Competition and Markets Authority – The NEN

Watchdog identifies ‘multiple concerns’ in veterinary industry

The CMA has today published its main concerns following an initial review into the veterinary sector

CMA provisionally decides it should launch a formal Market Investigation.
Initial review prompts over 56,000 responses from public and vet industry.

The review by the Competition and Markets Authority (CMA) highlights multiple concerns in the market, including:

Consumers may not be given enough information to enable them to choose the best veterinary practice or the right treatment for their needs.
Concentrated local markets, in part driven by sector consolidation, may be leading to weak competition in some areas.
Large corporate groups may have incentives to act in ways which reduce choice and weaken competition.
Pet owners might be overpaying for medicines or prescriptions.
The regulatory framework is outdated and may no longer be fit for purpose.

The CMA has provisionally decided that it should launch a formal Market Investigation focused on its provisional analysis of the issues in the sector and is now consulting on this proposal.

A Market Investigation enables the CMA to investigate its concerns in full and to intervene directly in markets if it finds that competition is not working well. Along with compelling those under investigation to provide information, it gives the CMA access to a wide range of legally enforceable remedies, such as mandating the provision of certain information to consumers, imposing maximum prescription fees and ordering the sale or disposal of a business or assets.

Sarah Cardell, Chief Executive of the CMA, said: “We launched our review of the veterinary sector last September because this is a critical market for the UK’s 16 million pet owners. The unprecedented response we received from the public and veterinary professionals shows the strength of feeling on this issue is high and why we were right to look into this.

“We have heard concerns from those working in the sector about the pressures they face, including acute staff shortages, and the impact this has on individual professionals. But our review has identified multiple concerns with the market that we think should be investigated further.

“These include pet owners finding it difficult to access basic information like price lists and prescription costs – and potentially overpaying for medicines. We are also concerned about weak competition in some areas, driven in part by sector consolidation, and the incentives for large corporate groups to act in ways which may reduce competition and choice.

“Given these strong indications of potential concern, it is time to put our work on a formal footing. We have provisionally decided to launch a market investigation because that’s the quickest route to enable us to take direct action, if needed.”

The CMA’s concerns

Based on the evidence gathered so far, the CMA has 5 key concerns that it proposes to investigate further:

Consumers may not be given enough information to enable them to choose the best veterinary practice or the right treatment for their needs.

Most vet practices do not display prices on their website – of those practices checked, over 80% had no pricing information online, even for the most basic services. Pet owners tend not to shop around between vet practices and assume prices will be similar, although that is not always the case.
People are not always informed of the cost of treatment before agreeing to it – around one fifth of respondents to the CFI said that they were not provided with any cost information before agreeing to tests, around one in 10 said they were not provided with cost information before their pet had surgery, and around half said they were not informed about costs before agreeing to out of hours treatment.
A company can own multiple vet practices in a local area without making that clear – for example, only 4 out of 6 of the largest groups don’t change the name or branding when they take over an independently owned vet practice. This means pet owners are not always comparing competitors when choosing a vet practice.

Concentrated local markets, in part driven by sector consolidation, may be leading to weak competition in some areas.

Market concentration measures how many competitors operate in a particular market – the fewer firms operating in a market, the more concentrated it is.

In 2013, around 10% of vet practices belonged to large groups, but that share is now almost 60%, and many of the large groups have expressed an intention to continue expanding their business through acquisition of independently owned practices.
To illustrate this another way, since 2013 1,500 of the 5,000 vet practices in the UK have been acquired by the 6 large corporate groups (CVS, IVC, Linnaeus, Medivet, Pets at Home and VetPartners).
This may reduce the number of business models in locations where most or all of the first opinion practices are owned by one large corporate group, giving less choice to consumers because they tend to choose practices close to home.

Large integrated groups may have incentives to act in ways which reduce choice and weaken competition.

Given the significant and ongoing growth of large corporate groups, the CMA is concerned that:

The large, integrated corporate groups (especially those whose business models include significant investment in advanced equipment) may concentrate on providing more sophisticated, higher cost treatments, meaning that consumers are less able to access simpler, lower cost treatments even if they would prefer that option.
To varying extents, the large vet groups have also bought businesses which offer related services such as specialised referral centres, out of hours care, diagnostic labs and/or crematoria. These large groups may have the incentive and ability to keep provision of these related services within the group, potentially leading to reduced choice, higher prices, lower quality and exit of independent competitors.

