale prices or otherwise influencing retail pricing.

This recent announcement follows an OFT review of the Order, which considered views from across the sector. The review found that since the Order was first introduced in 1998, there have been several significant developments which have led to improved competition and mean that the Order is no longer needed. These include new high street and online traders entering the market and consumers using the internet to compare prices. In addition, other competition legislation now provides an effective mechanism to address any future competition concerns of the type addressed by the Order should they re-emerge.

The Competition Commission will now consider the OFT's advice, before reaching a conclusion on what should happen to the Order.

Claudia Berg, Director in the OFT's Goods and Consumer Group, said: 

'This recommendation reflects major changes over the past decade in the way consumers purchase household electrical goods, not least the growth of the internet. We are determined to ensure such industry-specific regulation only remains in place where it continues to be necessary to promote effective competition. Where it is no longer necessary, and we can use general consumer and competition law, we will always look to reduce regulatory burdens on UK businesses.'

Since 2003, the OFT has conducted 20 reviews of monopoly and market orders and undertakings to ensure that they remain necessary. In 17 cases this has led to the regulation in question being removed or updated.

NOTES

  1. Further details on the remedy review, including the OFT's advice to the Competition Commission can be found on the Domestic Electrical Goods market review page.
  2. See press release OFT launches Domestic Electrical goods review (25 November 2010) for the announcement of the review of the Order.
  3. The Order was one of those regulations about which the Cabinet Office invited comments as part of the Government's red tape challenge. Further details on this can be found at: www.redtapechallenge.cabinetoffice.gov.uk/home/index.
  4. The OFT has a duty to review orders and undertakings made following MMC reports and to identify to the Competition Commission any changes of circumstances which mean they should be varied, removed or superseded. The review of the Order was undertaken under section 88 of the Fair Trading Act 1973 which remains in force by virtue of Schedule 24 of the Enterprise Act 2002. 
  5. The Competition Commission will set out details of its process for reviewing the Order in due course. In the meantime, any comments from interested parties on the OFT's advice should be sent to Tim Oyler, Remedies Manager, Competition Commission at tim.oyler@cc.gsi.gov.uk. Further details can be found at: www.competition-commission.org.uk. Download Further information regarding the process for the variation and termination of remedies (pdf 74kb).