The Office Of Fair Trading (OFT) has today formally announced that it is launching a review of the domestic electrical goods sector to focus on both whitegoods (large domestic appliances) and browngoods (consumer electronics such as televisions) as they suspect that the markets are not currently operating correctly.
Part of this review is focussed on a cause that UK Whitegoods, the Whitegoods Trade Association and independent repairers have been pursuing for some time, restrictive and anti-competitive behaviour by some manufacturers and importers in the the after sales and servicing sector.
The press release, issued at 10am GMT today, 25th November 2010, is as follows.
The OFT today launched a review of competition regulation for the sale of Domestic Electrical Goods and sought views on a possible market study into warranties and repairs in the sector.
It plans to focus its work on “˜white’ goods such as washing machines and fridges, and “˜brown’ goods like TVs, but not “˜grey’ goods such as computers. Following an investigation by the Monopolies and Mergers Commission (MMC) in 1997, an Order for the sector was introduced and undertakings were obtained to prevent suppliers of certain brown and white goods from recommending resale prices and to limit their ability to refuse to supply dealers.
Since the MMC investigation, new high street and online traders have entered the market and there has been significant product innovation. The OFT review will consider whether specific competition regulation, set by the Order and undertakings, remains appropriate in the light of these and other changes.
At the same time the OFT is seeking comments on competition in the “˜aftermarkets’ for Domestic Electrical Goods which include extended warranties and out of warranty servicing and repairs. This follows claims that independent repairers have problems getting access to the technical information and original spare parts they need to compete. The OFT is asking for evidence of this and any resulting loss to consumers, to decide whether it should examine these issues further.
Claudia Berg, Director in the OFT Goods Group, said:
“˜Domestic electrical goods are an important part of the UK economy and have become an essential part of our everyday lives.
“˜Our review of the Order and undertakings will examine whether they are still necessary to promote competition in the market or if they can be removed, reducing red tape for UK businesses.
“˜While we are conducting this review and talking to interested parties it is sensible to also consider the competition issues surrounding warranties and repairs of these goods to decide whether there is evidence to suggest that we should examine these issues further’
Of course we wholeheartedly welcome a review of the after sales industry and all involved from the independent repairs industry will do their utmost to ensure that any information required under this review is provided to the OFT.
We hope that not only are the uncompetitive practices in the after sales market investigated but also that spares pricing is also brought in to focus as many parts prices are wholly disproportionate to the cost of the the goods to which they are fitted.
For some years many independent repairers have stated that the restriction of servicing information and equipment coupled with high spares pricing allows some manufacturers to effectively create their own monopoly on appliance servicing arrangements and this is neither healthy for the market nor is it in the interest of consumers.
The practice can also lead to the shortening of product lifespan as repairs can cost as much as or more than a new appliance leading to a direct negative environmental impact. An impact which we feel cannot be negated by any supposed energy saving by replacing products for newer more efficient ones as the savings on offer are not large enough.
We will follow this story very closely over the coming months.
More information from the OFT website can be found from this link
About time too.