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Forum says opportunity missed with OFT’s clean bill of health for fuel pricing

The Forum of Private Business has described the OFT's decision not to launch a full investigation into the state of fuel pricing as a ‘missed opportunity'.

The not-for-profit small business support group said it would be cold comfort for many firms reliant on fuel to do business that the OFT review, which was announced in September, would go no further having found UK pre-tax fuel prices amongst the lowest in Europe.

It also found supermarkets had caused a huge number of independent suppliers to go out of business, but in turn their increased buying power had helped drive down forecourt costs. Not surprisingly the study also found rural fuel prices were more expensive, and also raised questions about the way motorway service stations don't advertise what is often much more expensive fuel to drivers until they have exited the network.

But the main thrust of the investigation looking at anti-competitive behaviour in the fuel market, drew a blank. The watchdog even described competition in the market at a national level as ‘strong', but admitted there ‘may be' some ‘issues' at a local level.

The Forum's Head of Policy, Alex Jackman, said: "That we have some of the lowest pre-tax prices for petrol in Europe will come as little comfort to businesses who are paying a premium at the pumps. Whilst we praised the government for not implementing recent proposed increases, to go from the 7th lowest pre-tax price to the 6th highest post-tax price suggests there's something amiss in the UK.

"The problem of the overall price of petrol would seem to lie squarely in the tax take, and this government, along with previous ones, continues to ignore this most pressing of issues for business. Our own research has previously shown this to be one of the biggest costs for our members."

On supermarkets increasing competition, Jackman commented:  "The growth of supermarket filling stations has coincided with the decline of independents. It may be true that they increase competition, but by offering healthy discounts only when large amounts are spent in store, those discounts are not without their own cost. 

"We don't understand how the OFT can come to the conclusion they have bearing this in mind. This is a classic example of big supermarkets using their size and buying power to assimilate local markets for their own gain. They simply have too much power, and we think this was a missed opportunity by the OFT to take this further."

He added: "We will have to take the findings of the OFT investigation on board that there was little evidence of collusion of price fixing. It is a difficult finding to swallow, however, given the lag times that seem to exist between wholesale prices dropping and pump prices following which are there for all to see.

"We say there still needs to be much greater transparency in when these costs are rising and falling for the consumer to regain confidence." 

On the issue of motorway service stations, Jackman said: "It's clear road hauliers up and down the country are being penalised for their use of motorways. With road pricing being considered further down the line it is vital the on average £27 increased cost of filling a HGV tank on motorways compared to supermarket forecourts is addressed. 

"If prices were displayed on motorways, truck drivers could vote with their pedals and this would help drive down prices."

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