UK Ofgem Refers Energy Market to CMA
The UK launched a Competition & Markets Authority (CMA) investigation on Thursday, with the final report expected to be published after the General Elections to be held on 7 May 2015.
‘The CMA will now carry out its own comprehensive, independent investigation to see if there are any features of this market which prevent, restrict or distort competition and, if so, what action might be taken to remedy them… The CMA is required to publish its final report by 25 December 2015,’ reads a note published by the British Government.
The investigation follows Ofgem’s decision to refer the energy market to the CMA.
‘The recent assessment of the energy market, prepared by Ofgem with the Office of Fair Trading (OFT) and CMA, showed that competition isn’t working as well as it should for consumers. It showed increasing distrust of energy suppliers, uncertainty about the relationship between the supply businesses and the generation arms of the six largest suppliers, and rising profits with no clear evidence of suppliers reducing their own costs or becoming better at meeting customer expectations,’ reads a note released by Ofgem on Thursday.
Ofgem suggested CMA to focus also on the barriers to entry and the expansion for suppliers.
Two British companies (British Gas and SSE), two German firms (E.ON and RWE’s npower), France’s EDF and Spain’s Scottish Power supply gas and electricity to over 90% of British domestic costumers.
The issue climbed the political agenda, as Labour and Conservative have been indicating flaws in their energy policies in the last years. The political campaign is well started and the Coalition Government is clearly intentioned to wash its hands of it.
The six companies reacted releasing notes, welcoming Ofgem’s decision.
‘Our aim is to provide affordable energy, good service and innovative products that help customers reduce their consumption and save money on their energy bills,’ reads a note published by Centrica, which operates in the UK under the trading names Scottish Gas and British Gas.
CMA acquired its powers on 1 April 2014 and took over functions of the Competition Commission (CC) and the Office of Fair Trading (OFT). It is a non-ministerial department with over 500 members of staff.