A powerful new UK competition watchdog has come into force today as part of a shake-up to make markets work better for consumers, business and the wider economy.
The Competition and Markets Authority (CMA) is expected to have payday lenders and energy firms in its sights after taking over the responsibilities of the Competition Commission and some functions of the Office of Fair Trading (OFT).
The body will be responsible for making sure markets are "open, transparent and dynamic".
The new "strong and streamlined" authority will conduct market studies where there may be competition and consumer problems, investigate mergers which could restrict competition and probe possible breaches of UK or EU prohibitions against abuses of dominant positions. The new body will take over the caseload of the Competition Commission, including its probe into the payday lending industry which is due to report back later this year.
The OFT referred payday lenders to the Commission after an investigation last year found "deep-rooted" problems, including irresponsible lending taking place to people who could not afford to pay back their loans on time, meaning they were forced to roll the debt over and they then became trapped with their payday lender.
Last week, regulators said they planned to refer the energy sector for a full-scale competition investigation.
Ofgem said a full-scale probe by the CMA would "clear the air" amid concerns that switching between suppliers had fallen and that those who never switched, many of them vulnerable customers, were being ripped off. The CMA investigation will be the first ever full-scale competition probe into the energy sector and will subject to unprecedented scrutiny. It is likely to be launched within weeks following a consultation on Ofgem's findings.
The body has extensive powers to shake up the sector by removing "long-term structural barriers to competition" which could include separating firms' generation arms from retail divisions selling gas and electricity to homes and businesses. Another area of interest the CMA has already highlighted as a "major priority" to make sure competition is working effectively is the rapidly-expanding online market.
The CMA was established under the Enterprise and Regulatory Reform Act 2013. It came into being last October 2013, before taking on its full powers tomorrow.
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