Pet owners might be overpaying for medicines or prescriptions.

Vets must use signs in reception or treatment rooms to tell customers that they can get a prescription for medicine and buy it elsewhere, but the CMA is concerned that these may not be effective. While it can be convenient to buy a medicine directly from the vet as part of a consultation, around 25% of pet owners did not know that getting a prescription filled elsewhere was an option – meaning they are missing out on potential savings, even with the prescription fee.
Some vet practices may make up to a quarter of their income selling medicines – so there may be little incentive to make pet owners aware of alternatives.
The current regulatory regime may contribute to concerns by restricting veterinary practices’ ability to source cheaper medicines online.

The regulatory framework is outdated and may no longer be fit for purpose.

The main regulation in the industry dates from 1966, before non-vets were able to own vet practices. It relates to individual practitioners, not practice owners or vet practices as businesses. This means that the statutory regulator, the RCVS, has limited leverage over the commercial and consumer-facing aspects of veterinary businesses, for example how prices are communicated or whether there is transparency about ownership of vet practices or related services.
The RCVS has put in place a Practice Standards Scheme which applies to the vet practice rather than individual vets. Only 69% of eligible practices have signed up to this voluntary scheme, meaning that almost a third of the market has not committed to this approach.
The provisional view is that outcomes for consumers could be improved if regulatory requirements and/or elements of best practice could be monitored or enforced more effectively.

Next steps

The CMA has launched a 4-week consultation to seek views from the sector on the proposal to launch a market investigation. The consultation closes on 11 April 2023 at which point it will consider the responses received and a decision will be made on how to proceed.

For further information visit the veterinary services case page. This includes the consultation document which sets out more details and statistics on today’s update.

A response from the British Veterinary Association to follow

CMA sets out Autumn update in review of competition in groceries sector

The CMA has set out the latest findings and the next steps in its ongoing review of the groceries sector today

Some branded suppliers have pushed up prices by more than their costs increased, but in most cases, shoppers can find cheaper alternatives.
CMA to examine further whether ineffective competition in the baby formula market could be leading to parents paying higher prices.
CMA to launch review of loyalty scheme pricing by supermarkets, considering its impact on consumers and competition in the groceries sector.

The Competition and Markets Authority (CMA) has set out the latest findings and the next steps in its ongoing review of the groceries sector today.

It follows an initial assessment that focused on retail competition in the groceries sector published in July.

That assessment identified 10 product categories (including milk, baked beans and baby formula) for further analysis in a second phase of work, to gain a deeper understanding of competition across the supply chain, with a particular focus on branded and own label food suppliers.

Competition and price dynamics in the supply chain

Food price inflation continues to be at historically high levels, despite falling to 10.1% in October 2023.

Across the food and groceries sector, the CMA found that high inflation has been driven largely by rising input costs, particularly for energy and key agricultural inputs like fertiliser.

But the evidence collected by the CMA indicates that, over the last 2 years, around three-quarters of branded suppliers in products such as infant formula, baked beans, mayonnaise, and pet food have increased their unit profitability and, in doing so, have contributed to higher food price inflation.

However, own label products often provide cheaper alternatives with suppliers of these products earning lower profit margins and competing to win and retain contracts from retailers.

In all but one of the relevant product categories the CMA looked at, as food prices have risen, many consumers have switched away from brands towards own label alternatives, or reduced their consumption, leading to a decline in brands’ market shares and profits. This switching is positive for competition and allows those able to switch, to lessen the impact of high food price inflation.

Overall profit margins have fallen across most branded manufacturers since 2021, mainly because of a fall in sale volumes due to consumers switching to cheaper alternatives.

The CMA has also heard from leading brands that they are aiming to use any future reductions in their input costs to offer customers more promotions, rather than cut the standard price they charge supermarkets for their products.

