Energy market likely to face competition investigation

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Ofgem has proposed to refer the energy market for an investigation by the Competition and Markets Authority (CMA), following an assessment of its present state that revealed a number of concerns.

Profits increasing

The regulator, alongside the CMA and the Office of Fair Trading, issued on 27 March its State of the Market assessment.

The report found that average profits for the Big Six increased from £3bn in 2009 to £3.7bn in 2012. Given there was no clear evidence of increased efficiency from suppliers, Ofgem claimed the increases could be indicative of a lack of effective competition.

The report also noted that there was continuing uncertainty over whether the vertical integration of the large energy companies was in consumers’ interests. It further highlighted weak competition between larger energy suppliers, low customer trust and engagement, and barriers to entry and expansion for new suppliers.

via Catalyst Business Energy Market Brief April 2014.

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