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Phorm's shares dip on news of inquiry by Office of Fair Trad

Controversial behavioural targeting firm hit by announcement of investigation into online pricing and advertising

The share price of controversial behavioural targeting firm Phorm fallen by more than 20% in early trading today, after the Office of Fair Trading announced an investigation into how the habits and personal information of web users are used to target internet advertising.

Aim-listed Phorm has been criticised by privacy campaigners over its plans to roll out Webwise, which tracks the internet habits of customers, and has seen trial partner BT mothball a roll-out of the service.

Phorm's share price closed on 130p yesterday and in early trading this morning fell 23%, or 30p, to 100p at 8.20am. Since then Phorm has seen its share price claw back some ground to be down by 10%, or 12.5p, to 117.5p at 1pm. The OFT is launching an inquiry, entitled "Advertising and Pricing market study", looking at a number of areas of online pricing and advertising including price comparison websites and the use of personal data in website advertising.

Competition regulators added that there is a strong chance that the final decision on the scope of the study - which is calling for submissions from interested parties until 18 September - is likely to include an examination of behavioural advertising.

"We are also considering including the use of personal information in advertising and pricing," said the OFT. "In particular, we may look at behavioural advertising where information on a consumer's online activity is used to target the internet advertising they see. We may also examine the practice of tailoring prices to individual consumers on the basis of their personal data."

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