This is the third in a series of essays from the Rt Hon Kit Malthouse MP on how to fix the British economy. You can read the other instalments in the series here:
1. Growth is the Child of Capital
2. Ownership and Nationhood: The Fight for Economic Belonging
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The Friendly Giants: Breaking Free from Our New Masters
It used to be the case that Britain was the home of dynamism and enterprise, a nation of shopkeepers and innovators, of new ideas and fresh competition. Today, however, that spirit is under siege. In industry after industry, we see the same pattern: a handful of dominant firms controlling vast swathes of the economy, shutting out competition and stifling innovation.
The idea that monopolies are just an American problem is a convenient illusion. Yes, the United States is now effectively run by a handful of colossal firms – Amazon, Google, Apple, Microsoft and Meta – whose power rivals that of nation-states. But look at Britain: in banking, retail, supermarkets, energy, telecoms and beyond, we are seeing the emergence of near-monopolies and informal cartels, making life more expensive for consumers and life impossible for new businesses trying to break through. The UK is now starting to be dominated by US monopolies too, with American tech giants dictating the terms of trade, access and pricing across multiple industries. We are in danger of becoming an economic colony of Silicon Valley, where our regulators fail to act while our markets are captured by firms whose loyalties lie elsewhere.
This is not how capitalism is supposed to work. Competition drives innovation, raises productivity and delivers better value for consumers. But competition is being throttled, and if we let this continue, we will end up with an economy that works only for the biggest players – not for ordinary people.
The rise of monopolies is not just about a few companies getting bigger. It is about the systematic elimination of competition – not through innovation, but through brute force. In banking, the big four – HSBC, Barclays, Lloyds and NatWest – control over 80% of the market, making it nearly impossible for challengers to gain real traction. In supermarkets, Tesco and Sainsbury’s dominate, yet the regulator is barely interested in stopping consolidation. In energy, the same handful of suppliers dictate pricing, even after the collapse of smaller firms. In broadband and telecoms, ‘choice’ is often an illusion: multiple providers operate on the same infrastructure, with little incentive to lower prices.
Even worse are the informal cartels, where companies don’t need to merge to operate like monopolies. Fuel prices move in eerie lockstep. Supermarkets seem to ‘independently’ raise prices at the same time. Banks set mortgage rates at a level that seems suspiciously coordinated. The regulators, charged with preventing such abuses, are failing. The Competition and Markets Authority (CMA) has repeatedly allowed mergers that reduce competition, including Sainsbury’s takeover of Argos and the growing consolidation in broadband services. Ofcom has been slow to act on the monopolisation of digital advertising by Google and Meta, while the Financial Conduct Authority has done little to open up retail banking, despite challenger banks struggling to break through.
A case study in regulatory failure can be found in Amazon’s dominance over e-commerce. Amazon acts as both marketplace and competitor, setting the rules for thousands of businesses while profiting from their dependence. Small firms that sell on Amazon have no choice but to use its platform, yet face exorbitant fees and shifting rules. Amazon can increase the cost of using its fulfilment services at will, reduce product visibility if sellers don’t comply with its terms and even promote its own private-label products at the expense of independent sellers. For many, Amazon has become an unavoidable gatekeeper, extracting rents while stifling alternative routes to market. This is the very definition of monopoly abuse, yet regulators have so far failed to intervene effectively, allowing the problem to worsen.
The corporate giants that dominate the headlines are bad enough, but it’s the shadowy middlemen of our economy that are quietly stitching us all up behind the scenes. Payment service providers like Visa and Mastercard levy huge fees on businesses while locking out potential competitors. Credit rating agencies – Moody’s, S&P and Fitch – wield unaccountable power, dictating borrowing costs for companies and even governments. The 2008 financial crisis exposed their recklessness, yet they remain untouchable, deciding which businesses sink or swim with no real oversight. These firms and others like them sit at the heart of the economy, but no one ever talks about them, because they are designed to operate in the background.
Even my own profession, chartered accountancy, is a textbook example of creeping consolidation. What was once the Big Six – a competitive field of major audit firms – has now dwindled to the Big Four, and in practical terms, often the Big Three. PwC, Deloitte, EY and KPMG dominate corporate audits, controlling over 90% of FTSE 350 clients. These firms have become untouchable, not because they are the best, but because the system is now rigged in their favour. Companies of a certain size have no real choice but to turn to them, and their failures – from Carillion to Patisserie Valerie – prove that their dominance has bred complacency, not excellence. Worse still, private equity is now moving in, consolidating mid-tier firms under single ownership, further limiting choice and reducing independence. This is not a competitive market; it is an oligopoly in all but name, and so-called regulators have let it happen.
