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Argos, Comet and Dixons pledge action on extended warranties

Electrical retailers Argos, Comet and Dixons have offered legal undertakings to improve the way the extended warranties market works, the Office for Fair Trading said today.

GENERAL MERCHANDISE

Argos, Comet and Dixons pledge action on extended warranties

Electrical retailers Argos, Comet and Dixons have offered legal undertakings to improve the way the extended warranties market works, the Office for Fair Trading said today.

The news follows an OFT market study on the warranties, which highlighted the watchdog's competition concerns in the £1 billion per year market.

The promised measures include establishing a price comparison site, commissioning regular independent mystery shopping exercises and providing more information in-store including the availability of other suppliers.

The  retailers have also pledged to provide clear on-shelf information about the annual equivalent prices of pay-as-you-go  warranties to help shoppers understand the longer term costs of the products. This currently affects Dixons, which is the only one of these three retailers to sell PAYG warranties.

The OFT said it will assess the success of the measures  before deciding whether a full investigation by the Competition Commission is required.

In its market study the OFT concluded that, despite some improvements in the market including some lower prices, several competition concerns remained.

Ann Pope, director in the OFT's goods and consumer group, said: "Millions of extended warranties are sold in the UK each year and we remain concerned that, despite recent improvements, this market does not work as well as it could for consumers. We welcome the retailers' initiative in offering undertakings and we now want to hear from consumers and others whether they think these will lead to improvements."

She added: "If these undertakings are accepted by the OFT it would allow us to address the competition concerns more quickly and also reduce the burdens of further, detailed investigation."

The OFT said its expects to reach a final decision on whether to accept the undertakings in the Spring.
 

 

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