CMA to investigate energy sector’s competition

<p>The Big Six energy firms are all going to be subject to the investigation.</p>

A comprehensive review of the energy market is to be held by the Competition and Markets Authority (CMA), which will investigate whether there is enough competition within the sector.

The UK's Big Six energy suppliers – SSE, Scottish Power, Centrica, RWE Npower, E.On and EDF Energy – make up some 95 per cent of the country's energy market and commentators have suggested this means members of the public are not being given enough choice.

Ofgem did not accuse any of the providers of fixing energy prices, but in its report it did note there could be "possible tacit co-ordination" on the size and timing of price increases.

In a statement, Ofgem said: "The aim of the reference would be to establish if there are market features which are having an adverse effect on competition and, if so, whether there are reforms, including those outside Ofgem's powers, which would make competition in the market more effective."

Power to reform

Dermot Nolan, Ofgem chief executive, explained the matter is being passed on to the CMA due to the fact it has more powers to reform the energy market than the regulator. Many commentators have previously been critical of how Ofgem is powerless to improve the sector.

Speaking on Radio 4's Today Programme, he said: "Now consumers are protected by our simpler, clearer and fairer reforms, we think a market investigation is in their long-term interests."

The cost of energy looks set to be one of the major battlegrounds for the next UK general election, which is just over 12 months away. Leader of the Labour Party Ed Miliband has already pledged that if he becomes prime minister after the polls close he will impose a price freeze on energy bills for 16 months to help members of the public to cover the cost of their fuel.

Centrica, which is one of the UK's biggest energy companies and owns British Gas, saw its share price fall slightly this morning (March 27th) following the news of the CMA's review. By 08:39 GMT, stocks in the firm were down by 0.21 per cent. Centrica recently confirmed it will be purchasing the Irish state-owned supplier Bord Gais Energy.

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