The UK public sector is diverse in scope and purchases goods and services in a wide range of markets. In the majority of cases, these transactions are unlikely to have an impact on competition. Even where the public sector has a degree of purchasing power, it will have a strong incentive to ensure that supplier markets remain competitive so that it can secure good value for money. In addition, public procurement may be able to enhance the benefits of competition through, for example, openness to new and innovative ideas. Nonetheless there may be markets where public procurement is dampening competition. One possible example is whether public procurement might be restricting entry by new firms.
This piece of research is being commissioned by the Markets and Policy Initiatives (MPI) division of the OFT. MPI complements and supports enforcement teams by taking a broad look at how markets work. It identifies areas for study and reports on markets where concerns have been raised but where enforcement action under the Competition Act 1998 does not, at first sight, appear to be the most appropriate response.
The objectives of the proposed research are to:
The OFT expects the research to inform both the OFT and other parts of Government about the relationships between public sector procurement and competition and to highlight areas where further market studies should be conducted.
Questions to be considered within the research project include:
This research is expected to last three months and to be completed by July 2004.
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