Risk of Intervention in Market for Information and Communications Technology Services for the Public Sector


Introduction -

The Office of Fair Trading (OFT) has decided, following its call for information in July 2013, to commence a market study into the supply of information and communications technology (ICT) goods and services to the public sector. Market Studies often lead to far reaching intervention by the UK authorities — ranging from structural intervention such as requiring behavioural changes, such as prohibiting types of commercial practices or clauses in agreements or even forcing the disposal of businesses.

OFT has stated its continuing concerns about the large shares that some suppliers have of public sector ICT services. These high shares together with possible high barriers to entry and expansion (notably for smaller scale ICT suppliers) and the high costs of switching suppliers led OFT to decide to study the market in greater detail. The study will focus on the extent to which the high shares of some suppliers, the barriers to entry and the difficulty of switching suppliers arise from the market structure and the commercial behaviour of suppliers of IT outsourcing services and software to the government. OFT has claimed that the study will be informed by the current and recently concluded reports and other initiatives on public sector procurement but will not duplicate them. Thus OFT will be analysing primarily the market structure and practices of suppliers to the public sector, not the way the government procures its ICT services.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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