In terms of the Oil and Gas (Enterprise) Act it has been possible since 1982 for competitive activity in the gas supply business. By the time the Gas Act 1986 had come into force there had been no successful development in the market. By the end of 1987, fifteen months after the privatisation of the British Gas Corporation nothing had occurred in terms of competition to its successor British Gas plc. What had happened however was that by that time the Gas Consumers Council and a number of individual customers of British Gas (BG) had complained to the Office of Fair Trading not only about the prices being charged for gas but also that British Gas had been acting unfairly in this regard. At that point no mention was being made about the lack of competition to British Gas.
The Director General of the Office of Fair Trading took the view based on the material presented to him that British Gas had a case to answer and referred the matter to the Monopolies and Mergers Commission. At the time of this reference media commentators emphasised the points on pricing but ignored or failed to realise the significance of the words combined in the OFT reference which indicated that the question of competition should also be considered by MMC. Perhaps this was because no commentator believed that there was ever going to be gas to gas competition.
In December 1987 OFGAS published a Report which examined the area of gas to gas competition. The Report suggested reasons as to why there had been no competition to date and made proposals about the steps needed if there were ever to be competition to British Gas. There were those who expressed surprise that OFGAS should have become involved in this area. After all OFGAS was supposed to have been brought into existence to look after the interests of the 17 million or so tariff customers of British Gas. Consequently it was stated that OFGAS had no reason to become involved in this the most vital area of the industrial and commercial segments of the gas supply market.