On 5 September the Office of Fair Trading (OFT) issued a “call for information” on the UK petrol and diesel sector aimed at soliciting evidence for or against the competition concerns raised in relation to retail fuel prices.

The OFT noted that there is considerable volatility in the pump prices of petrol and diesel over the period between 2007 and 2012 and identified a number of specific concerns, including:

  • the fact that pump prices may not be rising and falling in a way that reflects the underlying crude oil price fluctuation
  • potential below-cost pricing by the largest market players, which is affecting the ability of independent fuel retailers to compete
  • a potential manipulation and distortion of oil prices, due to (among other things) the fact that  prices are based on voluntary data (offers and trades) provided to oil price reporting agencies
  • a potential lack of competition among fuel retailers in remote areas
  • the possible relevance to the UK of the concerns raised by competition authorities in other jurisdictions (including Germany, Spain and Australia)

The OFT has announced that it will be engaging with market participants at each stage of the supply chain (as well as government and regulatory organisations, consumer bodies and monitoring groups) by issuing information requests, arranging roundtable discussions and holding bilateral meetings.

The deadline for submissions is 17 October, after which the OFT will evaluate any information and evidence gathered with the aim to produce a report of its findings in January 2013. Further in-depth scrutiny, though, may follow.

In light of the areas of concern identified by the OFT, parties such as supermarkets, oil companies and oil price reporting agencies are particularly likely to be called upon to assist the OFT in its assessment of whether this matter should be escalated (e.g. into a formal market study).

Should features which distort competition within the market be identified, a number of options are open to the OFT. Most importantly the OFT could decide (usually following its own preliminary market study) to refer the relevant market to the Competition Commission for further investigation. Alternatively the OFT may accept undertakings in lieu of a reference, where this is appropriate.

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For more information about the OFT’s role or other competition issues, please contact the authors listed below.