Doubts over pricing raised by DTI report

These are the conclusions of a new report by the Department of Trade and Industry on increased competition and its benefits for the public.
Optics was given a relatively clean bill of health, but the report, covering six sectors, concluded that increased competition often brought 'large price reductions, innovation, and product improvement, typically achieved with little evidence of harmful side effects. The one exception might be retail opticians'.
The profession was singled out when viewed alongside international phonecalls, the net book agreement, passenger flights to Europe, new cars and replica football kits. 'Superficially at least, there is no hard evidence that deregulation has helped force [opticians'] price downwards,' it stated. 'Indeed, the price rises observed for private spectacles in the last two to three years suggest the opposite, albeit some 15 years after deregulation.'
The Benefits from Competition: some Illustrative UK cases detailed optical deregulation 20 years ago, and stated that the jury was still out as to whether it had brought improvements on price and quality. 'Available evidence on price and quality is inconclusive on whether they have proved successful,' it said.
'While it was accepted that deregulation would indeed intensify pressure on margins, it was believed that efficiency could be dramatically improved by increasing the utilisation of opticians' premises, and increased sales volumes would compensate for reducing margins,' the report stated.
It was thought that increased supply of spectacles from unregistered opticians would further reduce costs, which would be passed on to consumers with lower prices. Yet evidence offered 'no reason for believing that deregulation has had any major depressing effect on price', and 'making no adjustment for quality, if anything, the reverse would be true.'
Competition had brought no decline in service as some feared and since independents were still in business (albeit in smaller numbers) consumers still had the option of the 'arguably higher quality, more personal, service provided by such retailers'.
Fears that deregulation would reduce the number of eye tests were also unfounded, with the underlying growth rate unchanged. While there was little reason to believe that deregulation had any discernible effect on prices in the decade that followed, in the last five to six years, prices had risen quite steeply in real terms, it stated.
Competition had led to substantial price cuts for international phone calls, European airfares, and Ð due in part to 'consumer unrest' Ð a 15 per cent fall in football shirt prices, described as 'the most clear cut of our six cases'.Fears that deregulation would compromise optical standards were unfounded, but there was little evidence that competition had helped to lower retail prices.
These are the conclusions of a new report by the Department of Trade and Industry on increased competition and its benefits for the public.
Optics was given a relatively clean bill of health, but the report, covering six sectors, concluded that increased competition often brought 'large price reductions, innovation, and product improvement, typically achieved with little evidence of harmful side effects. The one exception might be retail opticians'.
The profession was singled out when viewed alongside international phonecalls, the net book agreement, passenger flights to Europe, new cars and replica football kits. 'Superficially at least, there is no hard evidence that deregulation has helped force [opticians'] price downwards,' it stated. 'Indeed, the price rises observed for private spectacles in the last two to three years suggest the opposite, albeit some 15 years after deregulation.'
The Benefits from Competition: some Illustrative UK cases detailed optical deregulation 20 years ago, and stated that the jury was still out as to whether it had brought improvements on price and quality. 'Available evidence on price and quality is inconclusive on whether they have proved successful,' it said.
'While it was accepted that deregulation would indeed intensify pressure on margins, it was believed that efficiency could be dramatically improved by increasing the utilisation of opticians' premises, and increased sales volumes would compensate for reducing margins,' the report stated.
It was thought that increased supply of spectacles from unregistered opticians would further reduce costs, which would be passed on to consumers with lower prices. Yet evidence offered 'no reason for believing that deregulation has had any major depressing effect on price', and 'making no adjustment for quality, if anything, the reverse would be true.'
Competition had brought no decline in service as some feared and since independents were still in business (albeit in smaller numbers) consumers still had the option of the 'arguably higher quality, more personal, service provided by such retailers'.
Fears that deregulation would reduce the number of eye tests were also unfounded, with the underlying growth rate unchanged. While there was little reason to believe that deregulation had any discernible effect on prices in the decade that followed, in the last five to six years, prices had risen quite steeply in real terms, it stated.
Competition had led to substantial price cuts for international phone calls, European airfares, and Ð due in part to 'consumer unrest' Ð a 15 per cent fall in football shirt prices, described as 'the most clear cut of our six cases'.