Fuel retailers have been criticised by the CMA for failing to pass falling wholesale costs on to motorists quickly enough, as the competition watchdog warned that profit margins remain historically high.
The Competition and Markets Authority said some retailers were slow to cut diesel prices when wholesale costs fell between May and June, raising fresh concerns over competition in the UK fuel market.
The regulator said pump prices fell overall in June as wholesale costs eased, but remained significantly above levels seen before the conflict in the Middle East. It found no evidence that retailers had actively changed their pricing strategies to take advantage of the crisis.
However, the CMA said the widespread use of “passive pricing strategies” was contributing to persistently high margins, with some retailers failing to immediately reflect lower wholesale diesel costs in their prices.
The watchdog will now carry out a more detailed review of the road fuel market in the autumn, examining retailers’ pricing strategies, how quickly wholesale price movements are reflected at the pumps and why prices differ between local areas.
CMA chief executive Sarah Cardell said the regulator expected reductions in wholesale prices to be “rapidly and fully passed on to drivers”, adding that it would continue to closely monitor both prices and margins.
The AA also hit out at retailers over the findings, claiming some businesses were doing a better job than others at cutting prices as costs fell.
AA president Edmund King said that while some retailers were passing on lower costs promptly, “many more, including large numbers of supermarkets, are not”.
The CMA’s update also revealed it has sent 1,166 letters to fuel retailers and issued compliance notices covering 53 sites since April over registration requirements for the government-backed Fuel Finder scheme. No financial penalties have yet been required, with most registration problems resolved after retailers were contacted.
Around 97 per cent of UK petrol stations are now registered with Fuel Finder, representing an estimated 99 per cent of fuel sold across the country. The platform is designed to make it easier for motorists to compare pump prices and increase competitive pressure on retailers.
The latest intervention comes three years after the CMA found competition in the road fuel market had weakened, prompting measures aimed at increasing price transparency and putting greater pressure on retailers to compete for motorists.
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