CONCERN OVER CAMELOT’S PLANS TO OFFER BILL PAYMENTS
26 April 2010

Camelot’s plan to enter the bill payments and mobile top-up market is an abuse of its monopoly position that threatens to eliminate competition and raise prices in bill payments and mobile top-ups.  It also puts at risk the future of thousands of local shops and post offices, and ignores the social impact on vulnerable consumers.

 

The warning is published today in a response to a consultation run by the National Lottery Commission (NLC) into the impact of Camelot’s proposal.  PayPoint argues that, if the plans are approved, Camelot will be in breach of competition law, and NLC approval risks putting the UK Government in breach of EU law.

 

PayPoint accused Camelot of attempting to abuse its position as the monopoly operator of the National Lottery to secure a monopoly of bill payments and mobile top-ups and squeeze out competition, by cross-subsidising its proposed new commercial services in those markets from its Lottery revenues and network of terminals and by exploiting its exclusive National Lottery brand rights and resources.  The losers would be the consumers of essential services like gas, electricity and water, and mobile phone users.

 

PayPoint has been joined by MPs and faith groups, including The Salvation Army, who are calling on the NLC to reject the proposals and have voiced their concerns with Ministers and the NLC about the social issues raised by Camelot's proposal. More than 80 MPs from across the political spectrum in the last Parliament and candidates in the general election have expressed their concern over the plans, written to Ministers or signed Early Day Motions, before Parliament was dissolved, calling on the Government to reject them.

 

Many local convenience stores and sub-post offices (of the latter, two-thirds do not have a Lottery terminal) will be hit by lower sales and fewer people shopping in the stores as they make their bill payments in other outlets with a Lottery terminal, particularly the major superstores, PayPoint warns. For many, this would be a loss too far, leading to the closure of a vital local service.

 

Vulnerable people on low incomes and young people under 16 could also be tempted into gambling if they find themselves paying their bills for essential services or topping up their mobile phones at gambling terminals. Retailers are already being urged by Camelot to encourage new people to play, supported by massive advertising campaigns.  It is part of the National Lottery Commission’s statutory duties to prevent excessive gambling and under-age gambling on the Lottery.

 

Dominic Taylor, CEO of PayPoint plc, said: “We believe that the implications of Camelot’s proposal are far-reaching and that insufficient consideration is being given to their social impacts. 

 

Camelot’s plan would undermine local shops and sub-post offices, small businesses at the heart of their communities, and put pressure on vulnerable consumers to gamble. These issues are being overlooked by the National Lottery Commission’s consultation, which takes into account only the effects on competition. While the Competition Law issues are very important – and centre around Camelot abusing its monopoly position – the voices of consumer groups, and those that help low paid, vulnerable and indebted people are going unheard.

 

Even Camelot itself has said that the National Lottery operator should focus only on the Lottery. This is a massive U-turn and an abuse of a dominant position in shops nationwide.  Branching out into bill payments will result in further closures of local convenience stores and post offices, and could easily lead to less money being raised for good causes. We urge the National Lottery Commission to reject this proposal.”

 

ENDS….

 

Contact:
PayPoint:  Peter Brooker

01707 600300

 

Finsbury:  Rollo Head/Don Hunter
020 7251 3801

 

NOTES TO EDITORS

Under the terms of its licence, Camelot requires the NLC’s consent to offer commercial services through National Lottery terminals. The Commission is consulting with interested parties solely to identify any European or UK competition law considerations which it needs to take into account when reaching its decision. Following a last minute extension when new information about Camelot’s financial projections and its relationship with the Post Office came to light, the consultation closes on 26 April 2010.

 

PayPoint’s response to the consultation by the National Lottery Commission, submitted today (26 April 2010), argues that the proposal will result in the following consequences:

 

Breach of EU and UK competition law

 

  • The proposal represents an abuse of Camelot's monopoly position that is contrary to EU and UK competition laws.
  • Camelot would be exploiting its monopoly National Lottery rights (brand, terminal network, etc) to secure a monopoly position on the markets for bill payments and mobile top-ups, which are currently highly competitive and well served by a number of private sector businesses.  No private sector operator – no matter how efficient – could match this on a level playing field.
  • Camelot would also be cross-subsidising its new commercial services from its monopoly National Lottery revenues and infrastructure.  Again, no private sector competitor – no matter how efficient ¬– could compete with this on a level playing field.
  • So the proposal creates a real danger of Camelot monopolising the bill payment and mobile top-up markets, thereby squeezing out all competition.
  • Consumers would suffer badly from a Camelot monopoly, with higher prices for bill and mobile collection being passed on to them.
  • Agreement by the National Lottery Commission could put the UK Government in breach of EU law, under which it is illegal for national governments (and organisations acting on their behalf, such as the National Lottery Commission) to take measures that lead companies with state-granted exclusive rights (like a licence to run the National Lottery) to breach EU competition law.

