The Competition and Markets Authority continues to set its sights on the forecourt sector, warning that it is “concerned” that retailers’ “continued use of passive pricing strategies” is “causing sustained high margins”.
The CMA’s latest ‘road fuel monitoring’ report concerns itself with wholesale and retail fuel prices during the Middle East conflict, and the widespread market volatility this prompted.
The CMA concedes that it “has not found evidence that retailers actively changed their pricing strategies to take advantage of the crisis, either in relation to petrol or diesel”. It also recognises that retailers’ pricing strategies over the period “continued to be influenced by the need to manage inventories”, as ultra-low prices could see customers empty forecourts’ tanks.
The watchdog nonetheless considers that “some retailers gained a competitive advantage when wholesale diesel costs fell” yet failed to “immediately pass these cost reductions on to drivers in an attempt to gain market“ share. The CMA says had this been done, the retailers in question would have “intensified competitive pressure on their rivals”, thereby deploying “active” pricing strategies.
While the CMA says it “has not found evidence that retailers actively changed their pricing strategies to take advantage of the crisis, either in relation to petrol or diesel”, it nonetheless believes “retailer responses to reductions in wholesale diesel costs may have been more delayed” than they were for petrol.
The body appears not to know why this is, explaining that it needs to make “a more detailed assessment” of this trend – though industry sources say the CMA has previously been told this disparity is due to the mechanism and margins of the fuel-card market, and the amount of diesel bought by customers using these cards.
Gordon Balmer, executive director of the Petrol Retailers Association, says of the report: ”Pump prices remain elevated primarily due to the crisis in the Middle East, and the government could play its part by reversing the cancellation of the fuel duty rebate due in the new year. Since the crisis began, it is estimated that the government is taking an incremental £90 million per month in VAT due to higher pump prices.”