Baby formula

Baby formula is a product category where different dynamics seem to apply. The prices for baby formula in the UK have risen by 25% over the past 2 years.

Similar to other products the CMA examined, evidence suggests that branded suppliers of baby formula have also increased their prices by more than their input costs. On top of this, the market is highly concentrated (2 firms have around 85% of the market share) and brands have maintained high profit margins over the last 2 years.

Unlike other products examined, there is little evidence of parents switching to cheaper branded options as prices have risen and very limited availability of own-brand alternatives.

Families could make significant savings of more than £500 over the first year of a baby’s life, through buying cheaper baby formula options. Regulation ensures that all baby formula products, including cheaper options, provide all the nutrients a healthy baby needs.

Despite this, the CMA is concerned that parents may not always have the right information, at the right time, to make effective choices. It is also concerned that suppliers may not have the right incentives to offer infant formula at competitive prices.

The CMA will now undertake further work to better understand consumer behaviour (including what influences choice) and barriers to entry and expansion for baby formula manufacturers and consider whether any changes to the regulatory framework could help the market work better.

An update on the CMA’s work into baby formula will be published in mid-2024.

Loyalty pricing

With the rise in some supermarkets making cheaper prices only available for loyalty card members, the CMA plans to begin a review of the use of loyalty scheme pricing by supermarkets in early 2024. The CMA’s work will consider how the growth in loyalty scheme pricing is affecting consumers and competition in the groceries sector.

Sarah Cardell, Chief Executive of the CMA, said: “Food price inflation has put huge strain on household budgets, so it is vital competition issues aren’t adding to the problem. While in most cases the leading brands have raised prices more than their own cost increases, own label products are generally providing cheaper alternatives.

“The picture is different when it comes to baby formula, with little evidence that people are switching to cheaper products and limited own label alternatives. We’re concerned that parents may not always have the right information to make informed choices and that suppliers may not have strong incentives to offer infant formula at competitive prices. We will investigate this further and consider whether changes to regulations are necessary to ensure parents can get the best deal possible.

“We have also seen an increase in the use of loyalty scheme pricing by supermarkets, which means that price promotions are only available to people who sign up for loyalty cards.

“This raises a number of questions about the impact of loyalty scheme pricing on consumers and competition and the CMA will launch a review in January 2024.”

More information and the full report can be found on the CMA Groceries case page

Competition and Markets Authority launches review of Vet sector

The CMA is opening a review of how veterinary services are bought and sold amid concerns that pet owners may not be getting a good deal or receiving the information they need to make good choices

The Competition and Markets Authority (CMA) has launched a review looking at consumer experiences and business practices in the provision of veterinary services for household pets in the UK.

It will explore how well the market, worth over £2 billion in the UK, is working for pet owners including whether they are receiving the information they need at the right time to get appropriate treatment for their pets.

The CMA wants to hear from pet owners and people who work in the industry.

Almost two-thirds of households in the UK own a pet, with the number of pet owners having increased significantly during the Covid-19 pandemic.

The CMA is concerned that pet owners may not find it easy to access the information they need about prices and treatment options to make good choices about which vet to use and which services to purchase.

Households are under strain from the rising cost of living and it is important that pet owners get value for money from their vets – but figures suggest that the cost of vet services has risen faster than the rate of inflation, which is something that the CMA will be looking into as part of its review.

The ownership of vet practices has also changed in recent years – independent practices accounted for 89% of the UK veterinary industry in 2013, which fell to approximately 45% by 2021. In some cases, a single company may own hundreds of practices and it may be unclear to people whether their vet is part of a large group.

People may also be unaware if their vet is part of a group which owns other vet practices in their area or that the services which are being sold to them (such as diagnostic tests or treatments at a specialist animal hospital) are provided by that group. This could impact pet owners’ choices and reduce the incentives of local vet practices to compete.

The CMA is keen to hear more about pet owners’ and vet practitioners’ experiences of:

Pricing of services, including whether pet owners were aware of how much a treatment would cost, and how they pay for it (whether they pay themselves or via insurance)
How prescriptions and medication for pets are arranged and sold
Choosing a vet surgery and whether people are aware that their vet may be part of a larger chain which might also own other surgeries in the area
Using out-of-hours and emergency vet services where options might be limited

Sarah Cardell, chief executive of the CMA, said: “Caring for an ill pet can create real financial pressure, particularly alongside other cost of living concerns. It’s really important that people get clear information and pricing to help them make the right choices.

