Big six UK energy retailers collude on pricing: report
London (Platts)--14Jan2008
The big six energy retailers in the UK are facing a referral to the
Competition Commission, according to a report in the Sunday Times January
13.
The front-page article, headed "Energy rip-off exposed", said Britain's
biggest energy companies have stifled competition to raise prices and make
record profits of more than GBP4.5 billion ($9 billion).
The newspaper said that the companies profited from a dramatic fall in
the wholesale price last year, which they failed to pass on to householders,
leading analysts to predict record profits.
Executives in charge of the six major companies were last week confirmed
to be holding confidential meetings at least every two months to discuss
market strategy, from which smaller rivals are excluded.
Among the allegations, the six make sure their prices are broadly in line
with each other; they restrict energy supplies to competitors; and demand
laborious accreditation and credit requirements for new entrants.
UK finance minister Alistair Darling was due to meet the head of the
energy regulator Ofgem Monday, but Ofgem told Platts the meeting was
private.
He wrote requesting a meeting with John Mogg a week ago, seeking views on
the
link between wholesale and retail prices, among other topics, the ministry
told Platts. Ofgem said that if anyone had any evidence of collusion or any
other form of anti-competitive behavior, they should forward it to Ofgem. So
far though nothing had been sent as far as the spokesman was aware.
The industry group to which the retailers belong, the Energy Retail
Association, said last week, according to the report, that their meetings
were
concerned with improving "best practice" and did not discuss pricing
policies
in any other context. "It's a fallacy to say there isn't a difference in
price," said the ERA's CEO, as reported by the Sunday Times.
A list of the big retailers in the UK would include Germany's RWE and
E.ON, Scottish Power and Scottish & Southern Energy, Centrica of the UK and
Electricite de France. Scottish & Southern told Platts it supported the
statement by the CEO of ERA. Other companies had not yet returned calls.
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