Competition Law Enforcement and Household Inequality in the United Kingdom

Abstract

Using a comprehensive database of all the decisions made under European and U.K. competition laws over the 15-year period to 2020, alongside households’ consumption and market data, we estimate the level and distribution of the savings from enforcement across the United Kingdom. We find that competition law enforcement generated greater proportional savings for lower- and average-income households relative to the wealthiest households. Our estimations indicate average savings of 2.5 percent of the annual household budget for the lowest-income households, 2.1 percent for the average household, and 1.8 percent for the highest-income household. While proportionally greater savings for lower- and average-income households from competition law are observed in most years, in some years, higher-income households saved more. Our results bring to light the variables that affect the distribution of savings. Among them are the enforcement tool applied, the sectors in which enforcement action took place, and the enforcement body. We further illustrate how the public enforcement of competition law affects economic disparity and could potentially be used in a more structured, transparent, and systematic way to address societal concerns about increasing inequality.

The effects of competition law on inequality—an incidental by-product or a path for societal change?

“…2 The economic elite across the world has made significant gains over past decades, while the earnings of the rest of society have steadily declined. 3 In the face of the current economic downturn and rising costs of living, these trends have intensified.…”