By Muvija M
LONDON (Reuters) - Waning competition in British markets has allowed the biggest companies to cement their position and raise prices, hammering the poorest households already grappling with a cost-of-living crisis, an official report said on Friday.
Britain's competition regulator said in a report for the government that a "limited number" of companies were increasingly dominating markets after the global financial crisis and COVID-19 pandemic blocked smaller players from entry.
"We are seeing markets getting more concentrated, companies enjoying higher mark-ups and the biggest firms maintaining their leading positions for longer," the Competition and Markets Authority's Chief Economic Adviser Mike Walker said, calling the development "worrying."
"We've found that the poorest households are likely to suffer the effects of these changes the most - at the very time when they are already being hit by sharp rises in the cost of essential items."
Smaller, more nimble companies, can theoretically help dilute monopolies through innovation and new ways of working to lower the prices of products or services.
In finance, a number of "challenger banks" sprouted up in recent decades to take on centuries-old groups such as Lloyds Banking while challenger brands have been used in telecoms and retail to keep prices down.
However, the global financial crisis and the pandemic have decimated existing companies and limited the number of new entrants according to the CMA, allowing the largest firms to cement their positions.
In the first three months of 2022, a record number of companies filed for insolvency in England and Wales in 10 years, while record gas prices last year saw tens of energy suppliers go bust.
Economists have predicted that Britons, who are already paying more for essentials from food and energy to internet and furniture, will see the biggest drop in their living standards this year since at least the 1950s.
The report said low-income households were significantly more likely to suffer from a lack of competition because essential goods markets tend to be more concentrated.
(Reporting by Muvija M and William James; editing by Kate Holton and Tomasz Janowski)