OFT opens up franking market to allow greater competition
LONDON – The Office of Fair Trading has agreed to open up access to the market for the supply of franking machines and their maintenance in a move that will allow greater competition and choice for third-party supply.
The move comes after the Competition Commission released a report in 1998 saying that effective competition has not emerged in aftersales markets such as inspection work and the supply of ink cartridges.
The undertakings were given by the two leading suppliers, Pitney Bowes and Neopost, which account for around 90% of installed franking machines, together with Royal Mail, which licenses machines and inspectors using its delivery services.
It is the first time the OFT has accepted undertakings in lieu of a market investigation reference under the Enterprise Act to increase scope for third-party supply of new and second-hand franking machines and help remove some restrictions on the independent supply of ink cartridges.
The OFT also believes that users of franking machines should benefit from lower prices and better services.
Postal franking machines allow companies to frank mail for delivery by Royal Mail in place of using stamps or pre-paid envelopes.
There are more than 210,000 franking machines in the UK with the supply and maintenance of machines worth an estimated £100m-£115m a year.
OFT chairman Sir John Vickers said: "Competition in the market for postal franking machines is still restricted.
"These undertakings will help open up in the market and strengthen competition, in particular by making it easier for third parties to become involved in the supply and maintenance of franking machines."
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