Supermarkets hike diesel and petrol prices more than needed, CMA finds

Fuel retailers, especially supermarkets, have raised diesel and petrol prices more than necessary to boost profit margins, the competition watchdog has found.

The recent high fuel prices paid by drivers cannot be attributed solely to factors beyond the control of the retailers, such as the war in Ukraine, which has led to a rise in wholesale prices, the Competition and Markets Authority said.

Instead the controller found evidence suggesting “some weakening of competition” has driven up prices at the pump.

“Evidence gathered by the CMA indicates that fuel margins in the retail market, but particularly for supermarkets, have increased over the past 4 years,” the watchdog said in an update to its ongoing investigation into how much drivers should fill up.

“As a result of these rising margins, average supermarket pump prices in 2022 appear to be about 5 pence per liter more expensive than they would have been had their average percentage margins remained at 2019 levels.”

While supermarkets are still the cheapest fuel suppliers, the CMA said that “evidence from internal documents indicates that at least one supermarket has significantly increased its internal forward-looking margin targets during this period.”

This “change in approach” may have led other supermarkets to adjust their prices as well, it added.

The watchdog’s update comes as separate findings show that retailers are making far greater profits from both types of fuel than they were before the pandemic.

In 2019 average margins were 6.5 pence for every liter of petrol and 6.9 pence for diesel, the RAC says.

The calculation based on current prices shows that retail margins are almost twice as high on lead-free (12 pence per litre) and more than three times higher on diesel (23.7 pence per litre).

On Sunday, the average petrol pump price fell to 144.95 pa litres, with diesel selling 9p higher at 154.31 pa liters – despite the wholesale price of diesel actually being 4p lower than petrol, according to the RAC.

The CMA said it was concerned about the “continued higher margins on diesel compared to gasoline” so far this year, which “appear to be lasting longer than expected.”

The CMA’s CEO, Sarah Cardell, said they were not satisfied with evidence from supermarkets, so they will call for “formal interviews to get to the bottom of what’s going on.”

A full final report with recommendations will be published in early July.

RAC fuel spokesman, Simon Williams, said: ‘We are very pleased to hear that the Competition and Markets Authority has confirmed what we have been saying for a long time about the largest retailers taking more margin per liter on fuel than in the past. .

“At the moment the average price of diesel is more than 20 pence a liter too expensive, simply because they refuse to lower their prices.”

The AA also said the CMA’s update confirms the belief among millions of UK drivers that they are getting a raw deal at the pump.

“Since the pandemic, there has been too much lack of competition between filling stations in too many places,” said AA chairman Edmund King.

‘The current diesel price scandal and the price difference of five per tank between neighboring municipalities are just two examples.

“More recently, a handful of cocky little gas stations have lowered prices saying they can still remain commercially viable, exposing the embarrassment of the other retailers.”

It’s because a garage owner claims the crown of ‘King of the Pumps’ because he believes he sells the cheapest fuel available anywhere in Britain.

Vijay Jaganathan advertises both petrol and diesel at 129.9p a liter at his nationwide filling station – compared to the UK average of 145p for petrol and 154p for diesel.