55/12    28 June 2012

The OFT today published its Annual Report, including an estimate of the financial benefits of its activities to consumers.

The report shows that last year the OFT achieved an estimated benefit to consumers of at least eight times its cost to the taxpayer - £402 million compared to £49 million. This benefit has been achieved with an eight per cent reduction in budget compared to the previous year. 

In the course of the year, the OFT undertook a large and varied caseload under its competition, consumer and credit enforcement powers. Amongst the cases concluded were 11 investigations under competition law, 19 investigations under consumer law and 106 consumer credit cases.

There was also an increase in the number of merger cases examined from the previous year from 77 to 103, with nine referred to the Competition Commission for further investigation.
The OFT had two overarching priorities for 2011-12:  High-impact enforcement to achieve compliance with competition and consumer law, and influencing and changing the behaviour of business, consumers and government to make markets work well.  Achievements included:

• Action on anti-competitive behaviour including a £10.2 million fine on Reckitt Benckiser for abusing its dominant position by delisting NHS packs of its Gaviscon Original Liquid medicine, the completion of the investigation into the pricing of passenger fuel surcharges for long-haul passenger flights to and from the UK by British Airways and Virgin Atlantic with a final agreed fine of £58.5 million on British Airways following the previous conclusion of an early resolution agreement, and fines totalling £49.51 million on four supermarkets and five dairy processors following a dairy products retail pricing investigation
  
• Protecting some of the most vulnerable consumers through credit enforcement cases, including the removal of the consumer credit licence of Yes Loans - one of the UK's largest brokers of unsecured credit - and Log Book Loans, the largest logbook loan business
  
• Tackling misleading practices in online markets through obtaining undertakings from MyCityDeal Ltd, trading as Groupon, and taking a successful High Court action on unfair terms contained in gym membership contracts
  
• The aggregates, private healthcare and audit markets were referred to the Competition Commission (CC) for further investigation, the highest number of referrals in recent years
  
• Studies into off-grid energy, mobility aids, private motor insurance and dentistry, leading to policy recommendations and strategic enforcement action
  
• Investigation of super-complaints from consumer groups on subprime credit, card payment surcharges and travel money, securing industry commitments to deliver important improvements for consumers.

Philip Collins, OFT Chairman, said:

'This has been a productive year for the OFT during which we've secured significant achievements across all areas of our work.  We have increasingly combined the enforcement and influencing tools at our disposal to help ensure effective, well functioning markets and to strengthen protection for consumers.  For example, more of our market studies are leading to enforcement action which we often take in conjunction with Trading Standards.

'We are also investing in improving our procedures, in particular on Competition Act cases, and learning lessons where appropriate at the same time as preparing the ground for the transition to new regimes and institutions.

'In the coming year we will continue our focus on protecting vulnerable consumers and securing effective competition in the UK economy.' 

NOTES

1. The Annual Report was laid before Parliament on 28 June 2012.  It is available from the OFT website (insert link) or from TSO, PO Box 29, Norwich, NR3 1GN.  Tel 0870 600 5522.
   
2. £402m is the average annual consumer benefit over period 2009/10 to 2011/12. £49m is an average annual cost figure over the period 2009/10 to 2011/12. It is a measure of total OFT costs (actual spend) minus costs of Consumer Direct, Anti Money Laundering and Consumer Credit Licensing.
   
3. The breakdown of direct financial benefit to cost ratio for different OFT tools, in terms of estimated average benefit to consumers, is £35 million from consumer protection enforcement, £151 from competition law enforcement, £8 million from mergers and £207 million from market studies.
   
4. One party has appealed the OFT's decision on the dairy products retail pricing investigation to the Competition Appeal Tribunal.
   
5. Information on the impact estimation methodology - A guide to OFT's Impact Estimation methods.