Weak competition harms consumers: the cost of weak competition is borne by consumers in the form of higher prices, lower quality and less innovation. This comes at a cost to consumers, other businesses and the wider economy. If competition is weak or ineffective, firms do not face the same pressures to keep prices down to keep quality up to operate efficiently or to innovate. When firms compete effectively with each other, they cannot raise prices, or cut quality and service, without losing business. In such circumstances it is more important than ever that competitive intensity across the economy is monitored and supported.Įffective competition happens when businesses compete to win customers by offering them a better deal. The COVID-19 pandemic, the UK’s changing trade relationship with the EU, disruption to supply chains and shipping, and rising energy costs have all brought significant change and upheaval to the UK economy over the past few years. Specific analysis of competition in digital markets, which are poorly captured by existing economic statistics. Īn assessment of whether consumers on lower incomes face less competitive markets.Īnalysis of the latest surveys examining businesses’ and consumers’ experience of markets. Improved estimates of concentration that adjust for the effects of international trade and the effects of competing firms having the same owners (so-called “common ownership”). Updated indicators of the state of competition, including concentration, profitability and markups, and entry and exit. In particular, the latest report presents: It builds on the CMA’s first assessment, presenting new, improved and updated indicators of the state of competition. Its central aim is to provide information and analysis to help inform public debate and policy.
This second State of Competition report responds to the Chancellor’s and Business Secretary’s request. Others have also noted the value of such assessments: for example, John Penrose MP’s report on competition policy – Power to the people – called for a ‘State of Competition and Consumer Detriment’ report. This followed an earlier assessment published by the CMA in November 2020. Recognising the importance of competition to economic performance, in March 2021 the Chancellor and the Business Secretary jointly commissioned the CMA to carry out an assessment of the state of competition in the UK.
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