OFT consults on commitments for information exchanged in the private motor insurance sector

Start date: 30 September
Close date: 28 October

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Summary of work

The OFT has opened a consultation on an amendment to commitments offered by a number of motor insurance companies designed to address competition law concerns about the exchange of pricing data between competitors.

An OFT investigation raised concerns that, by subscribing to an analysis tool, seven insurance companies were able to access not only the pricing information they themselves provided to brokers through the software, but also pricing information supplied by competing insurers. The analysis tool was provided to insurers by an IT company, using information supplied to it by a second IT company.

As a result of the consultation, the OFT is now minded to accept an amendment to the draft commitments which will reduce, from 36 months to six months, the age of the data that can be exchanged via the analysis tool. The OFT believes this less restrictive duration, by ensuring that a certain level of information remains available, will avoid undue constraints on market entrants, in particular as concerns entry by new competitors and by smaller competitors to new product areas, and hence will encourage healthy competition in this market.

However, the OFT remains of the view that all other requirements of the commitments offered by the insurer parties are necessary to remove the OFT’s competition concerns, including the requirements that pricing information must (i) be anonymised and aggregated across at least five insurers; and (ii) not be supplied to insurers until prices are already 'live' in policies sold by brokers.

The OFT is now consulting on this proposed amendment to the commitments, formal acceptance of which would result in the OFT ending its investigation.

The consultation on the amended commitments will close on the 28 October 2011.

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Related documents

• Consultation document: Notice of intention to modify proposed binding commitments on a data exchange tool used by Motor Insurers (pdf 285kb)
• Press release OFT consults on amendment to commitments offered in motor insurance case (30 September 2011)
• Additional Q&As on modified commitments consultation (30 September 2011)
• Press release Motor insurers agree to limit data exchange after OFT investigation (13 January 2011)

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How to respond

The consultation document contains instructions on how to respond to the consultation. If you have any queries regarding the consultation, please do not hesitate to contact the team in charge of this project.

Grahame Horgan
Office of Fair Trading
Fleetbank House
2-6 Salisbury Square
London EC4Y 8JX

Email: grahame.horgan@oft.gsi.gov.uk

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Contacts

Team Leader: Mark Pratt (020 7211 8263, mark.pratt@oft.gsi.gov.uk)

Project Director: Grahame Horgan (020 7211 8532, grahame.horgan@oft.gsi.gov.uk)

Senior Responsible officer: Clive Maxwell (020 7211 8950, clive.maxwell@oft.gsi.gov.uk)

Media enquiries Any media enquiries should be directed to a member of our Press Office

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Notes

1. The Competition Act 1998 gives the OFT powers to investigate suspected infringements of the following prohibitions (which mirror the EU competition rules):
   
   i) the Chapter I prohibition prohibits agreements between undertakings, decisions by associations of undertakings or concerted practices which have the object or effect of preventing, restricting or distorting competition in the UK (or any part of it) and which may affect trade within the UK (or any part of it)
   
   ii) the Chapter II prohibition prohibits conduct by one or more undertakings which amounts to the abuse of a dominant position in a market which may affect trade within the UK (or any part of it).
2. The Competition Act 1998 allows the OFT to accept binding commitments from those under investigation. The formal acceptance of such commitments, which must address the OFT's competition concerns, requires the OFT to close its investigation into the conduct addressed by the commitments. 
3. A commitments decision does not include any statement as to the legality or otherwise of the parties' actions either prior to acceptance of the commitments or once the commitments are in place. Accordingly, the offer of commitments does not necessarily imply acceptance of an infringement on behalf of the parties.
4. The OFT launched its investigation in January 2010.

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