The Competition Assessment Framework for the Retail Energy Sector: Some Concerns About the Proposed Interpretation

"The Office of Gas and Electricity Markets (Ofgem), the Office of Fair Trading (OFT) and the Competition and Markets Authority (CMA) are presently are presently carrying out “an assessment of how well competition in the markets for gas and electricity is serving the interests of households and small firms in Great Britain”. They intend to publish a first assessment by the end of March 2014. The outcome of Ofgem’s consumer research will follow in late spring. Ofgem, OFT and CMA will then each consider their next steps. All options remain open, including a market investigation reference to CMA.

The three organisations have jointly set out a competition assessment framework. It is said to follow a standard typology, based on Competition Commission (CC) Guidelines."

"The concepts of “a well-functioning market”, “sources of harm” and “indicators” are relatively new in the context of energy markets. The purpose of the present paper is to examine how the CC Guidelines and market investigations introduce these concepts, and how the framework proposes to interpret them. The paper identifies some concerns about these proposed interpretations. Since the framework is a joint project with OFT and CMA, the concerns apply not only if the competition assessment is an annual report by Ofgem but also—and perhaps especially—if it is the basis for a formal market investigation by CMA."