For announcement of referral see OFT Press Notice 40/02
Extended warranties on domestic electrical goods
Terms of Reference
A.1 The Director General of Fair Trading in exercise of his powers under
sections 47(1), 49(1) and 50(1) of the Fair Trading Act 1973
('the Act') hereby refers to the Competition Commission the matter
of the existence or possible existence of a monopoly situation in relation
to the supply of extended warranties for domestic electrical goods within
the United Kingdom.
A.2 The Commission shall investigate and report on the questions whether
a monopoly situation exists and, if so:
- by virtue of which of the provisions of sections 6 to 8 of the said
Act that monopoly situation is to be taken to exist
- in favour of what person or persons that monopoly situation exists
- whether any steps (by way of uncompetitive practices or otherwise)
are being taken by that person or persons for the purpose of exploiting
or maintaining the monopoly situation and, if so, by what uncompetitive
practices or in what other way
- whether any action or omission on the part of that person or persons
is attributable to the existence of that monopoly situation and, if
so, what action or omission and in what way it is so attributable, and,
- whether any facts found by the Commission in pursuance of their
investigations under the preceding provisions of this paragraph operate
or may be expected to operate against the public interest.
A.3 For the purposes of this reference:
‘extended warranty’
means a contract, whether backed by insurance or otherwise, which covers
consumers within the meaning of section 137 of the Act for the cost of
any repairs or replacements that may become necessary within a specified
period beyond that covered by a manufacturer's, retailer's or importer's
guarantee, and includes both contracts that provide cover during the period
of the manufacturer's, retailer's or importer's guarantee, and contracts
where cover commences after this period, and
'domestic electrical goods'
are products designed to be connected to an electricity supply or powered
by batteries, and on which extended warranties are offered to consumers
within the meaning of section 137 of the Act.
A.4 The Commission shall report on this reference within a period of
12 months from the date hereof.
02 July 2002
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