This includes an increased concentration, with the average market share of the top four companies reaching 37pc in 2022, up 12 percentage points since the financial crash.
The findings, which cover the non-financial services sector, are in the “State of Competition in Ireland” report which has been produced by the Competition and Consumer Protection Commission (CCPC).
The rise in market share is most obvious in digitally intensive sectors, such as ICT services, but also in professional, scientific and technical services, including accounting, where a small number of firms now account for a bigger share of turnover.
“These findings point to a services sector where competitive pressures are uneven and, in some industries, clearly diminishing,” the CCPC says. “The rise in concentration and market power, coupled with reduced churn at the top of many industries, raises concerns about risks to the long-term health of competition.”
Looking specifically at business expansion, the authority drew on a survey of over 500 commercial decision makers. It found that more than half of Irish businesses – 54pc – have not expanded in the past three years, and roughly the same proportion have no plans to do so.
The reasons given include satisfaction with current operations, but also operational constrains and demographic factors, such as retirement.
“This inertia dampens market dynamism, reduces competitive pressure and restricts innovation and consumer choice,” the CCPC warns.
Dublin-based businesses are much more likely to have expansion plans, with 52pc of them intending to do so. This compares to 32-36pc in regional areas.
The manufacturing and hospitality sectors, plus smaller businesses, face the most acute barriers to expansion, particularly around regulatory compliance, financial constraints and staffing.
Among the most significant obstacles were difficulty recruiting suitable employees, and challenges raising capital, via government supports as well as from private investors and banks.
Brian McHugh, chair of the CCPC, said: “Competitive markets are vital for a healthy economy. Our initial findings show an increase in concentration and average mark-ups, meaning the promotion of strong competition has never been more important.
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