The study follows the publication in December 2003 of a report
by the Office of Government Commerce (OGC), which concluded that
the public sector needs to take a more systematic and strategic
approach to the markets in which it operates.
The OGC recommended that the Government should come to a
conclusion on the number of, and nature of, suppliers necessary for
effective competition or security of supply. Under certain
circumstances, said the report, there may be a case for
investigation by the OFT.
In the IT market the study may impact on major players such as
Microsoft, which is already facing the prospect of an increasing
number of public agencies transferring to open source technology.
In January Microsoft narrowly managed to hold onto a desktop
contract with Newham Council in London.
The OFT study will involve preliminary research into the impact
of public sector procurement on competition. This will invlove
external consultants analysing how public sector procurement might
affect competition from an economic point of view, both positively
and negatively.
The research will also aim to identify specific markets where
public procurement is likely to be affecting competition. One
possible example is whether procurement practices might be
restricting entry by new firms; another is whether they might be
enhancing competition – and its benefits – through openness to new
and innovative ideas.
The OFT expects this research to be completed by July with a
report published later in the summer.
