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OFT publishes guidance on market studies

185/04     10 November 2004

Guidance on how the OFT selects and conducts its market studies has been published today.

Download Market studies: Guidance on the OFT's approach (pdf 362 kb)

Market studies supplement the OFT's enforcement work, and can enhance understanding of all aspects of how markets work, from competition and consumer issues to the effects of Government regulation. The studies assess whether there are problems with a market that prevent it from working well for consumers; and, if so, which action the OFT or others should take to remedy the problem. 

The new guidance outlines the general procedures followed by the OFT when conducting such research including:

• why the OFT does market studies
• how the OFT chooses markets to study
• types of market study.

Suggestions from businesses and consumer groups, as well as consumer enquiries and complaints, provide important sources of information for the OFT when identifying possible market studies.

The decision to undertake an OFT market study follows a preliminary review of the market. Where a preliminary review uncovers significant issues that warrant further examination, the OFT will launch either a short, fact-finding study (typically three to six months in length) or a full study, lasting approximately one year, depending on the nature of the market, the complexity of the issues and the amount of information already available.

The range of possible outcomes of a market study includes:

• giving the market a clean bill of health
• initiatives to help consumers make more informed buying decisions
• encouraging businesses to undertake particular courses of action voluntarily, such as improving the quality of information available to consumers
• encouraging the development of consumer codes of practice within a particular market
• making recommendations to Government or other public bodies on the effect of regulations upon a market
• pursuing enforcement action against companies or individuals suspected of breaching consumer protection law or competition law
• a market investigation reference to the Competition Commission.

John Vickers, OFT Chairman, said:

'Market studies are central to our work to make markets work well for consumers. Contributions from businesses and consumer groups play an important part in this process.'

NOTES

1. Download Market studies: Guidance on the OFT's approach (pdf 362 kb)

2. The OFT has been carrying out market studies in their present form for three years. Following the commencement of the Enterprise Act on 20 June 2003, market studies are carried out under section 5 in order to identify whether perceived problems in a market should be addressed through the OFT's other functions. These functions include the enforcement of consumer regulations, the promotion of consumer information and education, the enforcement of competition legislation and making market investigation references to the Competition Commission.

3. Under section 8 of the Enterprise Act, the OFT has the power to approve consumer codes of practice, produced by code sponsors (usually trade associations or similar bodies), which safeguard or promote the interests of consumers. There is a two stage process for approval (see press release 15/03).

4. The OFT published a guidance document on market investigation references to the Competition Commission in March 2003 (see press release 24/03).

5. To date the OFT has published reports on the following market studies:
Extended warranties on domestic electrical goods (press release 40/02)
Consumer IT (press release 85/02)
Pharmacy entry regulations (press release 04/03)
Private dentistry (press release 29/03)
Payment systems (press release 66/03)
Liability insurance (press release 70/03)
Taxi services (press release 147/03)
Estate agency (press release 51/04)
Doorstep selling (press release 83/04)
Debt consolidation (press release 41/04)
Storecards (press release 47/04)
Public sector procurement (press release 16/04)

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