Investor concern over CMA findings at ‘near zero’, claims Citigroup

The initial findings of the Competition and Markets Authority (CMA) have fallen to zero now that a break-up of the big six seems unlikely, according to Citigroup analysts.

Early indications from the CMA have suggested that the authority has found little to raise concern over the vertically integrated structure of the UK’s largest energy suppliers, allaying early fears that the companies may be forced to separate their retail and generation business arms in a radical industry overhaul.

The CMA is set to report its initial findings by the end of the month but a weekend report from the Daily Mail cites sources within the CMA as saying that there will be no calls for a breakup.

Citigroup analysts have backed up the report, saying: “In our conversations with investors, we believe the market is not too concerned about the possible announcements to come”.

“Since the release of CMA’s issues statement, we believe market concerns for a possible break up have diminished to near zero. Of bigger interest in our opinion is any remedies imposed on the number, level and flexibility of tariffs and the discrepancies in profitability between customers that have never switched and those which have shopped around,” an investor note from the analysts added.

The Daily Mail sited an industry insider as saying: “The CMA will give a clean bill of health to the big energy companies on this issue. It has accepted that the notion that they are taking advantage of consumers because they own generating arms does not stack up”.

The CMA’s initial findings are expected within weeks, with final recommendations expected by the end of the year.