PayPoint faces multi-million pound lawsuit over alleged anti-competitive conduct
PayPoint faces a multi-million pound lawsuit from a social enterprise, which has accused the payment services business of anti-competitive conduct in the pre-payment market.
Social enterprise Global 365 said in a statement that it has begun legal action against the London-listed firm to “recover significant loss and damage” after having troubles launching its own prepayment system, which aims to reduce fuel poverty by enabling energy suppliers to offer price parity between prepayment and credit customers.
Global 365 claims it was “shut out of the market” with PayPoint entering into exclusive agreements with most of the major energy suppliers in Great Britain.
This meant it was not able to effectively launch its prepay system and alleged that PayPoint was abusing its dominant position by imposing contract restrictions.
It then complained to Ofgem, which subsequently opened an investigation and reached a provisional view in 2021 that PayPoint engaged in conduct that had the aim of restricting other suppliers entering the energy pre-payment market.
PayPoint made “voluntary commitments” to remove and not enforce the offending clauses, and make a donation of £12.5m to Ofgem’s voluntary redress fund.
But now Global 365, represented by law firm Addleshaw Goddard, is bringing its own legal proceedings before the Competition Appeal Tribunal. The claim was registered today alleging infringement of Chapter II of the Competition Act 1998.
A similar case has already been filed against PayPoint by energy supplier Utilita.
The energy supplier is seeking £42m in damages because it alleges that PayPoint overcharged it for processing prepayment transactions on its behalf as it was prevented from contracting with other providers – such as Global 365 – to obtain a lower price.
Samantha Haigh, partner at Addleshaw Goddard, said: “This claim seeks to restore Global 365 to the position that it would have been in had it not been wrongly kept out of the market. In being prevented from entering the market effectively in 2019, Global 365 has been unable to offer its services to the suppliers covering the majority of the market.”
PayPoint were approached for comment. Utilita declined to comment.