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Reading a report from the Office of Fair Trading (1)

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Competition law review

OFT closes investigation into Nashiconika
3 March 2008

The Office of Fair Trading has closed its investigation into a discount scheme being offered by Nashiconika under Chapter I of the Competition Act.

In November 2007, the OFT opened a formal investigation into Nashiconika’s discount scheme for its high-end cameras following complaints from dealers. The scheme, which Nashiconika launched in September 2007, offered discounts which rewarded face-to-face sales. The scheme was retroactive, and therefore applied to the total number of sales by dealers (including those completed before the scheme was launched). The amount of discount offered was dependent on the ratio of face-to-face sales versus distance sales, including via the Internet.

The OFT expressed concerns that Nashiconika’s scheme restricted distance sales, and that it acted as a price stabilizing measure which was targeted at dealers who were seen as ‘discounters’. However, before the OFT came to a final decision, Nashiconika withdrew the scheme. The company has since announced a new system for offering discounts to its retailers that is not in breach of competition regulations.

In a statement, an OFT spokesperson said:

‘The Office continually keeps its priorities under review given the finite resources available. In this way we maximize effectiveness by targeting resources to areas where we believe there are greatest competition concerns and greatest likelihood of consumer detriment. We are also mindful of the burdens imposed on businesses, including the uncertainty of an investigation. We have consequently decided to close the investigation and will not be imposing a financial penalty on Nashiconika.’

Volzt files complaint against Southern Electric

The spokesperson also gave details of a complaint filed yesterday by private electricity company Voltz concerning anticompetitive behaviour by Southern Electric, one of the regional monopoly electricity companies in England and Wales.

The complaint alleges that Southern Electric has quoted prices of between 99.5 and 99.9 per cent of the prices it presently charges its big customers for Voltz to use its network, leaving derisory profit margins of between 0.1 and 0.5 per cent for Voltz. The complaint says Southern Electric is attempting to impose a ‘margin squeeze’ on Voltz in breach of the Competition Act 1998, making it impossible for Voltz to enter the market profitably.

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