With the additional authority to seek pricing and profit information from road fuel retailers, the UK’s consumer watchdog will be able to highlight any future attempts of unfair price increases.
The government’s Department for Energy Security and Net Zero has given the Competitions and Markets Authority (CMA) the authority, which is expected to become legislation later next year. On November 15, 2023, amendments to the Digital Markets, Competition and Consumers Bill were introduced in parliament. These amendments require retailers of petrol and diesel, including supermarkets, to provide the CMA with information regarding their fuel prices relative to their profit margins.
The government claims that the law reform “will shine a light on any attempt from retailers to unfairly hike up fuel prices” and that it will enhance market competitiveness.
The CMA will now be in charge of keeping an eye on the cost of fuel and diesel and reporting any instances of misconduct under the new law. One of the proposals the CMA itself made after its well-publicized, year-long study into filling station prices came to a close in the summer was to appoint a fuel price monitor, and it offered to take up the position.
A government statement states that fuel retailers risk a fixed fine of up to 1% of worldwide revenue or an ongoing fine of up to 5% of daily turnover if they fail to disclose their fuel pricing and margins after the amendments become law.
The CMA has already started to work on its new remit. Last week, it released its first road fuel report in its capacity as a “unofficial” monitor, raising further concerns about the UK fuel market’s dysfunction.
Looking at the period from the end of May 2023 to October 2023, this first CMA monitoring report shows that prices rose during June, July and August, driven by an increase in global oil prices. However, “wholesale prices then reduced in September and October while retail prices did not,” the CMA said. “While it is too early to draw definitive conclusions, this could indicate a lack of competitive response from fuel retailers if this trend continues.”
According to the CMA, between the beginning of the year and August 2023, retailer margins decreased by an average of 4.5 pence per litre, from an average of 11.9ppl to 7.3ppl. It stated, “Nonetheless, August margins remain higher than those for any year prior to 2021.”
Sarah Cardell is chief executive of the CMA, and she reckons the latest data paints a mixed picture for motorists.
“Drivers are feeling the pain again as petrol prices at the pump have been on the rise since June,” she says. “Over the summer we saw rising wholesale costs, but more recent trends give cause for concern that competition is still not working well in this market to hold down pump prices.”
While many filling station operators had willingly provided information pending a change in the law, Cardell notes that this first report from the CMA is an essential step. However, large retailers Shell and Moto-Way had neglected to reply to its request for data.
“That’s why it is so important that a permanent fuel monitor – with powers to demand information from all retailers – is put in place to give a fuller picture of how the market is working,” she said.
RAC fuel spokesman Simon Williams said: “We welcome the CMA being given new powers to take action against retailers that don’t pass on the savings they benefit from when wholesale fuel costs fall significantly. Due to our long-term monitoring of retail and wholesale prices, we have been calling for fairer, more transparent pricing for years.
“While the CMA’s report concluded the supermarkets had overcharged to the tune of £900m last year, our data shows this behaviour is continuing to this day with supermarket fuel margins more than double what they were before the pandemic.
“These new powers can’t come soon enough because, as it stands, the Treasury’s 5p-a-litre fuel duty discount is not making it to drivers at the pumps.”