Post Office and local shop closures

 

  • The Post Office network is shrinking and the Post Office has publicly stated that any fall in sub-post office income could mean the network collapsing from c.11,500 to 3,000.
  • Camelot outlets will poach revenue from sub-post offices and sub-postmasters – more post offices will close and sub-postmasters and their employees will pay the price.
  • Local shops, many of which are excluded from the National Lottery, depend on bill payment services to differentiate them from bigger retailers. This lifeline will be under threat and will lead to the loss of even more local neighbourhood shops.

Vulnerable and under-age people tempted into gambling

  • Camelot's duty is to promote gambling while protecting the vulnerable, including under-16s – its licence expressly obliges Camelot to prevent ‘excessive’ play and play by under-16s.
  • Bill payment customers for Camelot are likely to come from lower income and other vulnerable groups – poorer people often struggling to live within a limited budget and pay for essential services, who spend disproportionately more on the National Lottery than others.
  • Under-16s are also likely to use the terminals to top up mobile phones.
  • Encouraging these two vulnerable groups to use gambling terminals means exposing them to an unnecessary temptation to gamble money they cannot afford to lose.
  • This temptation to gamble will be reinforced by video screens promoting scratchcards and lottery play at point of sale

Less revenue for good causes

  • Bill payments are generally slower and more complicated transactions than the Lottery, which will lead to long queues at the terminals that will reduce Lottery sales.
  • The overlap in the timing of peak lottery and bill payments will create bottlenecks on main draw days and around rollover draws, holidays and Christmas – the queues caused will prevent customers from paying bills for essential services.
  • If offering bill payments reduces Lottery revenues by just 1%, the sums raised for Good Causes would fall by the equivalent of five years of funding for English rugby and UK Athletics.
  • Camelot previously recognised this exposure, before its shareholders’ recent decision to exit, when it wrote to its regulator in the last competition: “Camelot believes that the operation of The National Lottery should remain a single purpose vehicle... The National Lottery requires and deserves total commitment from its operator – and a single purpose vehicle delivers exactly that.”

About PayPoint:

PayPoint is the leading cash and internet payments company in the UK, with operations also in Ireland and Romania.  It handles over £9.3 billion from almost 550 million transactions annually for more than 6,000 clients and merchants. The company operates several businesses:

  • The PayPoint branded retail network numbers over 22,300 terminals located in local shops (including Co-op, Spar, McColls, Costcutter, Sainsbury’s Local, One Stop, Londis and thousands of independents) in all parts of the UK and Ireland. The terminals process gas and electricity meter prepayments, cash bill payments, mobile phone top-ups, transport tickets, BBC TV licences and a wide variety of other payment types for most leading utilities, telecommunications suppliers and many consumer service companies;
  • An ATM network which has over 2,300 ‘LINK’ branded machines across the UK, typically in convenience stores;
  • PayPoint.net, an internet payment service provider, delivers secure online credit and debit card payments for over 5,200 web merchants, linking into all major UK acquiring banks;
  • PayPoint Romania, a branded national retail network of over 2,400 terminals located in local shops which process cash bill payments for all the major utilities and mobile top-ups and a further 2,600 terminals that process mobile top-ups only;
  • Collect+, a joint venture with Home Delivery Network Limited, provides a parcel collection and drop off service at PayPoint retailers; and
  • PayByPhone, a leading international provider of services to parking authorities, that allows consumers to use their mobile phones to pay for their parking by credit or debit card. 

PayPoint floated on the London Stock Exchange in September 2004 and the company’s market capitalisation at 22 April 2010 was £212 million. PayPoint is widely recognised for its leadership in prepayment systems, smart technology and consumer service.