The competition watchdog is to question supermarket bosses after finding evidence that retailers have increased fuel prices to unnecessarily high levels, squeezing consumers who are hit by the cost of living crisis.
The Competition and Markets Authority (CMA) said that high pump prices could not be solely blamed on global factors, such as Russia’s invasion of Ukraine. It added it had found evidence that weakening competition among the supermarkets had pushed up prices for drivers at the pump.
The watchdog also said on Monday that it would step up its work in the grocery sector to check prices are not higher than they should be, given the pressures on households from soaring food inflation and the wider cost of living crisis.
The CMA said on Monday that, although “global factors” including the war in Ukraine had contributed to an increase in fuel prices, it was concerned retailers were taking larger margins than before the Covid pandemic hit.
The CMA said average 2022 supermarket pump prices were about 5p a litre more expensive than they would have been had supermarkets maintained their average margins at 2019 levels.
The watchdog said that although supermarkets still tended to be the cheapest retail suppliers of fuel, it had seen internal documents indicating that at least one unnamed supermarket had significantly increased its margin targets and claimed that rivals had spotted a change in behaviour and followed suit.
Sarah Cardell, the chief executive of the CMA, said: “The rising cost of living is putting people and businesses under sustained financial pressure. The CMA is determined to do what it can to ensure competition helps contain these pressures as much as possible.
“Although much of the pressure on pump prices is down to global factors including Russia’s invasion of Ukraine, we have found evidence that suggests weakening retail competition is contributing to higher prices for drivers at the pumps. We are also concerned about the sustained higher margins on diesel compared with petrol we have seen this year.
“We are not satisfied that all the supermarkets have been sufficiently forthcoming with the evidence they have provided in our road fuel market study, so we will be calling them in for formal interviews to get to the bottom of what is going on.”
The CMA, which began studying the road fuel market in detail last year and has almost concluded its investigation, said it would conduct formal interviews with the supermarkets’ senior management “in order to get to the heart of the issues”. It will issue a final report no later than 7 July 2023.
The CMA said it would also look at the grocery retail market and study whether any product categories merit closer examination.
Cardell said: “Grocery and food shopping are essential purchases. We recognise that global factors are behind many of the grocery price increases, and we have seen no evidence at this stage of specific competition problems.
“But, given ongoing concerns about high prices, we are stepping up our work in the grocery sector to help ensure competition is working well and people can exercise choice with confidence.”
