We’ve just had a year of seismic events with the second largest operator, MFG, buying its larger rival MRH, and Sainsbury’s agreeing a deal with Asda that would make it the UK’s number one road fuel retailer. And while one deal has cleared all its regulatory hurdles, and the other is facing an uphill struggle in its engagement with the Competition and Markets Authority (CMA), both are likely to continue to reverberate through the coming year.

MFG got the all clear from the CMA for its deal, but only after it agreed to sell 38 sites. It told the CMA it had expressions of interest for all of the sites and the market is eagerly anticipating who the new owner, or owners will be. Meanwhile, Sainsbury’s proposed takeover of Asda would give it around 18% of the road fuel market, leap-frogging Tesco to become the market leader, but this very fact could be the deal’s Achilles heel. Even if Sainsbury’s can come up with store disposals to satisfy the CMA, and convince it that it won’t distort the grocery market, the regulator may baulk at it controlling such a vital part of the fuel market.

Asda has a history of charging the lowest fuel prices in the supermarket sector, and PRA chairman Brian Madderson points out that Asda’s influence on the market was singled out by the Office of Fair Trading in the last inquiry into road fuel pricing, when it said the presence of the retailer tended to pull down fuel prices within its catchment area. With recent suggestions that the other three supermarkets have given up trying to compete with Asda’s fuel pricing, the CMA may conclude that Sainsbury’s taking control of Asda’s sites would put up prices for motorists, and is therefore not in the interest of consumers.

And while all this is being fought out, changes are already taking place in the market. The previously acquisitive MFG may have to concentrate on integrating MRH into its business, but other groups, such as MPK and Ascona Group, appear to have funds and are keen to expand. Oil companies are also becoming increasingly active in the market. Certas Energy is building up its estate, and Harvest is building a new brand with Harvest Retail after the acquisition of HKS. Phillips 66 sprang a surprise by snapping up NJB, and then indicating it would consider further acquisitions, and Essar will be assessing any opportunities in the market.

Richard Billington, retail director of Certas Energy, said: "Our investment in all aspects of the Gulf brand, to protect and grow the revenues of our dealers, will continue through 2019 and we anticipate further network expansion as we unveil a range of exciting initiatives over the coming months. Based on feedback from the independent sector, we are adding real substance and innovation to our offering, allowing us to further differentiate Gulf from its competitors."

Meanwhile, Bernie Williamson, Shell UK’s retail general manager, believes the year ahead will see great opportunities for retailers as the face of the UK forecourt is reshaped: "Already, shoppers are seeing beyond the traditional view of a service station, which allows us to keep growing our convenience offering. At the same time, this challenges us to continue innovating and ensure we really are helping our customers to save time in their busy lives. Consumer demands are changing quickly and it’s up to forecourt retailers like Shell to continually develop new ways to meet their needs not just the needs they have today but the ones they’re likely to have in the future. Already, one in every three transactions at our service stations doesn’t include a fuel purchase at all. For 2019, we are ideally positioned to bring new and innovative convenience solutions to our customers."

Looking at the wider issues affecting the market, Madderson believes 2019 is very unlikely to see the introduction of E10. With the government struggling with Brexit it will be reluctant to try to implement a controversial measure.

Neither will 2019 be the break-out year for alternative fuels. Electric vehicles will continue to make big percentage sales increases, but overall will remain a small part of the overall market, and hydrogen is much smaller still. Madderson comments:"It will continue to make lots of noise and froth, but there will be no big changes."

News review of 2018

January
MFG is reported to be preparing a bid for MRH after acquiring 14 sites from Golden Cross Group, taking total site numbers to 439.
Harvest Energy snaps up Retail Fuels’ nine sites.
Ramsey MacDonald leaves Certas Energy.

February
EG Group buys 762 US sites in $2.15bn deal but in the UK Euro Garages halts its partnership with Sainsbury’s.
MFG switches 80 sites to the Esso brand.
Government policy is blamed for a 25% drop in sales of new diesel cars.

March
The UK’s second largest operator MFG agrees to buy its larger rival, MRH, in a £1.2bn deal.
EG Group completes takeover of 1,100 Esso service stations in Italy.
Motorway pricing trial fails to deliver expected benefits.

April
TV’s Quentin Willson warns against investing heavily in electric chargers because market will move towards hydrogen.
National Grid urges MPs to bring forward the date when sales of new diesel and petrol cars will be banned.

May
Sainsbury’s unveils plan to buy Asda in a deal that would make it the UK’s largest fuel retailer by market share.
An inquiry into the hand car wash sector is announced by MPs on the Environment Audit Committee.

June
Unleaded petrol prices see the greatest monthly increase since monitoring began 18 years ago, up 6ppl to 129.41ppl.
BP sends dealers bills of £5,000-£10,000 after it under-charged on Allstar fuel card fees.
July
BP buys Chargemaster and says it will roll out rapid chargers for electric vehicles to selected sites.
Valero renews supply deal for 81 Texaco-branded MFG sites.
The CMA investigates MFG’s takeover of MRH.

August
PRA accuses government of "just another fudge" after it launches another consultation on whether E10 fuel should be introduced.
Certas Energy buys six forecourts from David Taylor Forecourts.

September
Cornwall Garage Group puts its 17 sites up for sale.
Acquisition of 225 more stores by EG Group takes its US estate to about 1,000.
MFG/MRH inquiry indentifies 29 sites with local competition issues.
October
Maxol’s A26 Tannaghmore Services in County Antrim wins the Forecourt Trader of the Year award.
Phillips 66 buys Nick Baker’s NJB Services.
Applegreen raises funding to buy Welcome Break.

November
Harvest Energy’s parent company Prax Group buys Top 50 Indie HKS, taking its estate to around the 100 mark.
MFG agrees to sell 38 sites where the CMA identified competition issues, in order to close MRH deal.

December
Tesco and Volkswagen announce plans for UK’s largest electric vehicle charging network.
Top 50 Indie MPK signs supply deal with Essar for 12 sites and introduces Morrisons Daily c-stores onto its forecourts.

Topics