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Competition, not Concentration

This report explores issues of concentration and competition in consumer markets, and the role that policymakers can play in driving improved outcomes for UK households in these markets.

Our 2017 report, Concentration, Not Competition, showed that a sizable proportion of the UK’s most important consumer markets are concentrated – dominated by a small number of large incumbents. The lack of competition associated with industry concentration in turn generates a range of negative economic outcomes for consumers. This includes higher prices, poorer customer service and a lack of choice. More subtly, excessive levels of industry concentration may deter innovation in the economy and drive up inequality as wealth gathers in a small number of businesses.

At present, too often it feels as if the electorate is being offered a choice between re-nationalisation and big government, and corporatism – the domination of the economy by large private companies, who in turn use all the lobbying tools at their disposal to ensure that policy and regulation act in their interests, rather than the interests of wider society. We need a new policy framework that focuses on and champions competition and provides a clear alternative to both corporatism and nationalisation.

This report recommends:

1. Measuring and tracking industry concentration and competition on an ongoing basis – At present, a lack of data is holding back understanding, debate and policy making on market concentration and competitiveness and their impacts on the economy.

2. Creating a Minister for Consumers, Competition and Markets – The Minister for Consumers, Competition and Markets would be responsible for leading the efforts of the Government in improving consumer outcomes in markets, driving increased levels of competitiveness and minimising negative outcomes associated with excessive levels of market power held by large incumbents.

3. A “presumption in favour of competition” at the heart of M&A policy – putting consumer interests first. 

4. Boosting competition through data – consumers should own and be able to access and share personal data.  Allowing consumers to easily obtain digital records of their energy and telecommunications usage, and associated charges, would facilitate the development of new apps and internet tools to guide, encourage and automate supplier switching.

5. Bank of England style reporting of market concentration. We would like to see explicit targets placed on regulators by government to reduce the levels of industry concentration and boost competition in some consumer markets.

6. Automatically switching sticky customers to challenger companies in the energy and fixed-line telephony markets – We would like to see an automatic switching scheme introduced, whereby regulators, the State or another non-profit entity automatically switch “sticky” customers to new, cheaper challenger providers.

7. “Click in, click out” – ending the asymmetry between subscribing and unsubscribing. Companies often make it harder to subscribe to a product than to unsubscribe. We would like to see this asymmetry removed from consumer markets. If it is possible to sign-up online to a product, such as a pay TV or broadband service, it should be possible to unsubscribe online.

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