The Competition and Markets Authority (CMA) today announced it will investigate whether a “failure in competition” is seeing consumers overcharged for groceries and fuel.
The watchdog said it would be stepping up its work in the grocery sector to determine whether a “failure in competition is contributing to grocery prices being higher than they would be in a well-functioning market”.
CMA chief executive Sarah Cardell said: “We recognise that global factors are behind many of the grocery price increases, and we have seen no evidence at this stage of specific competition problems.
“But, given ongoing concerns about high prices, we are stepping up our work in the grocery sector to help ensure competition is working well and people can exercise choice with confidence.”
The watchdog also announced an update to its ongoing Road Fuel market study, launched in July to investigate whether fuel prices have been kept artificially high, which found supermarkets were overcharging drivers five pence per litre on petrol and diesel, even when taking into account the conflict in Ukraine.
It said that high pump prices could not be attributed “solely to factors outside the control of retailers” and that “the higher prices drivers are paying at the pumps appear in part to reflect some weakening of competition in the road fuel retail market”.
The CMA added that supermarket pump prices were “around five pence per litre more expensive than they would have been had their average percentage margins remained at 2019 levels”.
Weaker competition in diesel as compared with petrol was also a concern, with higher margins in 2023 continuing “longer than expected”.
A lack of transparency was also a concern of the CMA, with the watchdog “not satisfied” by the evidence provided by supermarkets during the probe, stating that information had been received “late in the day and after several rounds of information gathering”.
It did not mention the names of any specific supermarkets in the announcement.
Responding to the findings, the RAC 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 biggest retailers taking more margin per litre on fuel than they have in the past.
“Something badly needs to change to give drivers who depend on their vehicles every day a fair deal at the pumps. We hope even better news will be forthcoming later this summer.”
Meanwhile, AA president Edmund King said today’s decision was “hugely welcome in confirming what millions of UK drivers have long believed, that they too often get a raw deal at the pump”.
“The AA has been campaigning for many years to get more transparency in fuel pricing. If ever a business sector needed a major shake-up, it’s the fuel trade – critical to the cost of living, family finances, transport costs and inflation.”
“A handful of maverick small forecourts slashing prices, saying they can still stay commercially viable, has exposed the shame of the other retailers,” he added.
The CMA’s final report will be issued no later than 7 July 2023.