I wrote last year to the Office of Fair Trading (OFT) complaining about this exploitation by the UKBA.
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Hi
I am a taxpayer and work in the UK as an IT Consultant. I hold a Tier 1 (General) Visa issued by the UK Border Agency that will come up for renewal on ----
The UKBA is a not-for-profit entity and incurs only a relevant unit cost of £181 for Tier 1 - PEO Main (General), as page 5 of the immigration minister's statement on their website shows, but it charges £1800 which is horribly inflated -- see
http://www.ukba.homeoffice.gov.uk/sitec ... b-2012.pdf
I believe that the UKBA is abusing its monopoly position in the market by charging excessive fees for certain types of visas such as mine. I would need to renew my visa every two years, I will need to pay the UKBA whatever it charges, irrespective of whether such a charge is unfairly inflated or not.
I therefore would like advice from the OFT on how I can save myself from this pernicious exploitation by this monopolist service provider, and is there anything at all the OFT can do to investigate the legality & fairness of these inflated prices.
Thanks
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They replied as follows:
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Thank you for your email of 29 August 2012 regarding your complaint about the fees charged for the Tier 1 (General) Visa by the UK Border Agency (UKBA). We have noted your concerns regarding the matter and will respond as follows:
By way of background, the mission of the Office of Fair Trading (OFT) is to make markets work well for consumers. We achieve this by promoting and protecting consumer interests throughout the UK, while ensuring that businesses are fair and competitive. Our primary duties involve the enforcement of competition law, and the application of consumer protection legislation in respect of matters that adversely affect the collective interests of UK consumers.
As you may be aware, the main law covering competition in the UK is the Competition Act 1998 (the Act). In brief, the Act contains two prohibitions. The Chapter I prohibition prohibits price fixing or other anti-competitive agreements which prevent, restrict or distort competition. The Chapter II prohibition prohibits conduct by companies which amounts to an abuse of a dominant position.
Turning to your enquiry, we should explain that the Act applies to all bodies that are acting as 'undertakings'. The term 'undertaking' is not defined under the Treaty on the Function of the European Union (the TFEU) or the Act, but its meaning has been set out in Community law. The term covers any natural or legal person engaged in economic activity, regardless of its legal status and the way in which it is financed. It includes companies, firms, businesses, partnerships, individuals operating as sole traders, agricultural co-operatives, associations of undertakings (e.g. trade associations), non-profit making organisations and (in some circumstances) public entities that offer goods or services on a given market.
In making this assessment, the key issue is the nature of the activity being undertaken rather than the legal form or status of the body that carries it out. Thus, a body may be an undertaking (and therefore subject to competition law) in respect of some of its activities, but not others. This distinction will depend on the facts of each case.
The distinction between public functions and economic activities involving the provision of a good or service on a market will depend on the facts of each case. Where a body acts in a purely administrative capacity and merely regulates the provision of goods and services on a market, it has been considered not to be offering or supplying such goods or services.1 That such administrative activity is undertaken in exchange for a fee will not necessarily render the activity 'economic'.
It is not clear based on the information provided in relation to your concerns that the UKBA in question is engaged in economic activity rather than acting as an administrative body. It is therefore unlikely to be considered to be acting as an undertaking. Given this position, it is not clear that the conduct you have described would be caught by the Act.
In view of the above, the OFT is unable to take action in relation to your complaint at this time. However, we appreciate the time you have taken in bringing this matter to our attention.
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I replied as follows:
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Thank you for your response to my email sent to me on 05-Sept-2012 bearing the reference number ---.
You have concluded your response with the assertion that since it is not clear to the OFT whether the activity in question is economic or not, it is therefore unlikely to be considered to be acting as an undertaking and thereby unclear if the issue would be caught by the UK & EU competition law.
This apparently means that if the 'economic' nature of an activity is unclear to the OFT, the OFT will treat it as 'not economic'; which is an unjustifiable stand.
I believe the OFT should rather determine if the activity in question is of a wholly social nature, and if the exclusively social nature of the activity is not established, it needs to be treated as an economic activity, and once the OFT has determined this, it is upto the UKBA to show in what conceivable way it is exempt from UK & EU competition law in respect of the supply of its services pertaining to the issue of UK visas.
To establish very clearly that the issue of visas by the UKBA is an economic activity, I would like to draw to your attention your publication OFT1389 titled "Public bodies and competition law - A guide to the application of the Competition Act 1998" published in December 2011, which I found at your website
http://www.oft.gov.uk/shared_oft/ca-and ... FT1389.pdf
According to this document, it is clear that:
1. The UK Border Agency (UKBA) is a public body established under the Home Office for administering the border controls for the UK Government.
2. The same public body, in addition to the exercise its public power of administering border controls mentioned above, has been supplying its services of issuing UK visas to the public at large for which it has published unit prices.
3. It is open to the world at large to avail of the UKBA's visa services by paying the published prices as appropriate. The UKBA would refuse to perform the services if the aforesaid price was not paid in advance by its customers.
