Case closed: 29 January 2007
Issue: General Terms of Agreement (GTA)
Relevant provision: Chapter I prohibition, Competition Act 1998
Outline of case
On 13 November 2002, the ABI notified its GTA between insurers and credit hire organisations (CHOs) to the OFT for a decision that the GTA did not fall within the Chapter I prohibition of the Competition Act 1998 (‘the Act’) or, in the alternative, that it satisfied the criteria for an individual exemption under section 9 of the Act. The OFT concluded on 22 April 2004 that certain provisions and associated features of the GTA infringed the Chapter I prohibition by appreciably preventing, restricting or distorting competition (‘the Original Decision’) [see note 1]. The OFT noted in the Original Decision, however, that if certain changes were made to the GTA it would qualify for individual exemption. However, no such changes were made.
On 22 June 2004, the ABI appealed the Original Decision to the Competition Appeal Tribunal (CAT). The CAT set aside the Original Decision on 30 July 2004 [see note 2]. In an undertaking given by the OFT to the CAT on the same date, the OFT undertook to reconsider whether there were reasonable grounds for suspecting that the GTA has (or has had) as its object or effect the prevention, restriction or distortion of competition within the meaning of the Chapter I prohibition [see note 3]. The OFT also undertook, following this consideration, to decide what action it would take.
The OFT has provisionally identified a number of provisions of the GTA, as notified to the OFT, which may have (or have had) as their effect the prevention, restriction or distortion of competition within the meaning of the Chapter I prohibition. Following this exercise, the OFT then assessed the GTA in terms of the application of the section 9 exemption criteria of the Act. The OFT is of the provisional view that the GTA, as notified to the OFT, may not meet the exemption criteria [see note 4]. This is because one of the provisions of the GTA that the OFT had identified provisionally as a restriction of competition may not be indispensable.
In order to reach a definitive view on these issues, significant additional work would be required. In allocating its limited resources to particular cases, the OFT must target resources where they can have greatest effect. The OFT has assessed whether this case currently constitutes an administrative priority and therefore should have further resources allocated to it. In reaching its decision, the OFT has had regard to the six criteria it currently uses to prioritise competition casework [see note 5]. Taking these various factors into account, in particular the fact that the OFT considered there to be a lack of consumer benefit in taking the case forward, the OFT does not consider that this case currently merits the allocation of the further resources. The OFT has therefore decided to close its file on this case as it no longer constitutes an administrative priority. Before reaching its final decision, the OFT gave interested parties an opportunity to comment on a provisional decision to close its file on this case.
OFT’s action: Case closed
Case Officer: email@example.com
Case reference: CE/4875/04
1. Case No CA98/04/2004, Notification of the Association of British Insurers of the General Terms of Agreement, 22 April 2004.
2. Case No 1036/1/1/04, Association of British Insurers v Office of Fair Trading, Order of the Competition Appeal Tribunal.
3. This included consideration of whether the GTA may affect trade within the United Kingdom.
4. In order for an agreement to qualify for an exemption from the Chapter I prohibition of the Act all four limbs of the Section 9 exemption criteria must be satisfied.
5. See press release 146/06, OFT publishes criteria for competition casework, 12 October 2006.