Premium charge and the Law

[Ferru123]

There was a debate on the forum a while back about whether it would be possible for people paying the Premium Charge to take legal action against Betfair.

I thought it might be, so just out of curiosity, I emailed the OFT (I don't pay the charge myself).

This was their reply (I've put in bold the bit that I think shows Betfair do have a case to answer):

Thank you for your e-mail of 18 April concerning Betfair and the different charging structures it offers to different customers.

By way of background, the mission of the Office of Fair Trading (OFT) is to make markets work well for consumers. We achieve this by promoting and protecting consumer interests throughout the UK, while ensuring that businesses are fair and competitive. Our primary duties involve the enforcement of competition law, and the application of consumer protection legislation in respect of matters that adversely affect the collective interests of UK consumers.

The main law covering competition in the UK is the Competition Act 1998 ('the Act'). In brief, the Act contains two main prohibitions. The Chapter I prohibition is of price fixing or other anti-competitive agreements which prevent, restrict or distort competition. The Chapter II prohibits conduct which amounts to an abuse of a dominant position.

In general, the price that a company sets for a particular product or service to its customers is a matter for its own commercial judgement. The OFT does not have a role as long as prices are not arrived at by agreement, or do not reflect an abuse of a dominant position or anti-competitive practices in the UK.

This type of behaviour, where a supplier charges different prices to different customers for the same product or service, is a common business practice and is not prohibited under the Act unless it leads to a significant reduction in competition. It is only if market power is present that the behaviour may be caught under the Chapter II prohibition.

A key issue, therefore, is whether the supplier holds a dominant position in the market. A company is considered dominant if it can operate to an appreciable extent independently of its competitors and of consumers. It is only if the company is considered to hold a 'dominant position' that we would consider whether the conduct amounts to an 'abuse'.

From the information provided, it is unlikely that Betfair holds a dominant position for the purposes of our legislation given the number of competitors such as Ladbrokes, William Hill and Coral. Accordingly its actions would not appear to be caught under the Chapter II of the Act.

In view of the above, the OFT will not be taking any further action in relation to your complaint at this time. However we appreciate the time you have taken in bringing this matter to our attention.

Jeff

[SilentDave]

Interesting that they consider Hills etc. as competition when one is a bookmaker and Betfair is an exchange.

[LeTiss 4pm]

I'm pretty sure BF are not doing anything illegal

It's like some old fashioned Trade Associations.
They offer the same intangible product and services to their members, but charge different prices according to their turnover. If those members don't like it, they can leave.

BF are not too dissimilar

[Ferru123]

Indeed.

I've replied to point out that Betfair have a near monopoly in the field in which they operate, and that Betdaq is their nearest rival.

I'll let you know what they say.

Jeff

Interesting that they consider Hills etc. as competition when one is a bookmaker and Betfair is an exchange.

[Ferru123]

If a company is a monopoly or near monopoly, though, consumers don't have much of a choice about where to take their business. So at that point it may become a public interest issue.

BTW, I'm not saying Betfair are acting illegally; I doubt this would be a matter for the criminal courts. But it may be that they are operating unlawfully.

Jeff

I'm pretty sure BF are not doing anything illegal

It's like some old fashioned Trade Associations.
They offer the same intangible product and services to their members, but charge different prices according to their turnover. If those members don't like it, they can leave.

BF are not too dissimilar

[mugsgame]

Jeff does this mean I'll get my £43,654.12 back?

[Ferru123]

I don't know, but if my email results in action by the OFT that brings the Premium Charge to an end (and yes, that's an extremely big 'if'), you owe me a pint!

Jeff

PS I suggest other people also write to the OFT. It's easy to ignore one person, but if enough people pester them, they might take action just to shut people up!

Jeff does this mean I'll get my £43,654.12 back?

[Euler]

I don't think there is anything the OFT could do about the PC but there are other aspects of Betfair's business where I think they are acting in a manner that could be conceived as being anti competitive.

[freddy]

It's effectivly a voluntary payment,
if you want to continue to use Betfair you have to pay it, if not then you don't, they can not / will not chase you for any pc money owed.

I think it perfectly legal for them to this,
althoe of cause i dont like it.

[Ferru123]

Let's say that British Gas were still the only supplier of gas to households, and decided to put a 20% surcharge on gas supplied to customers in more affluent areas. They might argue that customers had a choice - they could do without gas if they didn't like it. But it would be an abuse of their position of monopoly (and they would probably be fined and told to desist).

I would argue that the PC is an abuse of monopoly for the same reason - Betfair traders don't have a competitor within the industry who they can viably turn to. So the 'choice' is to either pay up or find another way of making a living...

Jeff

It's effectivly a voluntary payment,
if you want to continue to use Betfair you have to pay it, if not then you don't, they can not / will not chase you for any pc money owed.