'Big Six' energy firms to face major competition inquiry

Ofgem has highlighted several key areas the Competition and Markets Authority should look at in its inquiry of the energy market, including possible tacit co-ordination and profits made by the 'Big Six'.

The energy watchdog has outlined the following areas:

• Customer trust: The review found that consumer trust had fallen with 43% of customers not trusting energy suppliers to be transparent with them.
• Entry barriers: The large suppliers own infrastructures such as power stations and supply businesses meaning it is difficult for new entrants to the market.

• Possible tacit co-ordination: Ofgem did not find evidence of explicit collusion between suppliers. However, the watchdog found evidence of possible tacit co-ordination in the timing and size of price announcements.

• Profits: The average profits for the 'Big Six' have increased from £3bn to £3.7bn in three years. Ofgem said it noted the increase and questioned suppliers saying that 5% is a fair margin.

Click here to read Ofgem's review into the energy market

The 'Big Six' energy firms "behave similarly" and "anticipate each other particularly on price rises" which leaves a market that is not competitive, Ofgem's Rachel Fletcher told ITV News.

Read: Centrica 'refutes totally' idea 'Big Six' are a cartel

The boss of Centrica, which owns British Gas, told ITV News the 'Big Six' energy firms are "absolutely not a cartel" after Ofgem's review found evidence of possible tacit co-ordination.

The energy watchdog said it did not find evidence of explicit collusion between the firms but said the timing and size of price announcements were part of the evidence that showed possible tacit co-ordination.

Sam Laidlaw told ITV News he "refutes totally" the idea that the 'Big Six' are a cartel and claimed that the energy market is "vibrant" and "very competitive."

Read: Inquiry a significant moment but it will take two years

The chief executive of RWE npower has welcomed the major competition inquiry into energy firms and said it is "time that the realities of the market were made public."

Mr Massara added that British consumers deserved a "comprehensive and vigorous investigation" so the public could start trusting energy companies again.

Read: Centrica 'refutes totally' idea 'Big Six' are a cartel

ITV News Business Editor Joel Hills has tweeted:

Read: Inquiry a significant moment but it will take two years

Centrica boss Sam Laidlaw has told ITV News the competition investigation into the 'Big Six' energy firms is "from Centrica's perspective fine [but we're] concerned from country's perspective."

Read: Inquiry a significant moment but it will take two years

ITV News Business Editor Joel Hills has tweeted:

The chief executive of Centrica, which owns British Gas, has welcomed the major competition inquiry into energy firms but said a lengthy review could damage investment when the market's "security is being seriously challenged."

Sam Laidlaw said: "Anything that clears the air and helps rebuild trust in the industry must be a good thing. Britain's energy market is highly competitive and we believe that a full independent review by a respected regulatory authority would demonstrate precisely that.

"Competition is working, providing choice for consumers and some of the lowest prices in Europe.

"We hope that a lengthy review process will not damage confidence in the market, when over £100 billion of investment in new infrastructure is needed.

"A prolonged period of uncertainty could damage investment at a time when Britain's energy security is being seriously challenged."

Read: Inquiry a significant moment but it will take two years