Energy top-up: PayPoint commits to remove exclusivity clauses

Energy regulator Ofgem has launched a consultation on commitments offered by PayPoint in relation to a competition investigation concerning the energy prepayment services.

The regulator said the commitments offered by PayPoint, primarily the removal of exclusivity clauses in its contracts with energy suppliers and retailers, address the competition concerns.

Ofgem launched its investigation in August 2017, considering whether PayPoint had abused a dominant position to restrict or distort competition in the market for the provision of over-the-counter (OTC) energy prepayment services by using contractual terms with certain energy suppliers that confer exclusivity to PayPoint, in combination with exclusivity in retailer arrangements, in contracts entered into prior to October 2018.

In its reply to the investigation, PayPoint has voluntarily proposed to Ofgem to remove exclusivity clauses from its current and future client and retailer partner contracts entered into during the next five years and to make a £12.5m donation to Ofgem’s Energy Industry Voluntary Redress Scheme.

PayPoint has also agreed to offer separate contracts to its supplier clients for the provision of OTC and non-OTC energy prepayment services, so that suppliers and retailers will be free to contract with other payment service providers and to use other providers’ equipment for processing OTC and non-OTC payments.

“Ofgem’s provisional view is that the commitments offered by PayPoint address Ofgem’s concerns and, if implemented, they should ensure that competition is no longer distorted. At this stage, Ofgem is minded to close the investigation with the acceptance of these commitments,” the regulator said.

The consultation will run until 15 September and a final decision will be taken after considering the comments raised in the consultation. The regulator noted that the offer of commitments by PayPoint does not constitute an admission that there has been an infringement of the competition law.

Responding to the development, PayPoint said it expects the voluntary commitments to provide a “constructive and timely route” to the resolution of the findings by Ofgem.

“In making these proposals, PayPoint is reaffirming the importance of delivering value, service and support to its clients, retailers and the communities it serves. This commitment sits at the heart of PayPoint’s strategy to deliver sustainable value to all stakeholders supported by the appropriate governance and oversight,” it added in a regulatory filing.