Having last month raised concern with the Competition and Markets Authority (CMA) at the significant discrepancies in price for road fuel within the region, Vale of Clwyd MP Dr James Davies has now received a response. He welcomes their general comments but has questioned their preliminary explanation for higher prices at some petrol stations. The CMA continues to undertake a Road Fuel Review, at the request of the Government last summer.
In his initial letter to the CMA, James said he had written to supermarkets in the Vale of Clwyd to question their pricing variations, and that their responses had failed to reassure him that supermarkets are always committed to supplying fuel at reasonable prices.
The CMA’s response stated that in their December 2022 Initial Analytical Update they said that “prices are likely to be higher at petrol stations where there are few (or no) competitors nearby – and particularly where there is no local supermarket petrol station”.
However, James has responded to emphasise the fact that a lack of supermarket petrol stations would not appear to be the main underlying driver of fuel price concern locally.
Responding to the CMA he said:
“The evidence I sent you suggested that significant price disparities appear to be occurring despite there being plenty of supermarket petrol filling station “competition”. In other words, I am concerned at what might by some be termed “price fixing”.”
In their letter to James, the CMA states that “while the evidence shows that the majority of fuel price increases are due to global factors, such as the Russian invasion of Ukraine, indications are that higher pump prices cannot be attributed solely to factors outside the control of the retailers. Based on evidence gathered as part of the Road Fuel market study, the higher prices drivers are paying at the pumps in 2023 appear in part to reflect some weakening of competition in the road fuel retail market.”
They also state that;
“Evidence gathered by the CMA indicates that fuel margins have increased across the retail market, but in particular for supermarkets, over the past 4 years. As a result of these increasing margins, average 2022 supermarket pump prices appear to be around 5 pence per litre more expensive than they would have been had their average percentage margins remained at 2019 levels”.
And that;
“Although supermarkets still tend to be the cheapest retail suppliers of fuel, evidence from their internal documents indicates that at least one supermarket has significantly increased its internal forward-looking margin targets over this period. Other supermarkets have recognised this change in approach and may have adjusted their pricing behaviour accordingly.”
They added:
“We said in our recent update that the CMA would conduct formal interviews with the supermarkets’ senior management in order to get to the heart of the issues. One of these wider issues is geographical variation in prices.
“We are looking further into our analysis of the drivers of price variation within and between areas, looking closer at some of the petrol filling stations charging the highest prices, and examining the degree to which the level of price variation has changed over time.
“We are also considering the extent to which differences in local prices are due to factors relating to differences in costs between areas (which will feed through into the pump price that is required to maintain a viable petrol station) or due to the level of competitive intensity.”
James said:
“As I said in my original letter to CMA, the discrepancies in price for fuel within the region are placing financial pressure on my constituents and creating a sense of unfairness.
“I am therefore pleased this is being looked at in depth and look forward to the CMA issuing its final report no later than July 7th 2023, covering the full range of issues they have considered in this market and setting out any further action that they think is needed.”
To view the original press release on this, click on the following link:
https://www.jamesdavies.org.uk/news/mp-calls-competition-and-markets-au…
