UK to probe energy suppliers over signs of price fixingThursday 27 March 2014 08.10
UK regulators have referred the country's energy supply sector for a full competition investigation, kick starting a legal process that could see some of the country's big suppliers broken up.
The watchdog said competition among UK energy suppliers was weak, partly due to possible co-ordination of price setting which makes 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," said Dermot Nolan, CEO of the energy regulator.
The big six firms - SSE, Scottish Power, Centrica, RWE npower, E.ON and EDF Energy - control around 95% of Britain's energy supply market.
Centrica is part of a consortium which is the process of buying Bord Gáis Energy from Bord Gáis for €1.1 billion.
The regulators said there were signs that the big six co-ordinate their pricing strategies because they typically change tariffs at the same time, they raise prices more quickly than they cut them and profits have risen for all.
Their retail profits have risen from £233m in 2009 to £1.1 billion in 2012, the regulators said.
"We found a number of aspects of the behaviour of the six largest suppliers that would appear to be consistent with tacit co-ordination between them," the regulators said in their assessment report.
British Prime Minister David Cameron ordered a review of competition in the energy retail sector in October last year, following public outrage over high energy bills. UK energy bills risen by 10% on average over two years.