“There has been a lot of consolidation in the vet industry in recent years, so now is the right time to take a look at how the market is working.

“When a pet is unwell, they often need urgent treatment, which means that pet owners may not shop around for the best deal, like they do with other services. This means they may not have the relevant information to make informed decisions at what can be a distressing time. We want to hear from pet owners and people who work in the sector about their experiences.”

The CMA would like to hear from pet owners, veterinary surgeons, veterinary nurses, practice managers and veterinary businesses as part of this work. To get in touch please visit the case page.

The CMA will provide a further update on this review in early 2024, outlining the issues it has identified and its proposed next steps.

High food prices NOT driven by lack of supermarkets competition, says CMA

Evidence to date indicates high food price inflation has not been driven by weak retail competition, but competitive pressure is important as input prices fall
Next phase of CMA probe will examine competition and prices across the supply chain for the product categories identified
Rules on unit pricing should be tightened and retailers must comply to help shoppers compare prices easily

The Competition and Markets Authority (CMA) has today published an initial update on its ongoing work to tackle cost of living pressures in groceries with the publication of two reports: an assessment of retail competition in the groceries sector and a review of unit pricing practices across major retailers.

At a time when food and other grocery prices are rising it is crucial that people can be confident that competition is working effectively to keep price rises as low as possible and that people can shop around and compare prices easily and with confidence.

Groceries

Over the past two months, the CMA has assessed how retail competition is working in the UK grocery sector, particularly between supermarkets such as Asda, Morrisons, Sainsbury’s and Tesco as well as discounters, including Aldi and Lidl. Looking at the effectiveness of retail competition across the market, this stage of the CMA’s review has focused on the extent to which rivalry between retailers ensures they keep their prices as low as possible and whether consumers can shop around to get the best deals.

Although food price inflation is at historically high levels, evidence collected to date by the CMA indicates that competition issues have not been driving this.

In particular:

Operating profits in the retail grocery sector fell by 41.5% in 2022/23, compared with the previous year while average operating margins fell from 3.2% to 1.8%. This is due to retailers’ costs increasing faster than their revenues, indicating that rising costs have not been passed on in full to consumers.
Consumers are shopping around to get the best deals, and the lowest-price retailers – Aldi and Lidl – have gained share from their competitors. This suggests retailers are restricted in their ability to raise prices without losing business.

However not everyone is able to benefit fully from strong competition, particularly those who cannot travel to large stores or shop online, and therefore may rely on higher-priced convenience stores.

Now that some input costs are starting to fall, there are some signs that grocery retailers are planning to start rebuilding their profit margins. The CMA will monitor this carefully in the months ahead, to ensure that people benefit from competitive prices as input costs fall.

The CMA’s review so far has focused on overall indicators of effective retail competition. It has not yet examined competition for individual product categories or across the wider grocery supply chain. This will be an important focus for the next phase of its work. Today’s update identifies 10 indicative product categories (including milk, bread, and baby formula) that merit further analysis to gain a deeper understanding of competition and price dynamics. Our choices are not an indication of any provisional concerns that competition for these products is ineffective.

As part of its ongoing work, the CMA could make recommendations to address any competition issues it finds or take a closer look at any areas which justify further scrutiny.

Unit Pricing

At a time when shoppers are looking for the most competitive deals, unit pricing provides critical information to ensure people can compare prices effectively.

The review looked at 11 supermarkets and 7 variety retailers (stores that sell homeware and household goods with a more limited range of groceries) that operate in the UK .

The CMA has found compliance concerns with the Price Marking Order (PMO) amongst all those it reviewed, however for some retailers these were relatively minor. The CMA has identified that compliance is worse amongst some variety retailers.

Some of the problems stem from the unit pricing rules themselves, which allow unhelpful inconsistencies in retailers’ practices and leave too much scope for interpretation. As a result, shoppers may be finding it hard to spot and compare the best deals.

