The OFT has published the final version of its revised guidance on market studies. The new guidance picks up on changes to the OFT's practice and replaces the original 2004 version (and follows a period of consultation which commenced in May 2009).
The key provisions are as follows:
- as proposed in the consultation draft, the distinction between short and full studies has been dropped. The new guidance simply states that the average length of a market study is generally 12 months but may be less (depending on many factors including the scale and complexity of the market). The new guidance also details the main stages of a market study project: pre-launch, launch, data collection and analysis, informal consultation on findings and final publication of the report together with any proposed remedies;
- the benefit of market studies as compared to the OFT's other tools is explained in more detail. Market studies may for example be better at identifying the root of a particular problem by looking beyond individual abuses of dominance or individual anti-competitive agreements. By assessing the market as a whole, both competition and consumer issues can be analysed holistically and there is an opportunity to address factors affecting productivity (which may not be picked up using enforcement tools);
- the new guidance also expressly refers to the OFT's prioritisation principles in relation to the choice of market studies. Accordingly, any market study proposal will be assessed against the following prioritisation criteria: impact, strategic significance, risks and resources;
- although there are certain drafting changes, the possible outcomes remain as before, namely: a clean bill of health, consumer focused action (such as an information campaign), recommendations to business, recommendations to Government, enforcement action and a market investigation reference to the Competition Commission;
- the new guidance now confirms that the OFT may use market studies to examine restrictions on competition where public sector bodies operate as suppliers or customers; and
- finally, the new guidance contains a section on how the OFT evaluates its market study work in order to assess whether it is providing value for money.
Market studies have proved a useful tool for the OFT, which has five such studies currently underway (including the study into the aggregates sector announced this week).
The OFT is intending to consult later this year on revisions to its separate guidance on market investigation references to the Competition Commission.
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