The OFT has issued a call for information on the UK petrol and diesel sector.
The review has been prompted by the large increases in petrol and diesel prices over the past five years. The OFT says that, since June 2007, petrol prices have risen by 38%. Diesel prices have risen by some 43%.
The OFT wants to identify whether there are deficiencies in the competitiveness of the industry and has identified a number of issues that it is likely to pay particular attention to, namely:
- whether reductions in the price of crude oil are being passed on to consumers through lower petrol and diesel prices
- whether supermarkets' and major oil companies' practices may be making it more difficult for independent retailers to compete
- whether there is a lack of competition between fuel retailers in some remote areas of the UK
- whether concerns about price co-ordination and the structure of road fuels markets identified by other national competition authorities (including in Germany and Spain), are relevant in the UK
The OFT has invited interested parties (likely to include fuel industry players, motoring groups and consumer bodies) to submit their views by mid-October. It will then consider the evidence with a view to publishing its findings in January 2013.
Described as a "call for information", this is currently a relatively light-touch investigation. It is entirely possible that the OFT will conclude that the matter does not merit further investigation.
However, if the OFT uncovers apparent competition concerns, it could well decide to take further action. In particular, it could launch a market study leading to a possible two year in-depth review by the Competition Commission. Or, if the OFT uncovers evidence of illegality, it could commence an infringement investigation under the competition law rules.
For interested parties who believe there are competition problems in the sector, this development represents an opportunity to make those concerns known to the OFT.
Conversely, for more established players in the market, there will be a strong incentive to demonstrate to the OFT that the market is operating competitively.