OFT Probing Competition Concerns in Scottish Islands

June 11, 2012 /

The Office of Fair Trading has taken steps to address the concerns raised, including analysing trends, in fuel prices in the Scottish islands, publishing guidance on co-operation agreements in farming and tackling consumer protection issues in the heating oil and liquefied petroleum gas sectors.

The Office of Fair Trading has published the findings of its consultation into markets in remote communities across the UK. In February 2012, the OFT invited consumers and businesses in these areas to contribute their experiences to improve understanding of how prices, choice and access to goods and services are affected by remoteness. In response to its call for evidence the OFT received 500 responses from individuals, public bodies, elected representatives, companies and voluntary organisations.

Around half a million people live in remote areas in the UK. Those who responded to the OFT’s call for evidence raised concerns about high fuel and grocery prices, limited or high cost delivery services, inadequate public transport, slow internet speeds and poor mobile phone coverage.

Overall, the OFT found that higher prices and limited choice in these remote areas arise from low sales volumes and p oorcompetition, with some businesses having local monopolies. Where local markets can only sustain a limited number of suppliers it can be difficult for consumers to get the benefits of sustained competition. The internet increasingly offers opportunities to access a wider range of suppliers, but action may be necessary to ensure this is not hampered by delivery terms and costs.

In addition to its powers to tackle cartels and other competition problems and to address breaches of consumer protection law, the OFT also has a role to play in investigating markets and advocating the important role that consumer choice plays. Using this wide range, the OFT is working with Highland Trading Standards to improve consumer protection in relation to delivery services and extending its guidance for retailers who supply remote communities on how to comply with the Distance Selling Regulations. It is also following up points made in submissions about potential local breaches of competition law.

The report acknowledges that the problems identified do not all fall within the remit of the OFT because, for example, they do not relate to illegal or anti-competitive behaviour. The study highlights initiatives in local communities which address the challenges – for example, consumers acting collectively in ‘buying clubs’ to reduce prices, or setting up community-based enterprises to keep local spend and profit in the community.

It also identifies ways in which business, government (both local and national) and enforcement partners, as well as the OFT, can play complementary roles in ensuring fair dealing by business for consumers.

Kyla Brand, OFT Director said: “The call for evidence has shown how problems of price, choice and access to goods and services mount up for consumers and businesses in remote areas. We can now explain how joined up approaches can succeed in making markets work well – or at least better – for those in remote areas.

“There is no quick-fix solution within the OFT’s powers but we have a part to play, alongside businesses, communities and government bodies.

“We have taken, and will continue to take, action ourselves to address these concerns and will share our report with government departments, local authorities, community groups and others to help ensure that this consultation informs policy discussions. It will also to shape the OFT’s future work, across our full range of powers.”

 

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