Assessing competition in energy markets

Today we've announced a framework with the Office of Fair Trading (OFT) and the Competition and Markets Authority (CMA) setting out how we will assess the state of competition in the energy market of Great Britain and how well this is serving households and small firms.

We will use the framework to produce the first annual report assessing the health of competition in the market in March 2014.

The assessment will build on existing reforms emerging out of our Retail Market Review which aim to make the market Simpler, Clearer, Fairer. The reforms aim to ensure suppliers work harder for consumers by competing keenly to offer the best service, making it easier for consumers to get a better deal.

We began implementing our reforms at the end of August 2013, with the complete package to be in place by the end of March 2014.

Market assessment

The framework will be used to assess the market share of the six largest suppliers, how vigorously they are competing and how easy it is for new entrants to enter and compete against larger suppliers.

It will also be used to look at how the vertical integration of suppliers affects competition and how well suppliers engage with consumers. The report will consider evidence on the level of profits at different parts of the supply chain.

The report will draw on our knowledge and expertise in energy markets and competition within them, as well as the OFT’s wide-ranging experience of assessing competition in a range of different markets. The CMA will become the UK’s lead competition and consumer body from April 2014.

On completing this assessment, we, the OFT and CMA, will each need to consider next steps which may include further assessment of particular issues, proposing no further action, specific reforms or proposing a market investigation reference.

View our full press release: Competition in Energy Markets – Assessment Framework Published