Ofgem has alleged a company which provides over the counter (OTC) services to prepayment energy customers breached competition rules, causing detriment to power suppliers and their customers.
Paypoint, which was used by an estimated four million households in 2018, allows energy customers to top up their prepayment meters in local supermarkets and newsagents. It operates in around 27,000 outlets in Great Britain.
In a statement of objections published today (30 September) the regulator alleges that between 2009 and 2018 exclusivity clauses in contracts between Paypoint and its customers, namely energy suppliers and local retailers, meant that customers were left with limited ability to use rival services, potentially breaching competition rules.
The clauses took the form of contractual provisions, often applying for several years at a time, which Ofgem says either directly restricted Paypoint’s customers from using rival services or imposed discounts on those using rival providers in addition.
A number of OTC services operate in Britain including Payzone, which was acquired by the Post Office in October 2018, Epay and Global-365.
Ofgem said Paypoint’s dominant market position over the nine-year period meant it had a special responsibility not to act in a way that would impair its rivals’ ability to compete.
The regulator alleges that Paypoint’s actions harmed competition to the detriment of consumers and amounted to an “abuse of a dominant position”, which breaches the Competition Act.
A spokesperson said the ability to switch payment provider could have resulted in a better deal for the suppliers, which would in turn pass savings on to their customers.
They added the reason for the lapse between the alleged breaches and its decision to issue the statement was due to gathering an extensive amount of information, and latterly the impact of Covid-19.
Ofgem stressed that its findings are provisional and that it does not mean there has been a breach of competition law at this stage.
The case will be considered by the regulator’s Enforcement Decision Panel in due course.
In August British Gas agreed to pay £1.73 million over failing to notify around 270,000 (17 per cent) of its PPM customers that Payzone was replacing Paypoint on 1 January – a day on which it was not operating its general enquiries phone line.