OFT to look into road fuel prices

The OFT have today (Wednesday 5th) 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 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.”

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 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.

And the Australian Competition and Consumer Commission has commenced a formal investigation into price information sharing arrangements in the sector.

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