The competition watchdog is to investigate whether “any failure in competition” is leaving consumers paying higher grocery and fuel prices than they should be.
The Competition and Markets Authority (CMA) said it had not seen evidence pointing to specific competition concerns in the grocery sector “at this stage”, but it was “important to be sure that weak competition is not adding to the problems”.
Supermarket fuel prices were roughly 5p more expensive per litre in 2022 than pre-pandemic levels, an investigation by the watchdog found.
The CMA said that factors beyond the invasion of Ukraine have impacted the price customers are paying at the pumps and weak competition has helped drive increases.
Retailers, specifically supermarkets, came in for criticism from the regulator.
“Higher pump prices cannot be attributed solely to factors outside the control of the retailers”, the CMA said.
Evidence provided by the supermarkets, as part of the CMA’s road fuel market study, also received criticism.
“Whilst the level of engagement with the study has varied across supermarkets, we are not satisfied that they have all been sufficiently forthcoming with the evidence they have provided,” the CMA said.
“In particular, important information has only been received late in the day and after several rounds of information gathering.
“Given the concerns we have about a market of such importance to millions of drivers it is vital we get to the bottom of what is going on.”
In an effort to “get to the heart of the issues”, the CMA will conduct “formal interviews” with the senior management of supermarkets.
The CMA did add that supermarkets still tend to be the cheapest retail suppliers of fuel but found evidence indicating “at least one” supermarket has “significantly increased” its internal forward-looking fuel margin targets.
Other supermarkets have recognised this and may have changed their pricing behaviour accordingly, the regulator said.
Concern was also expressed over possible evidence of weaker competition in diesel compared to petrol since the start of this year.
High diesel margins seen this year “appear to have gone on longer than would be expected”, the body said, though some degree of variation is to be expected given volatile diesel wholesale prices.
Competition among petrol forecourts has declined. In March of this year the CMA identified 13 areas of concern as part of Asda’s plan to buy Co-op petrol stations and requested the supermarket buyer take remedial action.
The watchdog has also been investigating price rises in the grocery market and on Monday announced it is stepping up its work to see if there are any competition failures which may contribute to more expensive grocery prices.
So far the body said global factors have been the main driver of grocery price increases and it has not seen evidence of specific competition concerns in the sector.
“The CMA acknowledge that higher prices are a result of global price increases, resulting in high food inflation both in UK and across Europe,” the director of food and sustainability at the British Retail Consortium (BRC) said.
“British supermarkets are confident that they are doing all they can to keep food prices as low as possible for consumers, and we have seen margins squeezed across the industry.”
“The UK has one of the most competitive markets for food in the world, and as global prices begin to fall we are confident that the competitive nature of the industry will help food inflation fall as a result,” Andrew Opie added.
Energy Security and Net Zero Secretary Grant Shapps said: “We won’t stand for motorists being treated like cash cows and ripped off at the pumps.
“Fuel prices are falling so there is absolutely no excuse for retailers to not pass those savings on.
“Supermarket bosses must fully cooperate with the watchdog’s investigation and if they refuse to play ball I won’t hesitate to take action.”
An Asda spokesperson told Sky News: “Asda is the price leader in the supermarket fuel sector and we remain focussed on providing our customers with the best value at the pumps.”
The Petrol Retailers Association have been contacted for comment.
