LONDON -- The British government is promising to free up the country's car market to increased competition after an official report showed that Britons pay at least 10 percent more for cars on average than their counterparts in the rest of Europe.

Leading car manufacturers have benefited from a "complex monopoly situation," which has contributed to higher prices and runs against the public interest, the Competition Commission said in a long-awaited study."The report confirms what many people have thought was the case -- that in Britain, we are paying over the odds for new cars," said Trade and Industry Secretary Stephen Byers.

The report found that car prices in Britain were 10-12 percent higher than elsewhere in the region.

To help ease retail prices, Byers said he would insist that manufacturers offer car dealerships the same discounts on bulk purchases currently given to rental companies and other large customers.

The Consumers Association, which has led the fight against what it describes as a "rip-off" of car buyers, said it was pleased that the government was taking action.

The report criticized 17 car companies that together accounted for 94 percent of new cars registered in Britain last year. Among them were the British subsidiaries of industry leaders such as DaimlerChrysler, Volkswagen, Citroen, Renault, Fiat, Ford, Honda and Hyundai.

The commission said these companies operated selective and exclusive distribution systems that contributed to a misleading environment in which consumers often ended up overpaying for new cars.

Retail customers typically obtained discounts of 7 percent to 8 percent off the price of a new car in 1997-98, according to the commission's report. In contrast, the study found that fleet operators obtained discounts of 17-35 percent.

Among the changes that Byers proposed were measures to ensure that car dealers be free to advertise their vehicles at any price without fear that suppliers might penalize them.

Car makers and dealers have until May 19 to comment on the planned changes.