OFT completes stock-take of UK infrastructure

Private ownership and foreign investment is having a positive effect on the UK’s infrastructure assets, according to the Office of Fair Trading (OFT).

Launched in May 2010, the OFT’s stock-take aimed to take a ‘systematic’ look across economic infrastructure after the growth of specialist infrastructure funds and increasing use of private unlisted company structures. It said there were high-level concerns about whether consumers were getting a good deal in infrastructure markets – particularly in areas where there is no direct price regulation.

Heather Clayton, senior director of OFT's Infrastructure Group said: “The key aims of the stock-take were to map ownership and control across the economic infrastructure sectors such as ports, airports, energy and water networks, assess how ownership of infrastructure affects outcomes for consumers in these markets and examine the different forms of ownership.”

Infrastructure UK estimates that around 70% of current investment in infrastructure is carried out through private sector markets, and this proportion is likely to rise in the future.

However, the OFT said there are “no immediate concerns” about the overall levels of concentration and cross-ownership within the infrastructure market as a whole.

The OFT also found that the potential for change of ownership through strong
capital market competition can place an important discipline on managers and put downward pressure on costs.

 “In this context, foreign investment can be very positive in strengthening capital market competition,” said the competition watchdog.