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UK Regulator Raises Concerns Over Fuel Retailers’ Competition

By  |  November 9, 2023

The UK’s competition regulator has sounded alarm bells about the “intensity of competition” among fuel retailers as it unveils its first monitoring update since last year’s revelation that drivers were overcharged by supermarkets. The Competition and Markets Authority (CMA) expressed ongoing concerns about the industry, citing a lack of crucial data on fuel margins and widening retail spreads.

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    While the CMA reported that fuel margins, the difference between what a supermarket pays for its fuel and what it charges consumers, decreased between June and August, recent data has raised red flags. The regulator highlighted that margins are a critical factor in determining the fairness of fuel pricing.

    Motoring groups have claimed that drivers are once again paying more than they should at the pump, prompting the CMA to scrutinize the market. One key indicator of this issue is the retail spread, which represents the average price that drivers pay compared to the benchmarked price that retailers purchase fuel for. The watchdog noted significant increases in retail spreads for both petrol and diesel during September and October.

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    Read more: Spain Watchdog Raids Oil Groups Over Alleged Anti-Competitive Practices

    The CMA’s statement read: “During September and October, the CMA observed significant increases in retail spread for both petrol and diesel. In both cases, the retail spread at the end of October was significantly higher than the long-term average of 5-10 pence per litre (ppl).”

    It’s understood that retail spreads can fluctuate in response to volatility in wholesale fuel prices. However, the CMA emphasized that if retail competition is effective, over time, pump prices should closely track wholesale prices. The observed deviations from this trend have raised concerns regarding the competitiveness of the retail fuel market.

    The CMA’s investigation has also revealed challenges in obtaining vital data. The regulator accused Shell and the operator of the Moto motorway service stations network, Moto-Way, of failing to respond to its requests for data. The CMA argued that this lack of cooperation has hindered its ability to conduct a comprehensive analysis of the fuel market, potentially leaving consumers at a disadvantage.

    In light of these findings, the CMA has called for increased transparency and cooperation from all industry stakeholders. It has also indicated that it will continue monitoring the situation closely to ensure that consumers are not unfairly overcharged for their fuel purchases.

    Source: News Sky