Start date: 25 November 2010
Next milestone: Decision on the proposed undertakings late in the Summer of 2012
The OFT has completed a market study of extended warranties which highlighted competition concerns in the £1 billion per year extended warranties market. Dixons, Comet and Argos, the largest retail providers of extended warranties, have offered legal undertakings to improve the way that the market works. The OFT will now consult on whether to accept these undertakings, instead of referring the market to the Competition Commission for a detailed investigation. For more details, see:
The OFT has now completed its consultation on the whether to accept the proposed Undertakings from Dixons, Comet and Argos (the Undertaking parties).
Following very careful consideration of the responses to the consultation, the OFT is now consulting on a limited number of modifications to the proposed Undertakings which it believes will further improve their effectiveness, whilst at the same time remaining a proportionate response to the competition concerns that the OFT has identified. These modifications are intended to:
Download full details of these proposed modifications and the consultation (pdf 357kb).
Any responses to the consultation should be provided to the OFT by 8:00pm on Thursday, 31 May 2012. Please respond by email to degs@oft.gsi.gov.uk or by post to:
The Extended Warranties Team
Goods and Consumer Group
Office of Fair Trading
Fleetbank House
2-6 Salisbury Square
London, EC4Y 8JX
The OFT welcomes the Competition Commission's decision to remove the DEGs Order and undertakings following OFT advice. Following that decision, the OFT has released several parties from assurances which they had given to the OFT to comply with the DEGs Order.
In the event that any DEGs supplier unduly influences retailer pricing decisions in the future, the Competition Act 1998 now provides an effective mechanism to address this issue. There are serious consequences for any undertaking which infringes the Competition Act 1998, including the possibility of significant financial penalties.
The OFT has completed a review of the DEGs Order and accompanying undertakings which were put in place in 1998 following a Monopolies and Mergers Commission (MMC) investigation which had raised concerns that competition between retailers was restricted. The review has found that there have been several significant changes of circumstances since the MMC reported, including the entry of new retailers and the increasing importance of the internet, which mean that the MMC's concerns are unlikely to re-emerge. In the unlikely event that they did so, the Competition Act 1998 now provides an effective mechanism to address them. For these reasons the OFT has advised the Competition Commission that the DEGs Order and undertakings are no longer appropriate.
The OFT has launched a short market study into extended warranties for DEGs. The study will focus on whether competition for warranties is sufficiently effective to ensure consumers get value for money. This follows a review of DEGs aftermarkets where parties raised credible concerns that competition for extended warranties was restricted. The OFT intends to publish the market study in summer 2011.
However, the OFT has decided not to launch a market study into repairs of DEGs. This is because it did not receive sufficient evidence to support initial concerns that manufacturers may be restricting competition for repairs by limiting independent repairers' access to technical information and spare parts.
Team Leader: Dan Moore (0207 211 5828, dan.moore@oft.gsi.gov.uk)
Project Director: Susan Oxley (0207 211 8265, susan.oxley@oft.gsi.gov.uk)
Senior Responsible Officer: Ann Pope (0207 211 8786, ann.pope@oft.gsi.gov.uk)
Any media enquiries should be directed to a member of our Press Office.
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