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Press releases 2002 -

Pest control under the microscope

OFT seeks views on pest control industry

PN 47/02     5 August 2002

The OFT is seeking views[1] on how the pest control market is working as part of a review of undertakings given by Rentokil in 1988.

The undertakings were given to the Secretary of State for Trade and Industry following a Monopolies and Mergers Commission (now the Competition Commission) report into the supply of pest control services in the UK. This concluded that Rentokil Group Plc's (now known as Rentokil Initial Plc) monopoly in the market acted against the public interest.

The MMC found that Rentokil's monopoly position gave it the freedom to fix its prices largely unrestrained by competition. This also enabled Rentokil to defend its position through selective price-cutting.

Rentokil was required to provide written undertakings:

  • to provide prospective customers with a written breakdown of estimated charges
  • to provide an annual written breakdown of charges for contract customers of one year or more
  • to notify the OFT of any proposed acquisitions of pest control companies
  • not to refuse or threaten to refuse to supply bromadiolone, which it imported under an exclusive agreement, on normal commercial terms to competitors.

Margaret Bloom, Director of Competition Enforcement, said: 'We are seeking views on whether the undertakings are still an effective way of safeguarding competition; if they need to be changed or replaced; or if there has been sufficient change in the market to allow their removal. We welcome comments from any interested parties.'

Issues that will be considered as part of the review include the current level of competition in the market and barriers to entry, the supply of bromadiolone and its substitutes, and Rentokil's conduct since the undertakings were signed. Another issue that will be considered is whether the prohibitions contained in the Competition Act 1998 would provide sufficient protection for competition in this market.

The deadline for consultation is 25 October 2002.

NOTES  

1. Download the consultation paper OFT review of undertakings given by Rentokil Initial Plc in pdf format (104 kb).

2. The OFT has a duty to review undertakings given in consequence of an adverse public interest finding by the MMC (now the Competition Commission) under section 88 (4) of the Fair Trading Act 1973, to ensure that undertakings remain appropriate.

3. Third parties that wish to contribute to the consultation should write to Patrick Greene, MPI2, Office of Fair Trading, Fleetbank House, 2-6 Salisbury Square, London EC4Y 8JX

4. In this press release the functions of the Director General of Fair Trading (DGFT) under the Act are for simplicity described as the functions of 'the OFT'. The Enterprise Bill proposes to replace the office of the DGFT with the OFT, to which would be transferred the DGFT's functions.




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