The UK’s competition watchdog is to gain new powers to monitor the road fuel market, protecting drivers from “rip-off” fuel prices.

The Government has warned fuel retailers to “be transparent on pricing or face a penalty”

Under newly tabled amendments to the Digital Markets, Competition & Consumers Bill, the Competition and Markets Authority (CMA) will become the designated body for closely monitoring road fuel prices and reporting any sign of malpractice to the Government.

The Department for Energy Security and Net Zero said the CMA’s new powers, expected to come into force later next year, would enable it to “shine a light on any attempt from retailers to unfairly hike up fuel prices”.

It’s issued a stiff warning to fuel retailers – “be transparent on pricing or face a penalty”. The CMA’s new powers mean it will be able to force fuel retailers, including supermarkets, to “come clean” on how much they are charging customers on their forecourts versus their profits.

Those that fail to comply could face a fixed fine of up to 1% of their worldwide turnover, or an ongoing fine of up to 5% of daily turnover.

The move comes after the CMA warned last week of continued concerns for fuel prices – including retailers’ profit margins – despite action taken this summer.

Its in-depth study into the road fuel market published in July 2023 found a weakening of competition in retail since 2019 and called for major changes, including establishing a monitoring body to report on the state of the road fuel market.

The study found increased supermarket fuel margins led to drivers paying an extra 6 pence per litre for fuel, which amounted to £900min extra costs in 2022 alone – and last week’s report indicated ongoing concerns.

Energy Security Secretary Claire Coutinho has now cautioned retailers that they will be held to account if there is any evidence of unfairly hiking up prices and holding back savings from UK motorists – so-called ‘rocket and feather pricing’.

Coutinho said: “At a time when many were struggling with increased living costs, we saw shocking behaviour from some fuel retailers who failed to pass on savings at the pump. Now we are cracking down on any petrol station bosses found to be unfairly hiking up their prices. That’s why we’re giving the CMA new powers to bring fairness back to the forecourts and make sure UK drivers get a competitive fuel price.”

The Government is progressing plans to make it a legal requirement for fuel retailers to share daily price information to help customers shop around

In last week’s report, the CMA said many retailers have voluntarily increased transparency of their costs and returns. It also announced that 12 of the biggest retailers, including all four fuel-selling supermarkets, had already signed up to its voluntary scheme to share daily price data, which will enable news outlets and websites to create price comparison tools for customers to easily compare costs.

But the CMA also revealed that Shell and Moto-way had failed to meet its information requests, despite calls from the Energy Security Secretary to do so.

The Government is progressing plans to make it a legal requirement for fuel retailers to share daily price information to help customers shop around, and a consultation on the design of the open data scheme is due to launch this autumn.

The Government has also urged comparison sites and others to get onboard to help UK motorists find the best local price for their fuel.

The RAC has welcomed the new power for the CMA to tackle fuel retailers not passing on wholesale cost savings.

Fuel spokesman Simon Williams said: “Due to our long-term monitoring of retail and wholesale prices, we have been calling for fairer, more transparent pricing for years.

“While the CMA’s report concluded the supermarkets had overcharged to the tune of £900m last year, our data shows this behaviour is continuing to this day with supermarket fuel margins more than double what they were before the pandemic.

“These new powers can’t come soon enough because, as it stands, the Treasury’s 5p-a-litre fuel duty discount is not making it to drivers at the pumps.”