As a second stage in the Office of Fair Trading’s (OFT) investigation into Information and Communications Technology (ICT) contracts with UK government, the OFT has published an initial 20 page report and announced that it will now conduct a full ‘Market Study’ into the functioning of the sector, including in relation to any apparent structural or competition issues.
The Market Study presents an opportunity for ICT suppliers to direct the OFT’s attention towards any business impediments within the sector. It appears that the OFT has moved on from its initially expressed concern that the supply of public sector ICT contracts was in the hands of an oligopoly. It now appears more interested in issues that relate to off-the-shelf software, migration and interoperability between systems. This new focus includes looking into proprietary systems of hardware and software and the ease or difficulty of switching from existing systems and services supplied under outsourced contracts. The fact that certain businesses have a high share of contracts in some areas of the sector, that there may be high barriers to entry and expansion especially for smaller scale ICT businesses, and the difficulties and costs of switching are areas identified for further investigation.
Over the next two months there will be extensive information gathering (up to 20th December 2013), with the OFT aiming to publish findings in March of next year.
OFT market studies are carried out under section 5 of the Enterprise Act 2002 which allows the OFT to obtain information and conduct research. Effectively, it allows a market-wide consideration of both competition and consumer issues. It also allows the OFT to take an overview of regulatory and other economic drivers in the market and consumer and business behaviour. Possible outcomes of market studies include: a market investigation reference to the Competition Commission, enforcement action by the OFT, recommendations for changes in laws and regulations, recommendations to regulators, self-regulatory bodies and others to consider changes to their rules, or a clean bill of health. Interested parties can volunteer information and those with a profile in the area might expect to receive formal requests for information.