Britain’s economy is increasingly defined by minnows and whales – giant conglomerates at one end and struggling startups at the other, with almost nothing in between. Where are the mid-sized businesses? Too often, they are either swallowed up by larger firms or driven to collapse or emigration before they can scale. Nowhere is this more evident than in the life sciences sector, where British ingenuity and research prowess regularly spawn world-class startups, only for them to be bought out before they can grow into the next global powerhouse. As I lamented in my first essay in this series, ‘Growth is the Child of Capital’, the UK simply does not have the infrastructure or financial ecosystem to help small firms scale into sustainable mid-sized companies. The result is a lopsided economy, where innovation is harvested by corporate giants before it can generate real economic dynamism. If we are to build a serious industrial base, we must create the conditions for companies to grow, rather than forcing them into a binary choice: acquisition or extinction.
Adam Smith himself warned of this when he wrote: ‘People of the same trade seldom meet together… but the conversation ends in a conspiracy against the public.’ It is not just that monopolies exist – it is that they are being protected.
The role of the regulator should be to keep markets open and fair. Yet too often, regulators become the servants of the companies they regulate. We see it time and time again: the Financial Conduct Authority unable to stop banking consolidation; Ofcom letting telecom giants squeeze out new entrants; and Ofgem standing by while the energy sector becomes more concentrated.
This is classic regulatory capture. The watchdogs have become lapdogs, and big businesses spend more time and money influencing regulators than innovating. When firms pour millions into lobbying instead of R&D, you know we have a problem.
Nothing illustrates the jaw-dropping failure of regulation more starkly than the appointment of Doug Gurr, a former Amazon executive, as the interim chair of the Competition and Markets Authority (CMA). This is not just a case of the fox guarding the henhouse – it is the fox being given the keys to the entire farm. Gurr, fresh from his role at one of the most aggressively anti-competitive corporations on the planet, is now in charge of overseeing fair competition in Britain. You could not make it up.
The CMA, already a byword for bureaucratic inertia, now risks turning into an outright corporate subsidiary, a watchdog that spends more time rolling over for industry giants than holding them to account. This is the very definition of regulatory capture: a regulator that no longer regulates but facilitates. If this kind of corporate infiltration is allowed to continue, then we might as well stop pretending we have competition enforcement altogether. It is not just a disgrace; it is a fundamental betrayal of the British consumer.
Nowhere is the failure of our current model more apparent than in the privatised utilities – once the shining example of market liberalisation, now a textbook case of rentier capitalism at its worst. These firms, entrusted with the basic essentials of modern life – water, energy and broadband – have become less about service and more about extracting value from captive customers. Instead of innovating, investing and competing to provide a better deal for the British public, they have mastered the dark art of regulatory capture. With an army of lobbyists and legal teams, they have bent the very bodies meant to police them into de facto guarantors of their profits. Consumers are left to foot the bill for poor service, crumbling infrastructure and opaque pricing structures, while executives cash in and shareholders rake in dividends.
And yet, should we really be surprised? We have, after all, constructed a system where these businesses are perversely incentivised to sell less of what they provide. Water companies, for instance, are urged to conserve supply, not expand it. Energy firms profit most when customers are squeezed into using the bare minimum at the highest price. The result? A dysfunctional market where scarcity is rewarded and abundance penalised.
This isn’t capitalism as it should be – dynamic, competitive and wealth-creating. It’s a grotesque distortion that fosters resentment and undermines faith in the very principles of the free market. If we are serious about restoring trust in our economic system, these monopolistic relics must either be brought to heel or broken up entirely.
The biggest political challenge in smashing up all these monopolies is persuading the British people that while they may feel comforted by these corporate behemoths, they are in fact being steadily suffocated by them. Large companies have mastered the art of public relations, wrapping themselves in the language of community, convenience and customer loyalty. They offer slick advertising, create familiar brands and present themselves as indispensable parts of everyday life. But the reality is that they are not our friends – they are rent-seeking leviathans whose primary goal is to extract as much value as possible while locking out competition.
Amazon, Google, Tesco, Visa – these companies don’t care about serving the public; they care about controlling the market. Breaking them up will feel counterintuitive to some, but it will deliver better prices, better services and a genuine market economy in the long run.
The last time a free-market economy found itself in the grip of monopolistic power, the United States took decisive action. At the dawn of the 20th century, vast industrial empires controlled American life – Standard Oil ruled the energy sector, the great railway trusts dictated the movement of goods and people, and J.P. Morgan’s vast banking empire had a stranglehold on finance. These conglomerates, like today’s monopolies, had mastered the art of making themselves appear indispensable while quietly rigging the system in their favour. But then the trustbusters arrived.
