CC Consults on Market
Remedies
The Competition Commission (CC) is consulting
on measures to remedy the adverse effect on competition it provisionally
found in the markets for the supply of domestic bulk lpg in Great
Britain and Northern Ireland.
Peter Freeman, chairman of the inquiry
group, said: “We
provisionally found that competition was not working as effectively
as it should and that consumers were losing out as a result.
We are now bringing this investigation to a close.
"Customers face a number of hurdles in
switching supplier and this has restricted competition between
suppliers, discouraged
entry and expansion, and led to higher prices. We are now consulting
on a package of measures that should make switching easier for
customers by removing the need to change tanks when changing
supplier, improving the terms of customer contracts, and giving
customers more information.”
The CC considers that the facilitation
of tank transfer, standardisation of the switching process, changing
customer contracts and better
provision of information would address those features of the
domestic bulk lpg market it has provisionally found as having
an adverse effect on competition.
An incoming supplier would have
the right to buy the existing tank, valves, regulator and pipework
from the outgoing supplier,
which would be obliged to provide documentation on the tank and
respond to emergency callouts for up to 14 days after transfer.
A methodology to determine a backstop price for transferred tanks
would be established.
There would be no charges to the customer
on termination of their contract, which would have to include
information on the switching
process. Exclusivity periods would be capped at two years, and
notice periods at 42 days. Notice periods where a switch is ready
to be completed would be waived.
Suppliers’ invoices will
have to include the amount of lpg delivered in litres and the
price paid in pence per litre
so that customers can more easily compare quotes over the phone
or on suppliers’ websites.
The CC intends to recommend to
the General Consumer Council for Northern Ireland that it include
information on switching domestic
bulk lpg suppliers with that on the opening to competition
of domestic mains gas and electricity liberalisation in 2007
that
will be sent to consumers.
The CC expects that its remedies
will include a transition period of no more than six months,
allowing domestic bulk lpg
suppliers
to adapt to the measures.
Return to April/May
2006 News
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