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Press releases 2012 -

OFT issues call for information into petrol and diesel prices

Refueling car in forecourt

76/12    5 September 2012

The OFT today issued a call for information on the UK petrol and diesel sector.

The UK retail road fuels sector is estimated to be worth around £32 billion. Petrol prices rose by 38 per cent between June 2007 and June 2012, and diesel prices by 43 per cent over the same period.

In light of continuing public concern about pump prices, the OFT wants to identify whether or not there are competition problems that it can tackle in the sector. It is inviting the industry, motoring groups and consumer bodies to submit information.

The OFT will explore a number of claims about how the road fuels sector in the UK is functioning, including:

  • whether reductions in the price of crude oil are being reflected in falling pump prices
  • whether supermarkets' and major oil companies' practices may be making it more difficult for independent retailers to compete with them 
  • whether there is a lack of competition between fuel retailers in some remote communities in the UK, and 
  • whether concerns about price co-ordination and the structure of road fuels markets identified by other national competition authorities are relevant in the UK.

Claire Hart, Director in the OFT's Services, Infrastructure and Public Markets Group, said:

'We are keenly aware of continuing widespread concern about the pump price of petrol and diesel and we have heard a number of different claims about how the market is operating.

'We have therefore decided to take a broad based look at this sector, to provide an opportunity for people to share their concerns and evidence with us. This will help us determine whether claims about competition problems are well-founded and whether any further action is warranted.'

The OFT will be gathering information over the next six weeks, and plans to publish its findings in January 2013.

NOTES

  1. See further details of this project.
  2. Conducted under section 5 of the Enterprise Act 2002, a call for information is one of the ways in which the OFT may gather information. This approach is not an alternative to a market study but responds to a need to take forward work where the OFT needs to better understand the functioning of a market or markets but requires more information to decide whether to identify the market as one which does not work well. 
  3. In February this year, the OFT received a submission from the Retail Motor Industry Federation, which raised concerns about the ability of independent fuel retailers to continue to compete in the market. 
  4. According to Keynote's August 2012 report, Forecourt Retailing, the UK road fuels sector was estimated to be worth approximately £32 billion in 2010. According the AA's Fuel Price Report, between June 2007 and June 2012 the pump price of petrol rose by 38 per cent from £0.97 per litre to £1.34, and the pump price of diesel rose by 43 per cent from £0.96 per litre to £1.39.
  5. The OFT is aware that competition authorities in other countries have identified concerns about the operation of road fuels markets in their jurisdictions. A recent investigation of the German road fuels sector by the Bundeskartellamt found a lack of intensive retail price competition, and raised concerns about the market's structure and potential price coordination. The Spanish Comision Nacional de la Competencia investigated the fuel sector in 2009, 2011 and 2012 finding concerns about the market's structure, highlighting the degree of market concentration at the retail level. The Australian Competition and Consumer Commission has commenced a formal investigation into price information sharing arrangements in the sector.



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