The Competition and Consumer Protection Commission (CCPC) has highlighted a weakening of competition across several areas of Ireland’s services sector in its latest State of Competition report. The study, covering a 15-year period in the non-financial services industry, represents a significant milestone in competition policy analysis in Ireland.
According to the report, market concentration and average markups have increased across multiple service industries, particularly since 2016. By 2022, the top four businesses in these sectors accounted for an average market share of 37%, up 12 percentage points from 2008. The trend is most pronounced in digitally intensive industries such as Information & Communications Technology (ICT) services and Professional, Scientific & Technical services, including accounting and legal services, where a small number of firms now command a substantial share of turnover.
Despite these concentration trends, the report identifies positive developments, with younger businesses contributing to turnover growth and productivity gains, highlighting the potential for new entrants to drive competition and innovation.
Complementing the analysis of market structure, the CCPC has also examined barriers to entry and expansion. These include challenges in raising sufficient capital, navigating regulatory requirements, and managing legal costs, which can hinder new businesses from entering or growing within the market.
Brian McHugh, chair of the CCPC, emphasised the importance of maintaining competitive markets, stating that the findings underscore the need to focus efforts on promoting competition where it can have the greatest economic impact. “Our initial findings show an increase in concentration and average markups, meaning the promotion of strong competition has never been more important,” McHugh said, noting that the report serves as a warning about weakening competition in certain sectors.
The CCPC intends to use the report’s insights to guide its future activities, aiming to support market dynamism and safeguard a healthy competitive environment in Ireland’s services sector.