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Consumer IT market working well - but room for improvement

OFT reports on consumer IT goods and services

PN 85/02     5 December 2002

The consumer IT goods and services market is working well, but could serve consumers better - particularly with information on support services and printer cartridges - says the OFT.

The findings are the result of the OFT's year-long investigation into the market, on which UK consumers spend more than £2 billion a year. To accompany the report, the OFT has published a consumer guidance leaflet to help potential buyers of PC equipment or support services make an informed decision. This is available from the OFT and UK Online centres.

The report finds that overall satisfaction with the performance and price of PCs is high, and only three per cent of consumers had difficulty obtaining and using the information available to compare PC prices and products. However there were some areas of dissatisfaction.

Support services are used by a third of consumers and are the greatest cause for consumer complaint. The quality of support services was often unsatisfactory, with telephone help-lines causing the most frustration. There was little pre-sale information available, either as take-home literature or sales advice, on support services and few consumers considered the cost, nature and quality of support when buying a PC.

The report also finds a lack of transparency regarding the price and performance of inkjet printer cartridges. Consumer expenditure on cartridges over the lifetime of a printer can amount to more than double the original cost of the printer. While prices of printers have fallen, prices for cartridges have not followed suit, with 80 per cent of consumers finding them expensive. When buying a printer consumers also need to know roughly how many pages ink cartridges on offer will produce, which will give them an indication of how much they might cost to print per page. However, the information that is provided is limited and not easily accessible or comparable between manufacturers.

Although the percentage of first-time buyers is falling, they still account for 44 per cent of IT sales, which highlights the importance of advice and information covering all key aspects of the purchase at the point of sale.

The OFT's main recommendations to improve how the market works for consumers include:

• clear information at point of sale and in promotional literature on support services, including cost of telephone help-lines
• the development of systems, and the training of sales staff, to guide consumers more effectively through the purchasing process
• the development of a test standard against which the performance of inkjet cartridges can be measured uniformly. The results should be made available by retailers to consumers at the point of sale.

The report notes that many consumers buy IT goods and services from home, either via the web or through catalogue or home shopping, and the products often involve complicated contracts. There is evidence of non-compliance with consumer legislation such as Distance Selling Regulations and Unfair Terms in Consumer Contracts Regulations, particularly regarding the return of goods. Suppliers must pay particular attention to compliance. In addition to normal casework, the OFT will provide guidance tailored to the needs of the industry on these matters and will work with the Local Authorities Co-ordinators of Regulatory Services (LACORS) to produce an advice pack on key issues for use by trading standards authorities. This should help businesses comply with these regulations and so avoid consumer problems.

John Vickers, Director General of Fair Trading, said:

'Overall the IT goods and services market is working well for consumers. With improved consumer information it could work better. Our report sets out practical ways for that to happen.'

The OFT will review the market in a year to follow up the recommendations.

NOTES

1. The OFT launched its investigation into consumer IT goods and services on 3 October 2001.

2. The report into the consumer IT goods and services market can be downloaded in pdf format (336 kb). Alternatively, you can get a hard copy from the press office on 020 7211 8993.

3. Download the consumer information leaflet Buying a PC in pdf format (96 kb).  Alternatively, you can order it from our mailing house on 0870 6060321 or email oft@eclogistics.co.uk. The leaflet will also be available via UK online centres. The Government aims to have 6,000 UK online centres open by the end of 2002 based in internet cafes, libraries, colleges, community centres and village halls across the country.

4. The OFT has previously reported on the home PC market in October 1999.

5. The markets and policy initiatives division of the OFT conducts around five full studies a year. The possible outcomes of these include:

• enforcement action by the OFT's competition and consumer regulation divisions
• a reference of the market to the Competition Commission
• recommendations that the Government consider changes in laws and regulations and to regulators, self-regulatory bodies and others to consider changes to their rules
• campaigns to promote consumer education and awareness
• a clean bill of health.

6. In this press release the functions of the Director General of Fair Trading (DGFT) are for simplicity described as the functions of 'the OFT'. The Enterprise Act will replace the office of the DGFT with the OFT, to which will be transferred the DGFT's functions. The Act is expected to come into force from spring 2003.

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