Two suppliers, E (Gas and Electricity) Limited and Economy Energy, and a consultancy service, Dyball Associates have been found in breach of Chapter I of the Competition Act 1998. Ofgem considered that the three parties entered into an anticompetitive agreement which prevented the two suppliers actively targeting each other's customers, and which was supported by the exchange of commercially sensitive information. The companies were fined a collective £870,000.
| what you need to know - key takeaways |
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- Sectoral regulators have similar powers to the CMA to bring enforcement decisions on infringement of the Competition Act 1998. Their industry-specific focus allows for a more vigilant enforcement regime.
- Parties that facilitate anticompetitive conduct can be caught by the enforcement action, to the extent that they contributed to a common objective and were aware that the relevant conduct was to facilitate the infringement.
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In September 2016, Ofgem opened an investigation into an alleged infringement of Chapter I of the Competition Act 1998 involving Economy Energy, E (Gas and Electricity) Ltd ("EGEL") and Dyball Associates ("Dyball").
Economy Energy and EGEL were both energy suppliers, catering mainly for pre-payment customers, and Dyball provided software and consultancy services to the UK's energy sector.
Ofgem found that:
- between January and September 2016 Economy Energy and EGEL agreed not to actively target customers already supplied with gas and/or electricity by the other, although each other's existing customers were allowed to switch between the two businesses if they pro-actively sought to do so; and
- Dyball had facilitated this agreement by allowing the companies to share commercially sensitive information (customer lists) through its software and by ensuring that the acquisition of certain of each other's customers was blocked.
Ofgem concluded that the parties involved entered into an agreement and/or a concerted practice to share markets and/or allocate customers between the two energy suppliers in relation to the supply of gas and electricity to domestic customers in Great Britain. The commercially sensitive information shared between the parties involved the customer meter points, which allowed the parties to know whether the customer was already signed up with the other.
Ofgem also found that Dyball:
- was party to the infringement, as it had intended to and did contribute to the common objectives pursued by the two energy suppliers;
- was aware of the actual conduct planned and had allowed Economy Energy and EGEL to share markets and allocate customers by its conduct, and was therefore a facilitator in the infringement.
In imposing fines, Ofgem fined EGEL £650,000, Economy Energy £200,000 and Dyball £20,000. Ofgem has stated that these levels of penalty reflected the seriousness of the infringement, and also that in setting Economy Energy's fine, Ofgem has reflected the fact that Economy Energy had entered administration.
This is the second Competition Act 1998 infringement decision handed down by a sectoral regulator this year using their concurrent competition law powers. In February 2019, the FCA issued its decision against Newton Investment Management Limited, River and Mercantile Asset Management and Hargreave Hale for the sharing of strategic information in the asset management sector.
With thanks to Kishen Vora and Danica Barley of Ashurst for their contribution.
