Probe finds drivers paying millions extra at petrol pump due to weak competition between retailers

Drivers left angry and frustrated as investigation shows petrol prices at supermarkets were too high last year, ITV News Business and Economics Editor Joel Hills reports

Customers paid an extra 6p per litre of fuel at supermarket pumps last year, leading to an overspend of almost £1bn as retailers boosted profit margins during the cost of living crisis.

The report into petrol station operators by the Competition and Markets Authority (CMA) was fast-tracked after Jeremy Hunt met with regulators last week and gave them the go-ahead to crack-down on retailers who don't pass on falling costs to customers.

The report also found an increase in margins on diesel across all fuel retailers cost drivers an extra 13p per litre during the first five months of this year, with Energy Security Secretary Grant Shapps accusing retailers of using motorists as "cash cows".

A "pump watch" scheme is set to be introduced by the government to allow drivers to shop around for the fairest fuel prices, with retailers obliged to publish real-time prices.

The CMA investigation was requested last year by the former Business Secretary Kwasi Kwarteng, over concerns some retailers were failing to pass on a 5p cut in fuel duty to customers.

Monitoring petrol prices is now one of Mr Hunt's top priorities, along with keeping a close eye on supermarket costs and energy bills.

Monday's CMA report found average fuel margins at Asda, Morrisons, Sainsbury's and Tesco rose by 6p per litre between 2019 and 2022, costing customers an additional £900m.

Asda's fuel margin target for 2023 was more than three times what it was in 2019, while Morrisons doubled their margin target in the same period.

Other retailers, including Sainsbury's and Tesco, "did not respond in the way you would expect in a competitive market" and raised their prices, ruled the CMA, again indicating that "competition has weakened and reinforces the need for action".

The CMA also found motorway service stations charging around 20p per litre more for petrol and 15p per litre more for diesel when compared to other stations

Asda was also given two fines totalling £60,000 for failing to provide "relevant information in a timely manner".

The CMA issued the first penalty after Asda sent a representative to a CMA interview who was not equipped to provide evidence on topics the CMA had briefed in advance,

The second was for failing to respond to a compulsory written request for information.

Sarah Cardell, the regulator Chief Executive, said: "Competition at the pump is not working as well as it should be and something needs to change swiftly to address this.

"Drivers buying fuel at supermarkets in 2022 have paid around 6 pence per litre more than they would have done otherwise, due to the four major supermarkets increasing their margins. This will have had a greater impact on vulnerable people, particularly those in areas with less choice of fuel stations. "We need to reignite competition among fuel retailers and that means two things. It needs to be easier for drivers to compare up to date prices so retailers have to compete harder for their business."

The chancellor in the meeting on Wednesday morning with consumer watchdogs. Credit: Number 10 / Flickr

In response to the CMA report, a spokesperson for Asda said: "The CMA's comprehensive road fuel market review recognised Asda as the price leader and confirmed the presence of an Asda petrol station in a local area keeps prices down for all motorists.

"Despite record inflation, we have carefully managed our business to ensure Asda was the cheapest traditional supermarket for both groceries and fuel throughout the period reviewed by the CMA and this position is unchanged.

"The penalty notices relate to two individual alleged technical breaches in the way information was shared with the CMA over a 12-month period, during which time a significant number of documents were shared with the CMA to aid their study and we engaged fulsomely with their inquiries.

"As the price leader in the supermarket fuel sector, we welcome any initiative that makes it easier for motorists to compare fuel prices, such as an app or other technology-based solutions."

Meanwhile, both the AA and RAC welcomed the findings of the report but criticised the government for not taking action sooner.

AA fuel price spokesperson Luke Bosdet said: "For years, drivers have been convinced - by daily watching of forecourt price boards - that pump prices shoot up when the cost of oil and wholesale fuel rises but fall much more slowly when those costs decline."

"Sadly, it has taken more than 15 years for a government and competition watchdog to recognise this and do something about it," he added.

"However, action that is better late than never is greatly appreciated by motorists across the UK."

RAC fuel spokesman Simon Williams said: "This is a landmark day when it comes to fuel prices in the UK.

"The fact that drivers appear to have lost out to the tune of nearly £1 billion as a result of increased retailer margins on fuel is nothing short of astounding in a cost-of-living crisis and confirms what we've been saying for many years: that supermarkets haven't been treating drivers fairly at the pumps.

"It's all about action now and we very much hope the Government follows through with both of the CMA's recommendations."

Want a quick and expert briefing on the biggest news stories? Listen to our latest podcasts to find out What You Need To Know...