Ofgem has alleged that energy suppliers Economy Energy and E (Gas and Electricity), along with consultancy firm Dyball Associates, have breached competition law.
The regulator has issued a statement of objections, under the Competition Act 1998 to the companies.
It alleges Economy Energy, E (Gas and Electricity) and Dyball Associates had an agreement that prevented the two suppliers “actively targeting” each other’s customers through face-to-face sales.
Ofgem suggests the companies shared “commercially sensitive” information about their current customers, most of whom are prepayment customers.
Dyball Associates, which provides software and consultancy services to the UK electricity and gas markets, is thought to have facilitated the arrangement by “designing, implementing and maintaining” software systems that allowed customer lists to be shared. Ofgem said the company blocked the recruitment of the energy suppliers’ customers.
The regulator stressed its findings are provisional and it has not found there has been a breach of competition law.
However, its provisional view is the arrangements “prevented, restricted and distorted competition amongst energy suppliers”.
Ofgem said: “We will carefully consider any representations from the companies before deciding whether the law has in fact been broken.”
A spokesperson for Economy Energy, said: “Economy Energy takes its compliance obligations very seriously and is disappointed by Ofgem’s annoucement.
“The company is presently reviewing the statement of objections and proposes to submit a robust defence to Ofgem’s allegations through the proper channels in due course.”
Victoria MacGregor, director of energy at Citizens Advice, said: “Ofgem’s provisional findings raise some major concerns. There is already limited competition in the prepayment meter market.
“Prepayment customers, many of whom will be vulnerable or on low incomes, can ill afford to be paying over the odds because firms are not competing for their business.”
She added: “Equally concerning is the allegation that a firm involved in helping a number of new suppliers enter the market supported and facilitated anti-competitive activity.”
A statement of objections gives notice of a proposed infringement decision under the Competition Act to the parties being investigated.
Economy Energy, E (Gas and Electricity) and Dyball Associates will have the opportunity to make written and oral representations in response to the case set out by Ofgem.
The case originally opened in October 2016 and decisions to continue with it were made in December 2016 and April 2017.
Ofgem issued a statement of objections to the three parties to the investigation on 29 May 2018.
The Gas and Electricity Markets Authority, Ofgem’s governing body, may impose a financial penalty of up to 10 per cent of a company’s annual worldwide group turnover if it finds an infringement has been made.
The case will be considered by Ofgem’s enforcement decision panel in due course.