The CMA’s concerns relate to:

Consistency – different measurements are being used for similar types of products, making it hard for consumers to compare deals on a like-for-like basis. For example, tea bags being priced per 100 grams for some products and others being unit priced per each tea bag.
Transparency – missing or incorrectly calculated unit pricing information both in store and online. For example, 250ml handwash costing £1.19 but unit priced at £476.00 per 100ml and unit pricing information unavailable online until items were selected.
Legibility – unit pricing information being difficult to read, for example text on labels being too small or shelf edge labels being obscured by promotional information or by shop fittings.
Promotions – some retailers not displaying unit prices for any products on promotion.

In its report, the CMA has set out recommendations on the unit pricing rules and is calling on the government to reform this legislation, to help shoppers spot the best deals. The CMA has also written to those that are not fully complying with the PMO and expects them to make changes to address its concerns or risk enforcement action.

More broadly the CMA is calling on all retailers to give consumers the unit pricing information they need to make meaningful comparisons, particularly for products on promotion, even before any reforms to the PMO are introduced.

The CMA will publish the findings of its consumer research into the use of unit pricing in Autumn 2023.

Sarah Cardell, CEO of the CMA said: With so many people struggling to feed their families, it’s vital that we do everything we can to make sure people find the best prices easily.

“We’ve found that not all retailers are displaying prices as clearly as they should , which could be hampering people’s ability to compare product prices. We’re writing to these retailers and warning them to make the necessary changes or risk facing enforcement action . The law itself needs to be tightened here, so we are also calling on the government to bring in reforms.

“We’ve also looked at how competition is working across the grocery retail market more widely. The overall evidence suggests a better picture than in the fuel market, with stronger price competition between all of the supermarkets and discounters. In the next phase of our work, we will examine competition and prices across the supply chain for the product categories we’ve identified.

“We’ll also continue to monitor the situation to ensure that competition remains effective as input costs start to fall.

More information and full reports can be found on our

Unit Pricing and Groceries pages.

Petrol Prices: Government acts to tackle rip-off retailers

Retailers will be forced to provide up-to-date price information as part of new government scheme to call out rogue supermarkets and stations overcharging drivers at the pump.
Motorists will be able to easily compare fuel prices in real time to choose the best prices whilst boosting competition and in turn driving down prices.
Government action after watchdog finds some supermarkets charged drivers 6p more per litre for fuel from 2019 to 2022 – meaning £900m in extra costs across the UK in 2022 alone.

Motorists are being put in the driving seat to find the best fuel prices as the government prepares to force retailers to publicly fess up to how much they are charging at the pump.

In a win for consumers, they will be able to compare prices in real time in any area of the UK, through a new fuel price reporting scheme. Drivers will be able to easily identify those charging fair prices and those failing to pass on savings from falling wholesale costs.

The government will change the law to force retailers to comply by providing up to date price information, which is expected to lead to greater transparency and competition – in turn driving down prices and easing people’s cost of living.

The new scheme will make pricing data available for third parties – paving the way for them to create price comparison apps and websites – supporting the digital economy and helping growth.

The tough action by government follows publication of a Competitions and Markets Authority (CMA) report today showing some supermarkets charged drivers 6p more per litre for fuel. This amounts to £900m in extra costs in 2022 alone – around £75m a month.

New powers will be handed to a public organisation yet to be decided, to closely monitor the UK road fuel market, scrutinise prices and alert government if further intervention is needed.

This is the latest step in the government’s action to ease the cost of living, as part of its efforts to halve inflation this year – one of the Prime Minister’s five priorities. It follows the Chancellor’s roundtable with regulators last week, including the CMA, to ensure consumers are being treated fairly and help those struggling to make payments.

Grant Shapps, Energy Security Secretary, 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.”

Jeremy Hunt, Chancellor of the Exchequer, 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.”

The CMA’s report found a concerning weakening of competition in the fuel market and an overall increase in retailers’ margins, especially in respect of diesel and with supermarkets the worst offenders (see below).

It also noted a lack of reliable and comprehensive price information available to motorists.