4. There exists a market of potential customers who utilize the services of the UKBA to apply for UK visas. I am one of those customers.
5. The UKBA in turn utilizes the services of a private company called VFS Global to perform a part of this service worldwide, and therefore this service (of issuing visas) can conceivably be performed wholly or partly by private companies. According to section 2.24 of the guide to competition law published by the OFT:
Where private sector companies have in fact carried out the activity in question in the past, this may indicate that it is not an activity that must necessarily be carried out by a public authority, and therefore that the activity is 'economic'.
Similarly, the fact that a government or public body decides not to allow private sector companies to provide a certain good or service (and, for example, instead provides it wholly in-house) does not necessarily mean that that activity is not 'economic'.
6. The activity of issuing UK visas very evidently is not exclusively of a 'social nature'. Therefore it is an economic activity.
Therefore the UKBA is an undertaking in respect of this activity, and I would like the OFT to take cognizance of the applicability of UK & EU competition law and to action the case accordingly. If not, can you please let me know why the OFT is unable to act in the light of the above facts.
Thanks.
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They responded to the above as follows:
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Thank you for your further email of 7 September regarding the fees charged for the Tier 1 (General) Visa by the UK Border Agency (UKBA).
We note that the UKBA works with a commercial company, VFS Global (VFS), which manages visa application centres in India. However, this appears to be an administrative service involved in assisting applicants in submitting their applications. It is clear from the VFS website that it has no influence over the decisions made in relation to applications. Accordingly, this does not demonstrate that the UKBA’s core activities could be carried out by private sector companies.
As explained in our guidance document Public Bodies and Competition Law, the broad issues to determine in identifying economic activities are:
whether the body in question is offering or supplying a good or service as opposed to, for example, exercising a public power, and if so whether that offer or supply is of a commercial – rather than an exclusively ‘social’- nature
In considering visa applications, the UKBA is exercising a public power by implementing UK immigration policy according to its statutory function. Accordingly, it does not appear that this would be considered an economic activity.
While we note your additional comments, therefore, our position remains that it is unlikely that the UKBA would be considered to be acting as an undertaking for the purposes of the Competition Act 1998 (the Act). In view of this, we will not be taking further action in relation to your concerns at this time.
I am sorry to send you what I know will be a disappointing response, but I hope I have clarified our position in respect to the complaint you have made.
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I replied to the above as follows
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Thank you for responding to my earlier emails, however I would like to point out that the crux of my query has still not been addressed by the OFT.
Making visa decisions is not an economic activity, I do agree.
In fact the decision to grant/refuse a visa (which is the exercise of the public power) by itself costs nothing. The charge of visa fees has no impact on the decision making power of the UKBA, and is therefore wholly irrelevant to the exercise of its public power.
The fee charged is not for making the visa decision, but precisely & substantially to cover the incidental administrative costs towards the economic services such as those performed by the private company VFS.
The OFT is therefore wrong in its assumption that the fee charged by the UKBA is to exercise a public power.
In a single transaction, on a charge of £1800, nearly 90% of the amount (£1619) is an economic surplus as the unit cost of providing the service is only £181, as published by UKBA. Therefore the visa fee serves no social purpose, it is purely an economic charge.
Please explain to me how the charge made by the UKBA can be inferred by the OFT to be "exclusively social", and therefore not economic, when everything it does points towards the activity being charged being substantially (if not wholly) economic.
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They responded
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Your complaint against the United Kingdom Border Agency (UKBA)
Thank you for your email of 27 September, further to your complaint that UKBA charges excessive fees for Tier 1 (General) visas, such as the one you required to be renewed.
The issues you raised have been passed to me for further consideration.
You disagreed with our assessment, that in exercising its public power, UKBA would be unlikely to be acting as an undertaking for the purposes of the Competition Act 1998 (the Act).
We should explain however, that even if UKBA were to be considered as acting as an undertaking for the purposes of the Act, in order to determine whether we would investigate further we would need to consider whether the issue raised would fall within our administrative priorities. I will explain this process further below.
The OFT receives thousands of complaints a year and cannot pursue them all. We therefore focus our efforts and finite resources on deterring and influencing behaviour that poses the greatest threat to consumer welfare. In exercising this discretion we assess a complaint with reference to our published prioritisation principles.
Our prioritisation principles explain that we only intervene when we can improve the way in which markets work. In seeking to target both our resources and enforcement strategy, the OFT needs to consider a range of factors, including impact on consumers, strategic significance, risk and resources within a market wide context.
We have considered your complaint against our prioritisation principles in the round, and do not consider it appropriate to use our resources to make further enquiries into this matter. Accordingly, we will not be taking any further action in relation to your complaint at this time. This is an administrative priority decision and does not reflect a substantive view on the merits of the case.
We realise that the above will be disappointing news for you, but we nevertheless appreciate the time you have taken in bringing your complaint to our attention.
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This was the end of the story, but I urge you all to write to the OFT again as charging above cost (i.e. a profit motive) makes the activity a 'trade' and the UKBA should be reined in by the OFT.
This post does not contain legal advice.
