Competition Watchdog Reports Fuel Retailers Continue to Overcharge Drivers
The CMA highlighted that retail margins in the UK are still considerably high compared to historical levels, emphasizing the need for the government to enforce a price comparison scheme.
According to the Competition and Markets Authority (CMA), drivers in Britain are continuing to overpay for fuel, as retail margins remain “significantly above historic levels.” This update follows the CMA’s road fuel market study final report from a year ago, which called for a mandatory fuel finder scheme to provide instant price transparency for drivers and a regulatory body to oversee fuel prices.
While the CMA will now take on the monitoring role, the implementation of legislation for the fuel finder scheme was delayed due to the general election. The CMA’s interim update released on Friday revealed that despite some fluctuations, road fuel prices and margins have generally stayed higher than historic levels.
The data showed that petrol retail spreads averaged 12.62 pence per litre (ppl) over the four months leading up to June, more than double the 2015–19 average of 6.51 ppl. Similarly, diesel retail spreads averaged 17.91 ppl during the same period, also more than double the 2015–19 average of 8.61 ppl.
The CMA mentioned that supermarket fuel margins remained largely unchanged from a year ago, while non-supermarket fuel margins saw a slight decrease. The watchdog estimated that the increase in retail fuel margins since 2019 cost drivers over £1.6 billion in 2023 alone, leading to higher VAT costs on fuel.
Although the report did not factor in rising operating costs, the CMA stressed that these costs have not been a significant driver of increased fuel margins for large retailers. The CMA plans to revisit this issue when it assumes its new permanent monitoring role with enhanced information-gathering powers.
The CMA’s previous recommendation for a mandatory fuel finder scheme aims to make retailers’ prices available in real time, empowering drivers to compare prices easily. While new legislation is pending, the CMA has initiated a temporary voluntary scheme for retailer price disclosure, covering only about 40% of retailers.
Sarah Cardell, CMA’s chief executive, urged the government to introduce legislation for a real-time fuel finder scheme to boost competition among retailers, allowing consumers to easily compare prices and make informed choices.
In response to the report, the RAC motoring group expressed disapproval of fuel retailers taking advantage of drivers. Simon Williams, head of policy at the RAC, criticized the £1.6 billion excess paid by drivers in the past year as unacceptable, given the lack of competition among retailers.
The British Retail Consortium defended supermarkets, stating they strive to offer value across various products, including food and fuel. Chief Executive Helen Dickinson emphasized that retailers will cooperate with the CMA to provide data for consumers to find the best petrol and diesel prices.
As of Friday, the average petrol price was 144.83 pence, incorporating fuel costs, retail margin, and taxes. The average diesel price was 150.01 pence, including similar cost components.
PA Media contributed to this report.
