Competition and Consumer Protection Law Background to road fuel market study
In 2021 to 2022 the price of both petrol and diesel went up by 60 pence per litre, following the Russian invasion of Ukraine. Against this backdrop, the then Secretary of State for the Department for Business, Energy and Industrial Strategy asked the Competition and Markets Authority (CMA) to carry out an urgent review to consider the health and competition in the road fuel market, geographical factors, and further steps government could take to strengthen competition or increase price transparency for consumers.
	The CMA reported their urgent review in July 2022 and found that while the retail road fuel market appeared relatively competitive, there were local variations in the price of road fuel, including pricing disparities between urban and rural areas. 20 Following the urgent review, the CMA undertook a 12-month market study to explore whether the retail market has adversely affected consumer interests, and to assess how far weakness in competition might be driving higher retail prices in certain parts of the UK.
	The CMA published its final report of its market study on 3 July 2023 and found three areas of concern. 21
	At a national level: competition between fuel retailers has weakened since 2019, due to a decision by the historic price-leaders to take a less aggressive approach to pricing by significantly increasing their internal margins for fuel. This coupled with other retailers maintaining largely passive pricing policies, pricing by reference to local competitors rather than responding promptly to cost movement and/or trying to win market share. As a result, consumers are paying generally higher prices than would otherwise have been the case, with estimated financial impact of an increased average supermarket fuel margin resulting in a combined additional cost of £900 million for consumers of the four supermarket retailers in 2022 alone. In addition, during 2023, competition has been significantly weaker for diesel than petrol.
	At a local level: the national level weakening of competition appears to have affected pricing in different parts of the UK in a similar way. However, longstanding patterns of variable pricing between different local areas remain, meaning that consumers in some areas can pay significantly more for fuel than in others.
	At motorway service areas (MSAs): Competition remains weak between MSA petrol filling stations (PFSs), meaning that consumers without access to fuel cards pay significantly more to buy fuel on the motorway than off it.
	Given the findings in the CMA market study on the health of competition the CMA recommended that the Government introduce a statutory open data scheme for prices in the retail road fuel section. The CMA also recommended that government introduce an ongoing road fuels monitoring function to be housed within an appropriate public body and provide it with information gathering powers to monitor developments in the market, both nationally and locally, as we move through the net zero transition, provide ongoing scrutiny of prices, and consider whether further action may be needed to protect consumers.
	Sections 311 to 318 provide the CMA with information gathering powers to establish a road fuels monitoring function. This will enable the CMA to request specified information from undertakings involved in the distribution, supply or retail of petrol and diesel. The CMA will use the information obtained to provide an ongoing assessment of competition in the retail road fuel market to government and provide advice on the need for further intervention to facilitate competition.