Telecoms | UK Regulatory Outlook April 2024

CMA responds to Ofcom's consultation on inflation-linked price rises

The Competition and Markets Authority (CMA) has responded to Ofcom's consultation on the prohibition of inflation-linked price rises. Ofcom is proposing to ban telecoms companies from providing inflation-linked price rises and price rises which are set out in percentages in their contracts. The telecoms regulator proposes that companies' contracts must be set out upfront in pounds and pence.

The regulator has welcomed Ofcom's proposal, and encourages Ofcom to keep under consideration whether any further action will be needed to protect consumers and promote greater competition in the telecoms sector.

The CMA agrees with Ofcom's assessment that the existing market practice of providers including inflation-linked price variation provisions in their terms and conditions are likely to cause harm to consumers, given the complexity and lack of clarity surrounding these clauses.

The CMA also encourages Ofcom to ensure providers fully comply with the requirements under the Consumer Protection from Unfair Trading Regulations 2008 when making any changes to their contract prices. The main consideration surrounds consumers being able to make transactional decisions based on full and transparent pricing information.