Energy firms accused of entering pact to avoid competing for customers
The two energy suppliers Economy Energy and E have been accused of breaching competition law by 'colluding to avoid competing' with each other.
This meant that, potentially, customers could have been denied the best energy deals on the market.
The companies have half a million customers between them, most of these are classed as vulnerable.
Ofgem, the energy market regulator, says that following an investigation, it has concluded there is enough evidence to reach a ‘provisional’ view the the rules have been breached.
It believes the companies worked with Dyball Associates consultants to prevent each other’s sales agents targeting the same customers.
Ofgem alleges the companies breached competition law, but had not at this stage concluded there had been a breach. "We will carefully consider any representations from the companies before deciding whether the law has in fact been broken," it said.
Coventry-based Economy Energy has around 305,000 customers and was recently ranked the worst energy supplier for customer service by Citizens Advice.
E (Gas and Electricity), based in Birmingham, has some 250,000 customers. Both companies are privately owned.
Ofgem said the companies’ main customers were those who used prepayment meters. These are typically among the poorest and have no choice but to use pre-payment meters after having had problems with debt.
Ofgem promotes free competition as it is believed it leads to more choice and lower prices as companies have to fight to win customers.
It can issue fines for breaches of the rules up to 10% of a company’s turnover.
This case is thought to be the first time Ofgem has alleged collusion between suppliers.
Ofgem alleges that between at least January and September 2016, "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".
It claims that "the companies shared commercially sensitive information, in the form of details about their current customers" and that "Dyball facilitated this arrangement". Ofgem said its provisional view was that this "prevented, restricted and distorted competition".
Economy Energy said: "Economy Energy takes its compliance obligations very seriously and is disappointed by Ofgem's announcement. The company is presently reviewing the statement of objections and proposed to submit a robust defence to Ofgem's allegations through the proper channels in due course."
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