UK Government Empowers Watchdog to Combat Soaring Fuel Prices

In a bid to address concerns over soaring fuel prices and promote transparency in the market, the UK government has granted new powers to the Competition and Markets Authority (CMA). Fuel retailers will now be required to disclose profit information, or risk facing substantial fines starting next year, reported The Financial Times.

The announcement, made on Wednesday, comes after energy giant Shell and service station operator Moto failed to voluntarily submit data on their profit margins to the CMA. The regulator, tasked with monitoring fuel prices, aims to alleviate the cost-of-living pressures on drivers amid fears of unfair pricing practices by retailers, especially as wholesale fuel costs decrease.

According to the Department for Energy Security and Net Zero, failure to comply with the new disclosure requirements could result in fixed fines of up to 1% of a retailer’s worldwide turnover. Retailers may also face recurring fines of up to 5% of daily turnover if concerns about transparency persist.

Sarah Cardell, Chief Executive of the CMA, expressed concern over the lack of effective competition in the market, noting that recent retail price trends indicated that “competition is still not working well in this market to hold down pump prices.”

The measures are expected to be enforced next year as an amendment to the Digital Markets, Competition, and Consumers bill, which is designed to enhance consumer protections. The move is part of a broader effort to ensure fair practices within the fuel retail sector.

Last week, the CMA revealed that petrol station prices were not aligning with wholesale fuel costs. At the end of October, the difference between the average price paid by drivers at the pump and the price at which retailers purchase fuel was reported to be 17-18 pence per liter (ppl). This figure was deemed “significantly higher” than the long-term average of 5-10 ppl, raising concerns about potential market distortions.

Source: FT