Competition authorities have in recent years increasingly used their powers to accept formal undertakings from those suspected of anti-competitive behaviour. These undertakings, known as "commitments", enable the authorities to close their investigations on the basis that their competition concerns will be addressed by limitations on the future conduct of the company concerned.
This was evidenced by a recent decision of the Competition and Markets Authority (CMA) to accept commitments proposed by Epyx concerning the provision of its "1link" Service Network platform in the UK. This on-line platform connects vehicle fleet owners with providers of service, maintenance and repair (SMR) services. Research carried out by the CMA during its investigation found that the majority of fleet companies preferred to use a single SMR platform at any one time given the cost and operational efficiencies involved. Further, customers did not consider there were any viable alternative platforms available to them which could offer the same functionality or access to as extensive a network of customers as that offered by Epyx.
The CMA's predecessor' the Office of Fair Trading (OFT), launched an investigation into Epyx after receiving complaints as to its business practices. Having investigated those complaints in some depth, the OFT took the preliminary view that Epyx was, through provisions in its customer contracts, excluding competition in the provision of SMR platforms, in particular by:
- requiring contracted fleet customers and SMR suppliers to "process all service and maintenance through 1link";
- preventing fleet customers from developing, using, marketing or supporting alternative SMR systems; and
- including minimum fee payments which, in effect, tied fleet customers to using 1link for all (or most) of their SMR requirements.
Sensing that it was facing formal infringement proceedings, Epyx entered into settlement discussions with the authorities. After two rounds of consultation, a final set of commitments was eventually agreed with the CMA.
The commitments given are far reaching and are designed to ensure that all fleet customers can engage freely with anyone providing an alternative SMR system, or develop/market their own systems in conjunction with new entrants through amendments to Epyx's standard contracts.
Those who are party to existing contracts with Epyx will, in the future, be able to switch to another platform at the end of their existing minimum period and annually thereafter, whilst future customers will not be able to be tied to any minimum period exceeding 18 months. During those minimum periods, customers will be able to use alternative systems for testing purposes. Epyx has also agreed to reduce its minimum annual fees to facilitate live testing by fleet customers of other potential platforms.
As regards SMR providers, their contracts with Epyx will now enable them to respond to requests from fleet companies initiated through any system (other than 1link).
The commitments came into effect in September 2014 and apply for five years. Epyx was given 14 days from the date of the CMA's decision to write to all of its customers informing them of the changes to their contracts. No doubt the CMA and others will be watching closely to see if these changes have the desired effect in opening up the SMR systems market to more competition.