Following on from an announcement that SSE would be freezing domestic energy prices in the UK until 2016.  Today the news has been announced that the larger Energy providers in the UK the “Big Six” are to be the subject of an investigation with regard to preventing effective competition with the UK energy Markets.

British Gas, Eon, Npower, SSE, Scottish Power and EDF combine to make up the “Big 6” of energy providers who account for around 95% of the market in the UK.

The published Ofgem report does not make any accusations of the group having colluded over pricing. Ofgem have referred the case to the Competition Markets Authority (CMA) and the CMA will conduct aninvestigation over approximately 18 months looking to see if there are any barriers to new companies entering the market and being able to compete effectively.

Dermot Nolan, the chief executive of Ofgem, said: “The CMA has powers, not available to Ofgem, to address any structural barriers that would undermine competition.  Now consumers are protected by our simpler, clearer and fairer reforms, we think a market investigation is in their long-term interests”
Hopes are that the CMA investigation will lead to a tighter regulation on the energy market preventing a situation where new business cannot enter the market let alone compete while a small selection hold the market in almost a collective monopoly
The energy markets have been under scrutiny for the past 18 months. Following price increases averaged at 4% across the group several members announced high profits. The energy secretary, Ed Davey, set the process in motion for a full enquiry earlier this year when he wrote to regulators stating that profit margins of the Big 6 energy suppliers had been higher than anticipated.

E.On UK chief executive Tony Cocker has stated that an investigation is the only way “to restore full public confidence to the energy sector and depoliticize the whole issue”.