Use of electricity customer transfer process data for marketing

Ofgem consultation (4 pages, PDF) on whether the Master Registration Agreement (MRA), which governs co-operation between electricity suppliers when a customer switches, might be amended to restrict the ability of the losing supplier to block the transfer by offering better terms to the customer after receiving notification of the loss of that customer. The consultation relates to non-residential supplies only.

The consultation is prompted by Ofgem's decision (8 pages, PDF) that Centrica did not breach the MRA by using information received from the putative new supplier pursuant to the MRA's requirements in order to contact the customer and offer a new contract. The basis for that decision was that the MRA allows the use of information when the party "believes, on reasonable grounds, that market arrangements set out or contemplated by this Agreement require or permit it" to do so. Ofgem found that there were reasonable grounds to construe the MRA in a way that permitted use of the information.

Ofgem gives short shrift to the argument that using information received for the purpose of operating the transfer process in order to engage in targeted marketing activity represents an abuse of a dominant position, or an unfair form of competition in some other sense. The only option put forward for consultation is to limit the ability of the losing supplier to object to the transfer: there is no option to prohibit approaches to the customer by the losing supplier using information generated for the purpose of the transfer process.

Ofgem's paper does not offer a comparison of the proposed policy options with the rules in other sectors. In telecoms, Oftel's 2003 CPS Save decision, confirmed by CAT on appeal (124 pages, PDF), prohibited BT from engaging in equivalent marketing activity when losing a customer. The CAT ruling was based on the common law of confidence and on a licence obligation to use access/transfer process information "solely for the purpose for which it was supplied" and not to pass it on to another department "for whom such information could provide a competitive advantage".

Responses by Thursday 31 May 2007.

For further information or advice please contact Franck Latrémolière.

Filed under Electricity, Ofgem.

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