The Office of Fair Trading is investigating whether public sector IT deals limit interoperability and competition in the sector.

In its launch document, the regulator says it is seeking information on the IT market, such as whether suppliers seek to limit their interoperability with other systems and if the IT procurement market is inhibiting competition.

It will also look at whether there are barriers that make it difficult for small and medium enterprises to enter the public sector market.

“Stakeholders have told us they believe margins may be high and that competitions may be restricted by other practices and features of the market,” says the document.

“These include the cost and difficulties of switching because of factors such as the terms of the licence agreements/contracts, lack of interoperability with other systems and the risk of disruption to critical services.”

The Office of Fair Trading’s chief executive, Clive Maxwell, said it wanted to hear from both suppliers and public sector users on how the market works, problems experienced and what could be done to make it better.

“This work demonstrates a continued focus by the OFT on markets related to public services. Information and communication technology is a crucial part of any modern economy and is key to improving productivity in public services as well as businesses,” he said.

“Given the vital role that this technology plays in the delivery of public services and the cost to the taxpayer, the OFT believes it is important to explore whether there are any restrictions on competition.”

The regulator says it is keen to ensure competition in the public sector IT market works well.

“There have been a number of reviews that have focused on instilling better procurement practises yet few have examined whether there are issues on the supply side of the sector which inhibit competition. The OFT’s review aims to address this imbalance,” says the launch document.

The Office of Fair Trading will publish a summary of its findings and proposed next steps in October 2013.

If it receives information that points to problems in the market, it could initiate competition enforcement proceedings and seek voluntary action from the industry.