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Ofgem to close competition probe as PayPoint offers concessions

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Prepayment customers top up their meter cards at local shops (Peter Byrne/PA) (PA Archive)
Prepayment customers top up their meter cards at local shops (Peter Byrne/PA) (PA Archive)

Ofgem has backed commitments from PayPoint and will close an investigation into whether the company broke competition laws.

The energy regulator said that PayPoint had promised to pay £12.5 million into a voluntary fund administered by officials, and would change the way it operated.

In return, Ofgem said it would stop investigating the company, after a consultation on the commitments.

Nearly a year ago Ofgem said it was probing how PayPoint dominated the market for gas and electricity top-ups between 2009 and 2018.

Households who have energy meters they have to top up go to local newsagents or petrol stations to charge their cards.

The commitments offered by PayPoint address Ofgem's concerns and, if implemented, they should ensure that competition is no longer distorted

Ofgem

PayPoint supplies the machines that these local shops use to top up the cards. It has around 28,000 sites around the UK on its books.

This dominance of the market meant that PayPoint risked falling foul of competition rules.

Ofgem suspected PayPoint might have abused this position by getting shops and energy suppliers to sign contracts with exclusivity clauses.

It launched an investigation in 2017.

On Wednesday the regulator said: “Ofgem’s provisional view is that the commitments offered by PayPoint address Ofgem’s concerns and, if implemented, they should ensure that competition is no longer distorted.

“Ofgem will now consider any comments raised in the public consultation before determining whether to accept the commitments. At this stage, Ofgem is minded to close the investigation with the acceptance of these commitments.”

Among other commitments, PayPoint said it would remove the exclusivity clauses in its current contracts and any others it signs over the next five years.

The company said it “believes these voluntary commitments are in the best interests of our clients, retailer partners and their customers and provides a constructive and timely route to the resolution of Ofgem’s provisional findings.”

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