Fuel retailers could be fined as new powers given to watchdog

The government claims it will provide further authority to shield motorists from excessive fuel costs and boost competition.

As per the latest modifications to the Digital Markets, Competition & Consumers Bill, which were presented today, November 15, the Competition and Markets Authority (CMA) would have the responsibility of vigilantly monitoring road gasoline costs and promptly reporting any indication of misconduct to the government.

Supermarkets and other fuel merchants will have to disclose the difference between the amount they charge customers on their forecourts and their earnings.

If they don’t comply, the watchdog may impose a fixed fine equal to 1% of their global turnover or a continuous fine equal to 5% of their daily turnover.

Claire Coutinho, the minister for energy security, says that if there is any proof that merchants are unjustly raising prices and preventing UK drivers from saving money, she will not hesitate to hold them accountable.

The warning comes after the CMA’s investigation earlier this year, which found that certain supermarkets had failed to pass on lower oil prices to drivers, resulting in a 6p increase in petrol prices per litre. This extra cost to drivers added up to £900 million in 2022 alone.

The CMA discovered earlier this month that large fuel merchants were continuing to profit from higher margins. 

According to the recent CMA study, supermarket fuel margins have increased year over year in 2023 relative to prior years. 

On a pence per litre (ppl) basis, however, the CMA estimates indicate that retail fuel margins decreased little in 2022 as a result of lower wholesale costs.

According to this most recent analysis from the CMA, which publishes road fuel monitoring update reports roughly every four months, the 2023 figure was influenced by exceptionally high gasoline margins early in the year.

The average monthly fuel margin has decreased since May, going from 11.9 percent in May to 7.3 percent in August.

The CMA notes that even the August number is greater than the yearly average for years preceding 2021, and the information about rising retail spreads in September and October implies that there may have been an increase in supermarket fuel margins since August.

Between the end of May and the end of September, supermarkets have continued to offer a degree of price reduction to other kinds of retailers that is consistent with long-term patterns.

In comparison to late 2022 and early 2023, the CMA has also observed fewer instances of non-supermarket shops offering prices lower than the average supermarket price (although this is more prevalent than prior to 2022).

“Some fuel retailers have shown shocking behaviour.”

According to Coutinho, “we saw shocking behaviour from some fuel retailers who failed to pass on savings at the pump at a time when many were struggling with increased living costs.””We’re giving the CMA additional powers to restore fairness back to the forecourts and ensure UK drivers enjoy a competitive gasoline price,” the statement reads. “Now, we are taking down on any petrol station executives found to be unfairly boosting their prices.”

Despite pleas from the energy security secretary to do so, the CMA also disclosed that Shell and Moto-way had not complied with their information requests, despite the fact that many merchants have voluntarily raised the transparency of their costs and returns.

Furthermore, 12 of the largest retailers—including all four supermarkets that sell fuel—have already enrolled in the CMA’s voluntary programme to exchange daily pricing data, which enables news organisations and websites to build price comparison tools that make it simple for consumers to compare prices.

According to the government, plans to enact legislation requiring fuel retailers to provide daily pricing information—which will facilitate customers’ ability to compare prices—are moving forward.

This fall, a public consultation on the blueprint for the government’s open data programme is scheduled to begin.

“I’m pleased to see many retailers cooperate with the CMA so far, to share their price information and bring competition back to our petrol stations,” said Amanda Solloway, minister for energy, consumers, and affordability. “I now urge comparison sites and others to get onboard to help UK motorists find the best local price for their fuel.”

The Digital Markets, Competition and Consumer Bill was amended today, and the CMA will now have additional information collection authority. The bill is anticipated to become law later in 2019.

The watchdog will report any evidence of unwarranted price hikes so that the government can hold merchants accountable. It will also utilise the information acquired from retailers to provide regular public updates on the level of competition in the UK gasoline market.

“We welcome this new responsibility and will use it to hold fuel retailers accountable,” stated CMA CEO Sarah Cardell.In order for drivers to be certain they are getting the best deal when they fill up their cars, the CMA is committed to reviving competition in this industry.

Further details about the 12 gasoline merchants who have consented to participate in the CMA’s voluntary data initiative by sharing their daily pricing information.