The Competition and Markets Authority (CMA) has said the average supermarket fuel margins went up by 6p a litre between 2019 and 2022 and last year drivers were ripped off as they paid £1 billion at supermarkets.
The watchdog’s report said that this led to an estimated extra cost of “around £900 million” for drivers who filled up at Morrisons, Sainsbury’s, Asda or Tesco.
The investigation found that in the first five months of this year there was an increase in their margins on diesel at all retailers costing an extra 13 per litre.
The government said in response a new law will be introduced which will force fuel retailers to make up to date pricing information to be available to third parties.
They have also said that new powers will be given to public organisations where they will be able to “closely monitor” fuel prices and will be able to “alert” Ministers to intervene if required.
Asda failed to provide the watchdog with the relevant information in a timely manner and was fined £60,000 by the CMA.
CMA chief executive Sarah Cardell said: “Competition at the pump is not working as well as it should be and something needs to change swiftly to address this.
“Drivers buying fuel at supermarkets in 2022 have paid around 6p per litre more than they would have done otherwise due to the four major supermarkets increasing their margins.
“This will have had a greater impact on vulnerable people, particularly those in areas with less choice of fuel stations.
“We need to reignite competition among fuel retailers.”
Chancellor Jeremy Hunt said: “It isn’t fair that businesses are refusing to pass on lower prices to protect their profits while working people struggle with balancing their budgets.
“Consumers need to be treated fairly, and so we’re empowering drivers to find the best prices possible for their fuel by taking swift steps following the CMA’s recommendations.”
Energy Security Secretary Grant Shapps said: “Some fuel retailers have been using motorists as cash cows. They jacked up their prices when fuel costs rocketed but failed to pass on savings now costs have fallen.
“It cannot be right that at a time when families are struggling with rising living costs, retailers are prioritising their bottom line, putting upwards pressure on inflation and pocketing hundreds of millions of pounds at the expense of hardworking people.
“Today I’m putting into action the CMA’s recommendations and standing by consumers. We’ll shine a light on rip-off retailers to drive down prices and make sure they’re held to account by putting into law new powers to increase transparency.”