Ticon UK Ltd

Collaboration and aggregation will inevitably lead to lower costs for Government agencies, something that is clearly unavoidable over the next few years.  Aggregation of demand has another impact, fewer and fewer suppliers are able to compete for large scale contracts, as the suppliers with scale are able to trade volume for margins. This has a positive effect for the public purse, but what is the consequence for the diversity of our supply chains? If more and more business is aggregated to fewer and fewer suppliers, we're likely to see a fall in competition and the development of monopoly scenarios in the future. 

In spend areas like utilities and telecoms, regulators have been forced to develop competition through opening the market, selling off state run businesses and where necessary, breaking up monopoly businesses. This is fine where the state grants licences to operate in these sectors, but what about temp staff agencies or facilities management? What will happen if these categories of spend fall into a monopoly scenario?

At the moment, this concept may seem a bit far-fetched, but the Government spend accounts for over 43% of spend across Europe. Over the next ten years European Governments will inevitably seek to outsource more and aggregate demand in exchange for larger, cheaper contracts.  The movement of this amount of money in favour of companies like Mitie, Serco, Ranstadt and others could easily change competitive markets into non-competitive monopolies.  The question is, how ready are we to protect competition in these markets, especially if it means reducing deficits at a slower pace?