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CMA unveils strategy to enhance competition in fuel retail

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The proposed fuel finder open data scheme is set to revolutionize the road fuel market in the UK. Designed to enhance competition and empower consumers, the scheme would require fuel retailers to disclose real-time pricing information in an easily accessible format. This move is a crucial recommendation put forth by the Competition and Markets Authority (CMA) following its comprehensive study into the market.

Currently, retailers only provide pricing information at their respective petrol stations, making it challenging for drivers to compare prices and limit competition. To address this issue, the new legislation would mandate fuel retailers to regularly update and disclose pricing data. This information would be made available to drivers through dedicated fuel finder apps, third-party navigation apps, or a combination of both.

To ensure fair practices, an independent ‘fuel monitor’ oversight body would be established. This body will continuously monitor prices and margins in the market, recommending appropriate actions if competition weakens further.

It is important to note that the CMA did not find any evidence of cartel behavior in the market and has no plans to pursue enforcement cases. However, the CMA’s study did reveal important findings. For instance, from 2019-22, average annual supermarket margins have increased by 6 pence per litre (PPL). Additionally, increased margins on diesel across all retailers have cost drivers an additional 13 PPL between January and May 2023.

By fostering greater transparency and encouraging drivers to shop around, the fuel finder open data scheme has the potential to save individuals up to £4.50 per tank within a 5-minute drive. Furthermore, the CMA’s research unearthed disparities between motorway service stations and other fuel stations, with the former charging approximately 20 PPL more for petrol and 15 PPL more for diesel.

Traditionally, supermarkets have offered the most competitive fuel prices, with Asda frequently leading the charge in affordability. Nonetheless, the CMA’s investigation revealed that Asda and Morrisons made significant shifts in their fuel margin targets in 2022 and 2023, respectively. While these changes impacted their pricing strategies, other retailers such as Sainsbury’s and Tesco did not respond competitively, leading to an overall weakening of competition.

Diesel prices have also been slow to decrease in 2023, partly due to Asda’s gradual response to falling wholesale prices. Consequently, the CMA estimates that drivers have paid 13 PPL more for diesel between January and May 2023 than they would have if margins remained at their historical average.

In light of Asda’s failure to provide relevant information promptly, the CMA has imposed fines worth £60,000 on the retailer. Asda received two fines, each amounting to £30,000 (the statutory maximum), for its inadequate provision of evidence during a compulsory CMA interview and its incomplete response to a compulsory written request for information. Asda has now complied and delivered the required information to the CMA.

The fuel finder open data scheme, supported by the establishment of a fuel monitor oversight body, promises to empower drivers and strengthen competition within the road fuel market. By implementing this scheme, the UK government can ensure that customers have easy access to real-time pricing information, facilitating informed decision-making and ultimately driving fairer prices for all.

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