Under President Theodore Roosevelt, the US government smashed the great monopolies. The 1911 breakup of Standard Oil divided Rockefeller’s empire into 34 separate companies, instantly increasing competition, reducing consumer prices and unleashing a new wave of energy innovation. Northern Securities, the vast railway trust, was dismantled, restoring fair pricing and ensuring that industry could once again expand freely. These interventions weren’t just about curbing excess power – they were about restoring the spirit of enterprise and ensuring that no company, no matter how rich or powerful, could bend the economy to its will.
And what happened next? America boomed. The roaring 1920s saw a surge of competition, new businesses and innovation. The banking system diversified. The oil industry flourished. And consumers, for the first time in decades, felt the benefits of real choice. The trustbusters weren’t just breaking things up for the sake of it – they were building a freer, fairer economy where competition could thrive.
The lesson is clear: Where competition thrives, choice flourishes. Where monopolies rule, markets stagnate. The UK beer industry proves that when government policy is designed to encourage new entrants rather than entrench incumbents, the market responds with innovation, variety and better outcomes for consumers. If we want a vibrant economy full of challengers, disruptors and wealth creators, we need to break up the cartels, not bow to them.
And what of the Conservative Party, once the champion of the underdog? Sadly, we allowed ourselves to be seduced by big business. The party that once stood for the self-employed, the small business owner, the scrappy entrepreneur, started rubbing shoulders with corporate titans instead. Politicians enjoyed the glitzy galas, the Davos invitations, the air of importance that came from consorting with multinational CEOs on their yachts rather than scruffy shopkeepers. We convinced ourselves that doling out corporate welfare to big business – subsidies, tax breaks, sweetheart deals – was economic prudence, when in fact it was nothing more than buying jobs by the dozen to press-release to the similarly big-business-owned media. We even swallowed whole their industrial strategy – the ultimate form of regulatory capture – where government stopped being the neutral referee and became an active player in a game rigged for the incumbents. We lost our way and became corporatists, turning our backs on the very principles that once made the Conservative Party the natural home of free enterprise. It is time to remember who we are.
In my first two essays on the future of Conservative economic policy, I set out two foundational pillars: electrifying risk capital and expanding ownership. But a third is vital. The Conservative Party must back the risk-takers – the entrepreneurs, disrupters and insurgents – because by championing them, we champion growth, competition and consumer choice. Britain thrives when challengers disrupt, innovate and win. Our job? Make sure they can.
The moment we allow monopolies and cartels to rule unchecked, we abandon the principles of free enterprise. The moment regulators serve corporations instead of competition, capitalism becomes rigged. This must change.
We need a competition revolution, one that restores the spirit of enterprise, encourages new entrants, and stamps on monopolistic behaviour. This should be a central Conservative mission, and here’s how we do it.
Britain’s competition laws are toothless and not fit for purpose. We need a modern Competition Act, modelled on the break-up of monopolies in the US in the early 20th century. This must stop major corporate mergers that reduce competition – no more easy takeovers. It must make collusion and price-fixing punishable by meaningful fines and long criminal sentences, not just slaps on the wrist. It must routinely mandate structural separations – forcing firms to spin off certain parts of their business to allow competition to flourish.
The Competition and Markets Authority must be turned into a real force, with expanded investigative powers and serious financial backing. That means much more use of its ability to launch surprise investigations into market abuses, the power to block anti-competitive mergers before they happen and a shift in focus to breaking up dominant firms, not just managing them. We need a lot more Eliot Ness and a lot less Sir Humphrey.
One of the biggest problems for competition is incumbents winning all the big contracts. If you are a new bank, a startup retailer or a tech disruptor, good luck securing government contracts: they nearly always go to the same big firms. That has to change. The Government must commit to awarding 25% of all contracts to businesses less than 10 years old, ban ‘bundled’ mega-contracts that only the biggest firms can bid for and ensure real competition in procurement, favouring new market entrants over predatory pricing.
Some companies are simply too big and too dominant. If they are operating like monopolies, then they should be treated like monopolies and dismantled. If a firm controls more than 50% of a market, a breakup review should be triggered automatically. The burden of proof should be on the company to prove it is not behaving anti-competitively. Forced divestitures must be a positive option, not a last resort.
This is not anti-business. This is pro-capitalism.
Competition is not just about economics – it is about fairness, choice and freedom. If we allow monopolies and cartels to dominate, we strangle innovation, punish consumers and make it impossible for small businesses to grow.
This is a defining Conservative cause. We must stand for free and open markets, a level playing field and a government that backs competition, not corporate giants. Labour will never take this fight seriously. They are ideologically inclined toward big state, big government and big corporate partnerships. If we truly believe in a vibrant free-market economy, then we must make smashing monopolies and reviving competition a central plank of our next economic mission.
In time, the Conservative Party will recover its confidence, and when it does, it must have the courage to write the next chapter of free enterprise for the United Kingdom, where no titan is too mighty to challenge, and no upstart too small to succeed.
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