In Autumn 2012, the government was notified of allegations that the UK gas market had been manipulated by price reporting agencies.
The specific allegations were that there had been manipulation of the gas market in Great Britain on 28 September 2012. These allegations concerned trading on that day in the period leading up to 4.30pm, when price reporting agencies produce a benchmark price for the day. Such benchmark prices are often used in a range of other contracts.
It was alleged that gas was sold at a lower price than necessary, in order to manipulate downwards the benchmark price produced by price reporting agencies.
The Government subsequently ordered the regulators to investigate but today UK Energy Minister Ed Davey announced that OFGEM and the Financial Conducts Authority (FCA) have concluded that they could find no evidence in this instance of market manipulation and that no further action is required. He said:
“Market abuse is always wrong, and where it exists it must be identified and the full force of the law applied. Ofgem and the FCA have conducted a rigorous review and have not found evidence of market manipulation in this case.
“Market abuse is a very serious concern and I’m determined that where it exists, the full force of the law is brought to bear.
“That’s why we’re introducing annual competition reviews to make sure the energy market is operating properly, and we’re proposing to introduce criminal sanctions for manipulation of the energy markets.”
Prime Minister David Cameron had earlier announced that Ofgem, OFT and the new Competition Markets Authority will lead a new annual review into the state of the competition of the market.