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OFT decision 'bitter blow' to smaller dealers, says PRA

30 January, 2013

The decision by the OFT to not proceed with a full market study into the UK retail fuels sector, has been condemned by the Petrol Retailers' Association.

Brian Madderson, PRA chairman said “This was a prime opportunity, supported by considerable new information from our retailers, to tackle market manipulation of UK wholesale prices and retail prices by the big players. This comes at a time when refineries have over-supply and demand has slumped due to the Arctic weather, yet the wholesale cost of petrol has increased by over 7.00ppl since Christmas.

“How can the OFT, supported by Government, try and tell motorists and businesses that the market is working in the consumer’s interests? As independent retailers, we are left trying to explain the unexplainable to our forecourt customers who will rightly be angry at another unwarranted price hike”

This failure by the OFT and Government to understand and act on simple evidence provided by our independent retailers will have nationwide implications resulting in:

• Higher rate of filling station closures

• Higher fuel prices

• Higher risk of immediate transport disruption in a crisis

The report by the OFT in 1998 waved on the supermarkets as did the Competition Commission in 2008 and more than 5,000 forecourts have shut across the UK resulting in job losses and deprivation of essential service, especially in rural areas.

Every new supermarket filling station, now often unmanned, destroys up to 5 independent forecourt businesses. A recent PRA report commissioned from Christie + Co confirmed that as many as a further 1,000 independent forecourt sites will be wiped out by new supermarket forecourts by 2017 unless the Government takes action.

Madderson continued “It is deeply ironic that as the OFT try and shut the stable door on the hundreds of complaints from our independent retailers. The “joined up” policy framework of Government is in disarray when only yesterday the Competition Minister at the Department for Business, Innovation & Skills issued a press release yesterday stating ‘Competition is one of the great drivers of growth; it keeps our prices low and our businesses innovating. This is why it’s important that where there are businesses who abuse their position in the market, those who have been affected can take appropriate action’

“The establishment has once again turned a blind eye to the need for a full Market Study which would have unmasked the market manipulators, provided proper transparency and helped our economic recovery.

“However, we are encouraged that the OFT has undertaken national sampling and found no evidence to substantiate the urban myth perpetuated by motoring organisations and the media that prices ‘go up like a rocket and down like a feather’.

“Similarly, their findings confirm that the rise in fuel prices results from a quadrupling of crude oil costs and increases to duty and VAT. This does nothing to expose the market manipulators of wholesale costs though it does exonerate the independent retailer from claims of ‘profiteering’.

“In our discussion with the OFT today, they recognise that the decision not to proceed with a Market Study at this time will be a bitter blow to many small, family owned petrol retailing businesses across the UK but they stress that their ‘door remains open’ to receive further evidence.”