Fishing vessels - economic link: business and regulatory impact assessment

12. Competition Assessment

• Will the measure directly or indirectly limit the number or range of suppliers?
• Will the measure limit the ability of suppliers to compete?
• Will the measure limit suppliers’ incentives to compete vigorously?
• Will the measure limit the choices and information available to consumers?

There is a competition concern in the expected restriction of competition in buyers via the requirement to land in Scotland. As a highly perishable good it is expected that most, if not all, of the extra landings of fish will be processed in Scotland, which will result in fishers selling to a smaller pool of fish processors than they previously had access to. While a smaller pool of buyers is a potential concern in the short run, many Scottish fish processors operate mixed species processing plants which would allow them to more easily expand into the pelagic market and, there is nothing to prevent the establishment of new processing businesses. As such, there is space to allow competition to continue. Additionally, pelagic fish processors in Scotland are in competition with each other and have the capacity to process more. Given the prices for their products are set by the international market, they are incentivised to continue to compete vigorously.

While this proposal is expected, in the short run, to lead to some affected Scottish fishing vessels potentially receiving a lower price or for them to be impacted by the requirement to quota gift in the alternative to meeting the landings target, it is not expected to alter their incentives to compete. All vessels are treated equally by this policy change and retain the full range of business options that they do currently. They will be able to continue to buy and sell quota to meet their operational needs and, they will be able to continue to land their catch into preferred ports (albeit with an increased cost to landing in ports outwith Scotland). Therefore, it is not expected that this proposal will in any way limit the number or range of fishing vessels or the volume of fish they will supply. Analysis suggests that it will in fact increase the supply of fish within Scotland. This proposal should not impact on the choices nor information available to consumers.

Based on the Economics of the UK Fishing Fleet Survey 2020, between 2015 and 2019, the average net profitability of the Scottish fleet was 21%. As average profitability is strong, it is reasonable to expect that viable businesses can tolerate potential price impacts which are not expected to impact profitability beyond the current net level.