Supermarket bosses face petrol pump price grilling
Britain’s competition watchdog has flagged fears that supermarkets have become less price competitive at the pump as it extended an investigation into the retail fuel market.
The Competition and Markets Authority (CMA) warned that a “weakening of competition” has driven up prices paid by drivers.
It said it now plans formal interviews with supermarket executives after the companies were not “sufficiently forthcoming” with the evidence they provided to demonstrate they remained competitive.
Sarah Cardell, the CMA’s chief executive, said: “Although much of the pressure on pump prices is down to global factors, including Russia’s invasion of Ukraine, we have found evidence that suggests weakening retail competition is contributing to higher prices for drivers at the pumps. We are also concerned about the sustained higher margins on diesel compared to petrol we have seen this year.”
She warned the watchdog is unhappy with supermarket co-operation with its inquiry. “We are not satisfied all the supermarkets have been sufficiently forthcoming with the evidence they have provided in our Road Fuel Market Study, so we will be calling them in for formal interviews to get to the bottom of what is going on.”
Evidence showed that fuel margins have increased across the market, but in particular for supermarkets, where average 2022 supermarket pump prices appear to be around 5 pence per litre more expensive than their 2019 average percentage margins.
While supermarkets tend to be the cheapest retail fuel suppliers, CMA investigations indicate “at least one supermarket has significantly increased its internal forward-looking margin targets over this period. Other supermarkets have recognised this change in approach and may have adjusted their pricing behaviour accordingly.”
It said competition in the diesel market has also weakened.
RAC fuel spokesman, Simon Williams, said: “We are very pleased to hear the CMA confirm what we have been saying for a long time about the biggest retailers taking more margin per litre on fuel than they have in the past.
“The average price of diesel is more than 20p a litre overpriced simply because they refuse to cut their prices. The wholesale price of diesel is actually 4p lower than petrol, yet across the country it is being sold for 9p a litre more – 154.31p compared to 144.95p for unleaded.
“Something badly needs to change to give drivers who depend on their vehicles every day a fair deal at the pumps. We hope even better news will be forthcoming later this summer.”
