Rivals fear British Gas pricing ploy

Alliance Gas, one of the main rivals to British Gas in supplying businesses, has called for government action to prevent predatory pricing when the domestic market opens to competition in six months. The company says that licences for suppliers, now in draft form, would fail to stop anti-competitive practices by British Gas.

Alliance, whose concerns are echoed by other suppliers, has demanded changes to ensure no dominant player can abuse its position in the market- place. A spokesman said that under the latest draft, British Gas could offer special prices to households where competition hits first without extending them to the rest of the country. It particularly fears that British Gas will dramatically drop prices in the South-west, where a pilot scheme offering competition to 500,000 homes begins next April.

The Alliance spokesman said: "We are asking for clarification as to what British Gas will or will not be able to do in terms of predatory pricing. Under the licences predatory pricing is now allowed but the problem is that the definition is not yet satisfactory."

Mobil, another big rival, said: ''There are a number of concerns - we need to make sure that there are proper controls on British Gas or any other dominant players. It's all in the interests of making sure that when we get competition we can be confident it is sustainable competition."

Clare Spottiswoode, the industry watchdog, is known to be concerned about potential anti-competitive practices. But although she will be responsible for issuing licences, they are being drafted by the Department of Trade and Industry.

Ms Spottiswoode has been seeking unprecedented powers to clamp down on any anti-competitive behaviour by British Gas, including the ability to ban suspect activity immediately rather than having to wait until after an investigation, which can take more than a year.

British Gas's rivals are thought to have complained to Ofgas and to the Government that the regulator's existing powers do not go far enough. They argue that companies can go out of business while a lengthy investigation into British Gas is under way.

Some players in the gas industry believe that the only effective solution is an overhaul of UK competition law, which is widely regarded as toothless. But the Government has for years resisted pressure for fundamental change.

The issue is one of a range of problems deterring some large companies from making detailed commitment to the domestic market. Recently British Gas was forced to climb down over planned increases in the charges for other suppliers to use its pipes following sharp criticism from Ms Spottiswoode.

Competition in the gas market is due to begin in April in an area covering 500,000 customers in Devon, Cornwall and Somerset. If all goes well, competition will be allowed throughout the UK by the end of 1998.

Rivals to British Gas

Alliance Gas - owned by BP, Statoil and Norsk Hydro

Mobil - serious interest but plans yet to be revealed

Total Gas Marketing - wholly owned by Total

Amoco - recently announced joint venture with Seeboard

Amerada Hess - plans to unveil pricing next week

Kinetica - owned by PowerGen and Conoco