This article about the privatisation of the UK’s electricity by James Meek in the London Review of Books from 13 September 2012 (I’m still catching up) is well worth a read.
There are many good bits (where by “good bits” I mean “bits that make one despair”) but this section caught my eye:
…before full competition was established [in the electricity industry], he, the regulator [Stephen Littlechild], imagined he would act as a surrogate, a kind of State Competitor General, enforcing occasional price cuts to keep the private companies on their toes. In the end, he thought, the need for regulation would largely wither away. What Littlechild, an academic with no business experience, didn’t fully take on board was that the reason private companies compete with each other isn’t that they like competition. They hate it, and will only compete if forced to do so. Rather than competing with a rival on price or product or revenue, they’ll try to eliminate the rival firm and take over its territory by buying it; or reach an unwritten agreement on an oligopolistic cartel of a few big firms, carving up the market between them.
I don’t know why, among all the arguments against privatising certain industries, this hadn’t hit me before: “The reason private companies compete with each other isn’t that they like competition. They hate it.” Of course, yes.