HM Treasury and BEIS have commissioned the Competition and Markets Authority (CMA) to assess how well competition is working across the UKs, in a review that will see new metrics developed. Once in place, an annual review of competition across the economy could see faster action over sectors that fall behind.
In a letter to the CMA, the secretaries of state said understanding of how well competition is working across the economy is limited. “While the CMA collects valuable information on competition in particular markets through its markets work, merger control regime and antitrust enforcement activities, unlike other key drivers of economic success, such as GDP growth or the employment rate, there is no agreed way to measure and monitor the state of competition across the whole economy.”
In an appendix looking at existing competition indicators, HM Treasury noted that regulated sectors, such as energy networks, rated much more highly on indexes that measure market concentration than the rest of the economy. It also noted that another measure, price mark-ups that indicate a lack of competition, had grown recently in some sectors – especially those with a few large digitally-intensive companies.
The review follows a year of discussion over the role of competition and the CMA, which will see its role expand post Brexit as it takes on cases that would previously have been considered by competition authorities at the European Commission. The Authority was granted some new powers after a previous review a year ago. However Lord Andrew Tyrie, chair of the CMA, has raised questions about whether the competition regime shoud be re-examined as commerce and customer relationships are reshaped by digitalisation.
He said in a keynote speech to the Social Market Foundation last year that consumers have lost confidence in market competition and there was a reason for their concern. Among other issues, he said, “There is price discrimination against the vulnerable in energy, insurance and other essential services. The rise of the digital economy has brought huge benefits to millions of people. But it has also rendered previously confident and capable consumers vulnerable to getting bad deals and poor service.”
Read CMA chairman Lord Andrew Tyrie’s speech to the Social Market Foundation here