The Competition and Markets Authority (CMA) ruled today that drivers paid an extra 6p per litre for fuel last year at supermarkets because of weaker competition. As a result, the regulator is planning a new scheme that will enable drivers access to live fuel prices on their phones or satnavs to help revitalise competition in the market.
Supermarkets had traditionally been the cheapest places to buy road fuel. However, an in-depth study by the CMA into the market found a weakening of competition since 2019 that has driven up prices.
The CMA found that in 2022, Asda and Morrisons each made the decision to target higher margins. Asda’s fuel margin target in 2023 was more than three times what it had been for 2019, while Morrisons doubled their margin target in the same period. The CMA noted that other retailers, including Sainsbury’s and Tesco, did not respond in the way you would expect in a competitive market and instead raised their prices in line with these changes.
However, the regulator stressed that is no evidence to suggest that there has been cartel behaviour taking place, and it has no plans to open an enforcement case.
At present, retailers only provide information on prices at the petrol stations themselves. The CMA noted that this makes it hard for drivers to compare prices and weakens competition.
The regulator wants to see the introduction of a new fuel finder open data scheme that would have statutory backing through legislation to ensure retailers provide up-to-date pricing. They would have to make this available to drivers in an open and accessible format that can be easily used by third-party apps such as satnavs or map apps, through a dedicated fuel finder app, or a combination of both.
The fuel monitor would monitor prices and margins on an ongoing basis and recommend further action if competition continues to weaken in the market.
Sarah Cardell, Chief Executive of the CMA, said: “We need to reignite competition among fuel retailers, and that means 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, this needs to be backed by a new fuel monitor function that will 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.”
NAM Implications:
- An opportunity for the retailer that makes the first move in live pricing provision…
- …instead of awaiting the obvious.
- (good while it lasted…)
