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Business Ethics

UK watchdog Ofgem paves way for collusion probe into energy suppliers

British regulators have referred the country's energy supply sector for a thorough anti-trust investigation. The probe may start a legal process which may eventually result in the break-up of some firms.

The UK's energy regulator, Ofgem, said on its website on Thursday that it had asked the Competition and Markets Authority (CMA) to launch a full anti-trust investigation into what it perceived as a lack of competition among energy suppliers active in the country.

The watchdog maintained competition was weak partly due to possible coordination of price setting which made it difficult for new providers to enter the market.

"Ofgem believes a referral offers the opportunity to once and for all clear the air and decide if there are any further barriers which are preventing competition from bearing down as hard as possible on prices," The organization's Chief Executive, Dermot Nolan, said in a statement.

Public anger

EU in oil price-fixing probe

Ninety-five percent of Britain's energy supply market is currently controlled by utility companies SSE, Scottish Power, Centrica, RWE npower, Eon and EDF Energy. Regulators said there were signs the big six had been coordinating their pricing strategies, because they typically changed tariffs at the same time and raised prices more quickly than cutting them.

Ofgem also pointed out that all companies in question had seen their profits rising irrespective of any efficiency measures being taken.

A year before parliamentary elections in the UK, the issue has become a political football with all parties trying to tap into the public discontent over high energy bills which have risen by some 10 percent on average over two years.

hg/msh (Reuters, Ofgem)

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