By Carolyn Batt (Filed: 24/07/2003)
Electrical retailer Dixons yesterday vowed to work with the Competition Commission to achieve “a sensible outcome” after the watchdog outlined proposed remedies to ensure a fair and transparent market for extended warranties.
Although the commission’s latest proposals are less draconian than earlier ones, Dixons said it remained concerned about the “practicality and usefulness” of some of the requirements.
Extended warranties, which offer protection beyond the usual manufacturer’s guarantee, are a lucrative source of revenue for electrical retailers.
However, that revenue stream is now under threat with the commission considering banning retailers from selling the warranties on the same day as an appliance is bought. Retailers could also be obliged to offer extra information and a 60-day cancellation period.
Rhys Williams, analyst at Seymour Pierce, said the latest development “cannot be seen as good news for electrical retailers”¦ An enforced delay before being able to sell the customer an extended warranty will seriously impact conversion rates, which are already showing signs of slippage.”
Dixons shares yesterday slipped 1 to 132.75p, with 48m shares changing hands, almost double usual volumes. The electrical retailer has vigorously defended the warranties during the commission’s inquiry, which began after a referral from the Office for Fair Trading
>From “The Telegraph” original article