CMA proposes fuel price monitor as margins widen
Sharecast – Its proposal included the introduction of a fuel finder scheme, which would provide drivers with real-time, station-by-station fuel prices on their smartphones or GPS navigation systems.
By granting instant access to pricing information, the CMA said it expected that fuel prices would decrease, enabling consumers to locate the most affordable options available.
The regulator said its probe revealed that increased supermarket fuel margins were resulting in drivers paying an additional 6p per litre.
Additionally, the investigation found that diesel prices across all retailers were seeing drivers bear an extra cost of 13p per litre from January to May this year.
By implementing the fuel finder scheme, the CMA said it was aiming to empower drivers to make informed decisions and save money on fuel expenses.
To support the fuel finder scheme, the CMA also proposed the establishment of a dedicated oversight ‘fuel monitor’ body, responsible for continuously monitoring fuel prices and margins and recommending necessary actions to sustain competition in the market.
As the UK progressed toward achieving net-zero emissions, the fuel monitor would also assess the impact on vulnerable consumers and those residing in areas with limited fuel station options.
Under the plans, fuel retailers would be required by law to provide up-to-date pricing information in an open and easily accessible format that could be integrated into third-party applications, such as satnavs or map apps.
That, the CMA said, would allow drivers to conveniently compare prices and make well-informed choices regarding their fuel purchases.
The regulator said its investigation did not uncover any evidence of cartel behaviour, and so it was not intending to initiate an enforcement case.
However, the study did reveal that Asda failed to provide necessary information when requested, and so had subsequently been fined £60,000.
Asda received two fines, each amounting to the statutory maximum of £30,000, for inadequately responding to a compulsory written request for information and sending an ill-prepared representative to a CMA interview.
The supermarket had since complied with the CMA’s information requirements.
In addition to the fines imposed on Asda, the CMA also found that motorway service stations were charging around 20p per litre more for petrol and 15p per litre more for diesel compared to other fuel stations.
Additionally, supermarkets – particularly Asda – typically offered the most competitive fuel prices, but both Asda and Morrisons decided to target higher margins in 2022, while other retailers such as Sainsbury’s and Tesco (LON:) responded by raising their prices, thereby weakening competition further.
“Competition at the pump is not working as well as it should be and something needs to change swiftly to address this,” said the CMA’s chief executive officer Sarah Cardell.
“Drivers buying fuel at supermarkets in 2022 have paid around 6p per litre more than they would have done otherwise, due to the four major supermarkets increasing their margins.
“This will have had a greater impact on vulnerable people, particularly those in areas with less choice of fuel stations.”
Cardell said the CMA needed to “reignite competition” among fuel retailers, which meant two things.
“It needs to be easier for drivers to compare up to date prices so retailers have to compete harder for their business.
“This is why we are recommending the UK government legislate for a new fuel finder scheme which would make it compulsory for retailers to make their prices available in real time.
“This would end the need to drive round and look at the prices displayed on the forecourt and would ideally enable live price data on satnavs and map apps.”
Given the importance of this market to millions of people across the UK, Sarah Cardell said that needed to be backed by a new fuel monitor function that would hold the industry to account.
“As we transition to net zero, the case for ongoing monitoring of this critical market will grow even stronger, so we stand ready to work with the UK government to implement these proposals as quickly as possible.”
Reporting by Josh White for Sharecast.com.
