COMPETITION
COMMISSION News Release (18/07) issued by The Government News
Network on 12 April 2007
The Competition
Commission (CC) has today published an issues statement as part of
its investigation into the market for the supply of payment
protection insurance (PPI) in the UK.
The issues statement identifies the specific questions and areas
the CC believes are relevant in deciding whether any feature of
the market(s) for PPI products restricts, distorts or prevents
competition. It will be used as the basis to guide collection of
evidence including the first round of hearings with interested
parties during the period May to July 2007.
PPI refers to insurance services supplied for the purpose of
protecting a borrower's ability to maintain credit repayments
in the event that the borrower becomes unable to maintain the
repayments due to circumstances which may include any of accident,
sickness, unemployment, and, in some cases, death. This market
reference follows a super-complaint from Citizens Advice to the
Office of Fair Trading (OFT).
The full statement is available on the CC website at: http://www.competition-commission.org.uk/inquiries/ref2007/ppi/index.htm
and identifies a number of issues relating to competition
including market definition, understanding the retail and
wholesale market(s) for PPI (including competition between
providers), the interaction between these markets (vertical
issues), the role of intermediaries and indicators of the extent
of competition.
The issues statement should not be seen as implying that the
inquiry group has identified any competition concerns-the CC has
yet to reach any conclusions on this inquiry. The purpose of the
issues statement is to inform all interested parties and give them
an opportunity to raise any further points with the CC.
The CC will continue to work closely with the Financial Services
Authority (FSA) to ensure that its investigation takes into
account the FSA's ongoing work to remedy problems relating to
selling standards and ensuring that customers are treated fairly,
as well as various industry initiatives in response to the
FSA's work.
Although the statutory deadline for the inquiry is 6 February
2009, the inquiry group aims to complete its investigation more
quickly than that and expects to publish its next publication-the
'emerging thinking' document-in the autumn. A full
administrative timetable for the investigation is available on the
CC website.
The CC would like to hear views on the issues statement from all
interested parties, in writing, by Friday 11 May 2007. To submit
evidence, please write to:
The Inquiry Secretary (PPI market inquiry)
Competition
Commission
Victoria House
Southampton
Row
LONDON
WC1B 4AD
Or email: PPI@cc.gsi.gov.uk
Notes for editors
1. The CC
is an independent public body, which carries out investigations
into mergers, markets and the regulated industries.
2. The members of the PPI inquiry group are Peter Davis (Group
Chairman and CC Deputy Chairman), John Baillie, Christopher
Bright, John Cubbin and Richard Farrant.
3. Under the Enterprise Act 2002 the OFT can make a market
investigation reference to the CC if it has reasonable grounds for
suspecting that competition is not working effectively in that market.
4. In its inquiry, the CC is required to decide whether 'any
feature, or combination of features, of each relevant market
prevents, restricts or distorts competition in connection with the
supply or acquisition of any goods or services in the United
Kingdom or a part of the United Kingdom'. If so, then there
is an adverse effect on competition. The CC will also consider
whether this is resulting in a detrimental effect on customers
such as higher prices, lower quality or less choice of goods or
services. The CC will then decide whether the CC should introduce
remedies to tackle the adverse effect on competition or
detrimental effect on customers or whether the CC should recommend
that action be taken by other bodies to remedy the adverse effects
on competition and, if so, what actions or remedies should be
taken. If the CC finds that there is no adverse effect on
competition, the question of remedies will not arise.
5. Market investigation references are intended to focus upon the
function of a market as a whole rather than the conduct of a
single firm in a market. If the OFT has concerns about the conduct
of a single firm or firms that have engaged in anti-competitive
agreements, it will first consider whether those actions infringe
the Competition Act 1998.
6. The OFT's reasons for making the reference are available at:
http://www.oft.gov.uk/advice_and_resources/resource_base/references/payment