Private monopolies cannot be trusted

The Guardian's revelations about Libor-like price-fixing in the gas markets are explosive for two reasons.

First, why has this only come to light publicly through the action of an ex-trader turned whistleblower?

Why have the official regulators, FSA and Ofgem, which were alerted to this problem months if not years ago, taken no action to get to the bottom of this scandal and to stamp it out?

Second, these revelations show that despite the propaganda about the efficiency of private markets, they are in fact usually pockmarked with over-cosy corrupt relationships and cartelised price-rigging.

In banking it is the selling of financial derivatives approved by rating agencies paid by the banks themselves, as well as the orchestrated rigging of the Libor price controlling contracts worth some £800 billion across the world.

In energy markets it's the over-cosy operations between traders and price reporters, where the latter are denied access to the opaque over-the-counter market and are pressured by traders to accept changes that suit them in their benchmark reporting.

Crucially, on the day when the price of day-ahead gas contracts are bought and sold, from which the price reporters' benchmark prices are derived, the price suddenly drops sharply just at the point it is known that the price reporters are trying to establish the state of the market.

This "unusual trading" activity has long been known and has been reported to Ofgem.

However, no decisive action was taken, even though contracts worth some £300 billion are underpinned by this data.

The only action taken has come from the EU under the energy market integrity and transparency regulation and from the extra market oversight exercised by the pan-European energy regulator ACER.

Of course all the big six energy providers, in their usual saccarine-sweet protests of innocence, deny any wrongdoing - just like the banks over derivatives and PPI mis-selling and then over Libor manipulation.

Can you believe a word the corporates say when they're caught with a hand in consumers' pockets?

Nor is this deliberate distortion of markets brought about by misleading information from energy traders confined to gas.

The work of the price-reporting agencies has also been scrutinised by the G20 group of leading global countries, which believes it is responsible for substantial oil trader speculation.

Exactly the same has been noted elsewhere in the commodities markets, including the foodstuffs industry.

The moral is that private near-monopolies cannot be trusted, and a thorough review is now needed whether Britain should now draw away from private market corruption and regain the stability, trustworthiness and integrity of publicly controlled markets.

• For more of Michael Meacher's writing visit www.michaelmeacher.info