Rip-off at the pumps – Big supermarkets slammed for profits

Drivers paid nearly £1billion extra in fuel costs last year as supermarkets used rip-off forecourt prices to boost profits, a damning report has said.

The Competition and Markets Authority yesterday slammed Britain’s four biggest grocers, as well as motorway services prices.

The CMA’s year-long probe found supermarket fuel profit margins rose “significantly” since 2019, as competition between retailers weakened.

It estimates that between then and 2022, greedy grocery chains made an extra 6p a litre on fuel. Yet last year alone, the cost to motorists was around £900million. This means Ford Focus drivers, whose cars have a 52-litre tank, have been paying £3.12 over the odds every time they fill up.

Asda and Morrisons, which have traditionally led the way on lower fuel prices, were particularly singled out for criticism.

The CMA found Asda decided last year to boost profits by reducing prices “more slowly than would previously have been the case as wholesale prices fell”…a practice known as feathering.

It resulted in rivals such as Tesco and Sainsbury’s taking “largely passive pricing policies”, the regulator said. Separately, the CMA announced it had fined Asda £60,000 for failing to provide it with information when required.

The Government now wants to force sellers to make up-to-date pricing data available to third parties and create a road fuel prices monitoring function.

Energy Security Secretary Grant Shapps accused some retailers of using motorists as “cash cows”.

He vowed to “shine a light on rip-off retailers to drive down prices and make sure they’re held to account by putting into law new powers to increase transparency”.

Diesel drivers have come off even worse since the start of this year. The CMA said they had faced prices around 13p a litre higher as retailers upped their profit margins. At motorway services, drivers without a fuel card were paying “significantly more” to fill up than elsewhere, the CMA said.

There, the average premium last year was around 20p on petrol and 15p on diesel. The authority added: “This premium has grown in real terms since 2012 and price variation among retailers on motorways is low.

“We have not seen evidence to suggest that this premium can be explained by higher retailer costs, so our view is that this is due to limited competitive pressure.”

The CMA is calling for a “fuel finder” scheme to allow drivers to see live, station-by-station fuel prices on their phones or sat-navs. Currently, retailers only provide price information at fuel stations themselves, making it hard to compare.

The idea is similar to a “Pump Watch” scheme long championed by the Fair Fuel UK group. The big four supermarkets said they were open to the idea at a recent House of Commons hearing.

Mr Shapps said of supermarkets: “They jacked up their prices when fuel costs rocketed, but failed to pass on savings now costs
have fallen.

“It cannot be right that at a time when families are struggling with rising living costs, retailers are prioritising their bottom line, putting upwards pressure on inflation and pocketing hundreds of millions of pounds at the expense of hard-working people.”

Chancellor Jeremy Hunt said yesterday: “Consumers need to be treated fairly. We’re empowering drivers to find the best prices possible for their fuel by taking swift steps following the CMA’s recommendations.”

Meanwhile, the CMA has also warned the push to electric cars risked putting charging into the hands of an even smaller group of retailers.

Watchdog chief executive, Sarah Cardell, said: “Competition at the pump is not working as well as it should be and
something needs to change swiftly to address this.”

Energy minister Graham Stuart echoed Mr Shapps’ condemnation. He told MPs: “Motorists should not be used as cash cows by the fuel industry. The Government will not stand for it and I know this House won’t stand for it.”

Luke Bosdet, of the AA, said: “We noted this behaviour as far back as 2005 when, following Hurricane Katrina, pump prices shot up 5p a litre in a matter of days.

“But a 4p drop in wholesale costs soon after took more than two months to be reflected at the pump. Sadly, it has taken more than 15 years for a government and competition watchdog to recognise this and do something about it.” The RAC said it was “extremely pleased” the Government was taking action.

Unite union chief, Sharon Graham, said: “Profiteering at the petrol pumps is more proof our economy is rigged.”

The GMB said the findings strengthened calls for Business Secretary Kemi Badenoch to investigate a merger between Asda and forecourt giant EG Group.

Lib Dem Treasury spokeswoman, Sarah Olney, added: “This scathing report shows ministers have been asleep at the wheel while drivers are fleeced by petrol profiteers.”

An Asda spokesman 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. 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.”