Bigger firms are taking a greater slice of markets for services in the Republic, posing a threat to consumers, regulators warn.
Competition has fallen in most services in the Republic a landmark report published by the Competition and Consumer Protection Commission (CCPC) on Tuesday shows.
The commission says that smaller numbers of bigger businesses have a greater share of their industries’ sales than in 2008.
As of 2022, the top four businesses in the sectors studied had an average market share of 37 per cent, up from 25 per cent 15 years previously.
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The regulator’s research found that “concentration”, as the problem is called, rose across multiple service industries, particularly since 2016, giving some businesses increased market power.
The problem is not explicitly linked to high prices, Brian McHugh, commission chairman, explained.
“It’s a warning sign,” he said. “If concentration increases over the long term then it presents a real risk for consumers,” he said.
The commission found that markups, the amount added to a product’s or service’s cost to set its price, also increased between 2008 and 2022.
Markups rose about 3 per cent, but this was lower than the rate found in most international studies.
Increased concentration is most pronounced in digitally intensive industries, including information and communications, and professional, scientific and technical services, including accounting and law, the report says.
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The findings could prompt reviews of professions including accountancy, law and vets, next year, Mr McHugh noted.
He added that the commission was “disappointed” that Government and legislators have not acted on some reforms of the legal professions that the commission sought 20 years ago.
However, Mr McHugh acknowledged that they had acted on others.
The CCPC’s State of Competition in Ireland report assessed how competitiveness evolved here over 15 years from 2008 to 2022.
The State agency, responsible for enforcing and promoting compliance with competition and consumer protection laws, will use it as a basis for further analysis and research.
“We will use the findings of this report to help us focus our activities on areas where increased competition can have the biggest impact,” Mr McHugh confirmed.
The CCPC is the first such agency in the European Union to have completed a study of this kind.
The research focused on non-financial services. Along with surveying the top four businesses in each industry, it assessed the top 10 and also found high concentration at that level.
However, the commission says there were positive signs also, particularly evidence showing strong numbers of new businesses starting up in Irish services.
These “younger businesses” had strong survival rates and took increasing shares of turnover in their sectors.
They accounted for a lower proportion of jobs, but the commission notes that this could partly be due to greater productivity and use of technology.
The CCPC also published reports on Tuesday showing that raising capital, regulatory burdens and legal costs are among the barriers that businesses face when entering a marker or expanding.
“Competitive markets are vital for a health economy,” Mr McHugh pointed out.
