UK Competition Authority to Carry Out Fuel Market Review

Jun 15, 2022

UK Competition and Markets Authority (CMA) Chief Executive Andrea Coscelli has revealed that the organization will carry out a review of the fuel market in a letter sent to the UK Secretary of State for the Department for Business, Energy and Industrial Strategy Kwasi Kwarteng.

In the letter, which was a response to a previous letter sent to Coscelli by Kwarteng, the CMA chief executive said high road fuel prices are causing significant concern for the millions of consumers and businesses who rely on being able to afford to fill up their vehicles.

“Global factors, including the war in Ukraine, have been the principal driver of recent trends,” Coscelli stated in the letter.

“But if competition is not working well in the retail fuel market, pump prices will be even higher than they need to be. With that in mind, the CMA will, as you request, carry out a short and focused review of the market, and provide advice to government on steps that might be taken to improve outcomes for consumers across the UK,” Coscelli added in the letter addressed to Kwarteng.

Coscelli noted in the letter that the CMA will engage with industry stakeholders and motoring organizations to ensure that its analysis and conclusions are based on solid evidence.

“We will also, of course, continue to urge anyone with evidence of business cartels or other illegal anti-competitive behavior to come forward,” Coscelli stated.

“Once our short review is complete, and taking into account its findings, the CMA board will consider what further work may be necessary, including whether a market study is appropriate,” Coscelli added in the letter.

In a letter sent to Coscelli by Kwarteng on June 11, Kwarteng asked the CMA to conduct an urgent review of the fuel market, as well as a longer-term market study, under the Enterprise Act 2002, to explore whether the retail fuel market has adversely affected consumer interests.

“This should consider the health of competition in the market, geographical factors, including localized competition, and any further steps that the government or the CMA could take to strengthen competition, or to increase the transparency that consumers have over prices,” Kwarteng said in his letter.

“As part of this, I would be grateful for the CMA’s advice on the extent to which competition has resulted in the fuel duty cut being passed on to consumers, and the reasons for local variations in the price of road fuel,” he added in the letter.

Kwarteng, who outlined in the letter that he expected the members of the road fuel industry to fully support and cooperate with the CMA in preparing its advice, revealed that he would like to receive the initial report by July 7.

In his letter, Kwarteng noted that unique circumstances globally have pushed pump prices up to unprecedented levels.

“We have taken action to support motorists by cutting fuel duty for petrol and diesel in a GBP 5 billion [$6 billion] package. Despite this action, there remains widespread concern about the pace of the increase in prices at the forecourt and, that prices may not fall as much or as fast as they rise,” Kwarteng said in the letter.

“The British people are rightly frustrated that the GBP 5 billion [$6 billion] package does not always appear to have been passed through to forecourt prices and that in some towns, prices remain higher than in similar, nearby towns,” he added.

“Drivers should be getting a fair deal for fuel across the UK. Healthy competition between forecourts is key to achieving this, with competition working to keep pressure on prices,” Kwarteng continued.

According to the RAC’s fuel price watch tool, which was last updated on June 13, the cost of unleaded petrol is 185.44 pence ($2.24) per liter and diesel is 191.21 pence ($2.31) per liter. Both of these are still “likely to rise” however, the RAC’s website warns.

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