February 18, 2015 Leave a comment
A CCP Working Paper by Professor Catherine Waddams (CCP & Norwich Business School) and Dr Minyan Zhu (CCP & Nottingham University Business School) is cited by the CMA in relation to the impact of the introduction of the Standard Licence Condition 25A (the SLC 25A non-discrimination clause) in 2009. The paper, ‘Pricing in the UK retail energy market 2005-2013‘, found that the non-discrimination clause prompted an adverse effect on competition in the energy market after its inception. An abstract for the paper can be found below.
UK governments and the energy regulator have shown increasing concern about the health of competition in the residential energy market, following their pioneering deregulation at the end of the last century. We identify the effects of introducing the non-discrimination clauses in 2009, a major regulatory intervention and the first since deregulation. We explore the effect of this intervention on the price movements of the six major players, and find that the nature of competition in the industry has changed, with less effective rivalry between the regional incumbents and large regional competitors following the intervention; companies seem to have ‘retreated’ to their home regions, leaving a market where pricing behaviour resembles more closely a duopoly between British Gas and the regional incumbent.
Catherine Waddams, ‘Is an in-depth energy market inquiry worth it?‘ (March 27, 2014) Competition Policy Blog.
Morten Hviid & Catherine Waddams, ‘Non-discrimination Clauses in the Retail Energy Sector‘ (2012) 122 The Economic Journal 236-252.