Energy suppliers Economy Energy and E (Gas and Electricity) violated competition law with an agreement to not target each other’s customers, Ofgem has ruled.
The market regulator has fined the suppliers, along with energy software and consultancy service Dyball Associations, a cumulative £870,00 for infringing chapter one of the Competition Act 1998.
Ofgem found that between January and September 2016, the two suppliers maintained an anti-competitive agreement that prevented them from actively targeting one another’s customers through face-to-face sales.
Dyball Associates designed, implemented, and maintained a software system that allowed Economy Energy and E to share customer meter point details, commercially sensitive information. The system then blocked recruitment of customers supplied by the other firm.
At the time the majority of the customers with both suppliers were on pre-payment tariffs. Households with pre-payment are among the least engaged in the energy market. They’re less likely to switch tariff and supplier and more likely to overpay for their energy. Ofgem said such anti-competitive agreements particularly harmed this portion of the energy market.
Anthony Pygram, director of conduct and enforcement at Ofgem, said: “Anti-competitive agreements are a serious breach of competition law and could cause widespread detriment and harm to consumers, especially those in vulnerable situations.
“E and Economy Energy agreed not to target each other’s customers with the assistance of Dyball Associates, leaving some customers potentially worse off by being unable to access deals from the other supplier.
“Customers should have an opportunity to switch to other suppliers and should not be prevented from doing so by anti-competitive agreements, and suppliers should all have an equal opportunity and compete on a level playing field with rivals.”
“This enforcement action sends a strong signal to suppliers that we will take action and penalise those who undermine competition and do not act fairly.”
Economy Energy and E argued that they were a combined family enterprise, a defence that was rejected by Ofgem.
The regulator fined E (Gas and Electricity) £650,000 and Economy Energy £200,000, with the lower figure reflecting Economy’s current financial position. The company is currently in administration.
Dyball Associates was fined £20,000 for providing the software that facilitated the agreement.
Economy Energy folded in January, after a string of customer service complaints, including the mishandling of bills, refunds, and customer complaints. At the time of the company’s collapse, the Energy Ombudsman was receiving more complaints about the firm each month than about any other supplier outside of the Big Six, which have larger customer rolls.
Earlier in January, Ofgem had found the firm’s customer service to be “unacceptable” and imposed a three month ban on it taking on new customers. Following the collapse, Economy Energy’s 235,000 domestic customers were assigned to Ovo Energy.
E (Gas and Electricity) continues to operate, serving mostly pre-payment customers.