Ofgem ends energy competition probe after PayPoint agrees £12.5m payment

The energy regulator launched an investigation for pre-pay customers after finding suppliers were forced to sign exclusivity clauses.

PayPoint pays up £12.5m to end Ofgem investigation (Yui Mok/PA) (PA Wire)

Energy regulator Ofgem has formally accepted commitments from PayPoint to change its ways following an investigation into whether the firm breached competition laws.

PayPoint will also hand over £12.5 million to the regulator and remove exclusivity clauses from its contracts with energy suppliers for pre-pay customers, who top up their meters using the company’s services.

The business added the move would allow suppliers and retailers to sign up to contracts with other payment service providers and to use other providers’ equipment for processing payments for topping up energy supply.

The regulator said: “Ofgem believes that the commitments offered by PayPoint address its competition concerns and will ensure that competition is not distorted.

“Accepting these commitments means that the investigation closes with no decision made on whether competition rules were infringed.”

Ofgem launched its investigation in August 2017 to consider whether PayPoint had abused its dominant position with the use of exclusivity clauses.

The company provides services to energy suppliers to allow customers with pre-pay meters to top up their supply online or via 28,000 PayPoint terminals in stores across the country.

PayPoint then transfers these payments to the relevant energy supplier, in exchange for a transaction fee.

But Ofgem raised concerns that PayPoint’s actions distorted competition and consumer choice in this market to the detriment of pre-payment energy customers, who are typically in low-income households.