Yahoo Finance Fuel: UK drivers pay extra 6p per litre amid weak supermarket competition
Weak competition led to higher petrol and diesel prices
The competition watchdog has blamed weaker competition between supermarkets for a surge in fuel prices since 2019.
The Competition and Markets Authority (CMA) warned that supermarket chains Asda and Morrisons have taken a “a less aggressive approach to pricing” since 2019. They have traditionally acted as price leaders in the market, but have recently charged higher prices — and other supermarkets have not reacted by cutting their own prices.
It also found that Asda's targeted fuel margins for 2023 were more than three times what they had been for 2019, while Morrisons' target doubled in the same period.
The watchdog said that increased supermarket fuel margins led to drivers paying an extra 6p per litre.
The regulator said a new fuel finder scheme would help drivers find the cheapest fuel in their area, adding that it would set up a monitoring body to try to strengthen competition.
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CMA boss Sarah Cardell said competition was "not working as well as it should be and something needs to change swiftly".
She added: "Drivers buying fuel at supermarkets in 2022 have paid around 6 pence 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."
There was, however, no evidence to suggest that there has been "cartel behaviour", the regulator said, and there are no plans to open an enforcement case.
It also fined Asda £60,000 for failing to provide relevant information in a timely manner during the year-long investigation.
According to the CMA, it asked Asda to send a representative who was “capable and appropriate” to give evidence on the issue and answer questions.
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However, the Asda manager sent to the CMA’s offices was apparently unable to answer questions on these topics or to explain statements in one of the relevant documents supplied by the company.
Luke Bosdet, the AA’s spokesman on pump prices, said: “The price difference of sometimes 10p or more for the same supermarket fuel but in a neighbouring town was so blatant that it has to be asked how the supermarkets ever expected to get away with it.”
The RAC called the CMA's report a "landmark", saying UK drivers appeared to have lost nearly £1bn as a result of increased retailer margins on fuel.
RAC spokesman Simon Williams said: "It is nothing short of astounding in a cost of living crisis and confirms what we've been saying for many years that supermarkets haven't been treating drivers fairly at the pumps."
Chancellor Jeremy Hunt said the government is taking “swift steps” following the CMA’s recommendations , so that consumers are treated fairly.
He said: "It isn’t fair that businesses are refusing to pass on lower prices to protect their profits while working people struggle with balancing their budgets."
The government said it will consult on the design of the open data scheme, and that the CMA will create a “voluntary scheme” encouraging fuel retailers to share accurate, up-to-date road fuel prices for publication by August.
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