Fuel retailers are required to reveal profit information by next year or risk hefty fines. This is under the new powers granted to the UK Competition Watchdog to combat high fuel prices.
The government announced the measures on Wednesday after Shell and Moto, a service station operator, failed to submit their margins voluntarily to the Competition and Markets Authority.
Fuel prices have been monitored by the regulator as it seeks to reduce cost of living pressures for drivers. This is in response to concerns about unfair pricing from retailers, as wholesale fuel costs are falling.
The Department for Energy Security and Net Zero warned that retailers who fail to provide the required information may be subject to fines up to 1% of their worldwide sales or fines recurring up to 5% of their daily sales if they do not address the concerns.
Sarah Cardell said that the retail price trends of recent months showed that “competition in this market is still not working very well to hold down pump rates”.
The amendments to the Digital Markets, Competition and Consumers Bill, designed to strengthen consumer protections, are expected to take effect next year.
Last week, the CMA said that retail fuel prices did not match wholesale costs. The regulator stated that the difference between the average petrol prices drivers pay at the pump, and the retail price of fuel, was 17-18ppl by the end of October. This is “significantly” higher than the long-term median of 5-10ppl.
The CMA acknowledged that global factors, such as the increase in crude oil prices, were likely to be behind the rise in petrol prices between June and August.
The RAC Foundation is an automotive services organization that welcomed the measure. Simon Williams said, “There is definitely a stick now being waved and hopefully it’ll make a difference in the cost-of-living crisis when drivers have to pay for fuel at the pumps.”
He said that retailers are facing higher wages and a four-fold increase in petrol theft compared to 2019. In recent years, the purchase of Asda by private investors has left these supermarkets with significant debts to service.
According to data that Asda Tesco Sainsbury’s Morrisons provided to the CMA, margins on fuel in supermarkets dropped from 11.9ppl in may to 7.3ppl in august. CMA stated that the fall could be a sign of increased competition.
The regulator said that the drop “shouldn’t be overstated”, due to the widening of the gap between wholesale and retail prices from September to October.
Shell and Moto failed to provide the data required by CMA for analysis of fuel margins in non-supermarkets.
Shell stated that it “cooperated fully” with the study of fuel prices by the regulator between June 2022 and July 2023. The company noted that “requests of commercially sensitive data are best dealt with through regulation, and we understand that Digital Markets, Competition and Consumer Bill is amended to deal with this”.
Ken McMeikan said that Moto had completed the previous study of the regulator and “then committed to provide data to the CMA as a response to their continuing voluntary request for information”.
Claire Coutinho announced the measures. She said, “At a moment when many people were struggling to pay for increased living expenses, we witnessed shocking behaviour by some fuel retailers, who failed pass on savings at gas pumps.”
We will now crack down on petrol station owners who are found to unfairly increase their prices.