Asda’s pence per litre fuel margin targets were three times their 2019 level by 2023, and the retailer deliberately passed on reductions to retail prices more slowly in areas where they had no competition, the competition watchdog has told MPs. Competition and Markets Authority (CMA) director of markets Dan Turnbull told the Business and Trade Committee that Asda repeatedly told it over the course of its market study that it had not changed its fuel pricing strategy, because it had consistently maintained the strategy of being the lowest cost provider in any particular area.
However, Mr Turnbull said: “On that particular point we didn’t find any evidence that that had changed. But what we did find were two very significant changes to Asda’s pricing approach: the first of those was around their internal margin targets.
“So we found that between 2021 and 2023 they significantly increased their internal fuel margin targets on a pence per litre basis, and indeed by 2023 those pence per litre targets were three times what they’d been in 2019. “The second of these areas was the decision that Asda took during 2022 to deliberately feather prices on fuel as they came down from the peak. “Asda told us that they saw an opportunity as the wholesale price fell to pass through reductions in the retail price more slowly than they previously would have done. “And they said that they applied that over 100 petrol stations where they faced no direct competition from another supermarket in the local area.” Mr Turnbull added: “They also said that there was a greater opportunity to do that on diesel in 2023 because of the volatility in the market.”
Earlier this week, Energy Secretary Grant Shapps met with supermarket bosses to discuss a crackdown on high fuel prices, after the main retailers were accused of 'profiteering' from the cost of living crisis.
One of the considerations on the table is a service for consumers to be able to compare petrol prices, a suggestion made after the Chancellor Jeremy Hunt met regulators earlier this month.
It comes as latest figures from the Office for National Statistics (ONS) show the rate of inflation dropped to 7.9% in June, down from 8.7% in May.
The ONS said falling fuel prices was the biggest driver behind it, while food price inflation also reduced to 17.3% from 18.7% in May, though still high.
Asda has been contacted for comment.
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