16/10/2009 - CAT allows challenge to Competition Commission's market investigation report on payment protection insurance

The Competition Tribunal ("CAT") has today quashed the Competition Commission's ("CC's") decision to recommend the introduction of a point of sale prohibition ("the POSP") as part of the remedies package proposed by the CC in respect of the payment protection insurance markets. Payment protection insurance ("PPI") is a form of insurance contract which provides payment to a consumer in respect of outstanding credit balances on the happening of a relevant event (usually accident, sickness, unemployment or death of the consumer).

The POSP recommendation was contained in the CC's Report on PPI dated 29 January 2009, which was produced after a two year investigation. The effect of the POSP would have been to prohibit distributors and intermediaries from selling PPI to their credit customers within seven days of a credit sale, unless the customer had proactively returned to the seller at least 24 hours after the credit sale. The CAT noted that the POSP was the most controversial of the remedies proposed by the CC, and is one for which there is no precedent.

The CAT unanimously concluded that the CC had failed to take account of relevant considerations in deciding to make the POSP recommendation. In particular, the CAT found that in conducting its proportionality analysis the CC had failed to give any consideration to the reduced take-up of PPI that would follow from the loss of customer convenience resulting from the introduction of the POSP. The CAT also concluded that certain aspects of the methodology used by the CC in modelling work undertaken by the CC as a tool for quantification of an aspect of the benefits to be expected from its proposed remedies package were defective so as to be judicially reviewable.

The CAT has therefore remitted the CC's decision to recommend the imposition of the POSP to the CC for reconsideration in accordance with the principles set out in the judgment.