Monopoly and the materials supply industries of the UK

The materials supply industries of the UK provide some good illustrations of uncompetitive market structures. The purpose of this paper is to analyse selected materials supply industries so as to highlight the reasons for this particular market structure and the extent to which the construction industry has suffered because of this and is likely to suffer in the future. This paper identifies a number of industries within the materials supply sector where the degree of competition is limited and outlines the reasons for this but concludes that while there is potential for abuse of monopoly power, this does not appear to have been unduly misused at this time. The paper then considers whether this apparent lack of abuse stems from countervailing factors or is simply a product of the current depressed state of the UK construction industry and thus whether abuse could emerge should demand increase in the future. The paper concludes that undue advantage has not been taken of monopoly power due to the potential for countervailing power on the part of the customers, the potential for import penetration, and fear of adverse legislative or administrative action from the Government or the Monopolies and Mergers Commission, and that a modest increase in construction demand might not provoke a major price spiral.