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The competition assessment framework for the retail energy sector: some concerns about the proposed interpretation

Author

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  • Stephen Littlechild

    (University of Birmingham, Judge Business School, University of Cambridge)

Abstract

The framework proposed by Ofgem, OFT and CMA invokes a well-functioning market, but the Competition Commission has not always used such a concept, and when it has done so it has been problematic. Here, the well-functioning market is Ofgem's vision of a successful market, not anchored in any actual market. Ofgem's indicators of a competitive market have changed since 2002: tariff variety and products tailored to different customer groups are now a harmful complexity rather than a potential benefit of competition. The proposed “theories of harm” ignore regulatory policy and coordinated conduct facilitated by regulation. The analysis of weak customer response fails to distinguish between competition as an equilibrium state and as the Competition Commission's rivalrous discovery process over time. The framework thus reflects Ofgem's perspective, but the assessment needs to be independent because regulation is at issue, and because Ofgem is no longer capable of a competition assessment.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Stephen Littlechild, 2014. "The competition assessment framework for the retail energy sector: some concerns about the proposed interpretation," Working Papers EPRG 1406, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    • Handle: RePEc:enp:wpaper:eprg1406
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    Citations

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    Cited by:

    1. Stephen Littlechild, 2020. "The CMA’s assessment of customer detriment in the UK retail energy market," Journal of Regulatory Economics, Springer, vol. 57(3), pages 203-230, June.
    2. De Mel, S. & Munshi, K. & Reiche, S. & Sabourian, H., 2020. "Herding in Quality Assessment: An Application to Organ Transplantation," Cambridge Working Papers in Economics 2052, Faculty of Economics, University of Cambridge.
    3. Littlechild, Stephen, 2018. "Competition, regulation and price controls in the GB retail energy market," Utilities Policy, Elsevier, vol. 52(C), pages 59-69.
    4. Marcos Fernández‐Gutiérrez & Oliver James & Sebastian Jilke, 2017. "Competition and switching in public service markets: Can they reduce inequalities?," Regulation & Governance, John Wiley & Sons, vol. 11(1), pages 41-63, March.
    5. Altoé, Andrey Vinícius & da Costa Jr., Newton & Lopes, Ana Lúcia Miranda & Veloso, Thiago Roberto Magalhães & Saurin, Valter, 2017. "Technical efficiency and financial performance in the Brazilian distribution service operators," Socio-Economic Planning Sciences, Elsevier, vol. 59(C), pages 79-92.
    6. Stephen Littlechild, 2019. "Promoting competition and protecting customers? Regulation of the GB retail energy market 2008–2016," Journal of Regulatory Economics, Springer, vol. 55(2), pages 107-139, April.
    7. Maria Ioannidou, 2018. "Effective Paths for Consumer Empowerment and Protection in Retail Energy Markets," Journal of Consumer Policy, Springer, vol. 41(2), pages 135-157, June.
    8. Almeida, Lucila de & Esposito, Fabrizio & van Zeben, Josephine, 2022. "When indicators fail electricity policies: Pitfalls of the EU's retail energy market Barrier Index," Energy Policy, Elsevier, vol. 165(C).

    More about this item

    Keywords

    Well-functioning market; competition assessment; retail competition;
    All these keywords.

    JEL classification:

    • L97 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Utilities: General
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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