The report recommends the mandatory public disclosure of fuel prices and establishment of a body to monitor the market, which the government has agreed to.

The government will consult on the design of the open data scheme, and market monitoring function this autumn – with changes to the law needed to bring it in. In the interim, the CMA will create a voluntary scheme encouraging fuel retailers to share accurate, up-to-date road fuel prices for publication by August and continue to monitor fuel prices using its existing powers.

The move follows a similar scheme in Germany, which boosted competition amongst fuel retailers. Meanwhile, motorists who shopped around in Queensland, Australia, saved on average $93 per year off the back of a statewide scheme rolled out in the area.

Action to protect consumers announced today follows the government spending nearly £40 billion protecting households and businesses from spiralling energy bills over the colder months – including paying half the typical household bill and saving the average home roughly £1,500 by the end of June.

Meanwhile, with the latest Ofgem price cap coming into effect from 1 July, families will see their yearly energy bills fall by around £430 on average. On top of this, the government is also providing additional support to the most vulnerable, with an extra £150 for disabled people and £900 for those on means-tested benefits.

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CMA sets out plan to help drivers get more competitive fuel prices

A new fuel finder scheme to enable drivers access to live, station-by-station fuel prices on their phones or satnavs would help revitalise competition in the retail road fuel market, the CMA said yesterday

Increased supermarket fuel margins led to drivers paying an extra 6 pence per litre
Instant access to prices via fuel finder scheme should drive down prices and help people find cheapest fuel
New monitoring body needed to hold industry to account
Asda fined £60,000 for failure to provide information when required

The scheme would be made possible by new compulsory open data requirements and backed by a new ‘fuel monitor’ oversight body. The proposals are the key recommendations by the Competition and Markets Authority (CMA) to UK government following its in-depth study into the road fuel market which found a weakening of competition in retail since 2019.

At present, retailers only provide information on prices at the petrol stations themselves. This makes it hard for drivers to compare prices and weakens competition. The fuel finder open data scheme would need statutory backing through legislation to ensure fuel retailers provide up-to-date pricing and make that available to drivers in an open and accessible format that can be easily used by third party apps such as satnavs or map apps, through a dedicated fuel finder app, or a combination of both.

The fuel monitor would monitor prices and margins on an ongoing basis and recommend further action if competition continues to weaken in the market. As the UK transitions to net-zero the demand for petrol and diesel will reduce. The fuel monitor will help us understand the impact of this on vulnerable consumers that remain dependent on petrol and diesel for longer, as well as those living in areas with limited choice of fuel stations.

The fuel monitor will ensure ongoing scrutiny of retail prices for petrol and diesel. We observed that following the interim update issued by the CMA in May 2023, the average price of road fuel fell in large parts of the UK. Over the last year, the CMA has investigated the road fuel market in detail and reached the conclusion that competition is not working well and greater transparency in pricing is needed to improve consumer confidence and bring down prices for drivers.

There is no evidence to suggest that there has been cartel behaviour taking place and the CMA has no plans to open an enforcement case.

The report found that:

From 2019-22, average annual supermarket margins have increased by 6 pence per litre (PPL)
Increased margins on diesel across all retailers have cost drivers an extra 13 PPL from January 2023 to the end of May 2023
With greater transparency and shopping around as effectively as possible, the driver of a typical family car could save up to £4.50 a tank within a 5-minute drive
Motorway service stations are charging around 20 PPL more for petrol and 15 PPL more for diesel compared to other fuel stations

Supermarkets are generally the cheapest places to buy fuel, with Asda typically the cheapest of those. This has anchored prices in the past. The CMA found that in 2022, Asda and Morrisons each made the decision to target higher margins.

Asda’s fuel margin target in 2023 was more than three times what it had been for 2019, while Morrisons doubled their margin target in the same period. Other retailers, including Sainsbury’s and Tesco, did not respond in the way you would expect in a competitive market and instead raised their prices in line with these changes. Taken together this indicates that competition has weakened and reinforces the need for action.

Diesel prices have been slow to drop in 2023, partially down to Asda ‘feathering’ (reducing pump prices more slowly as wholesale prices fell) its prices and other firms not responding competitively to that. As a result, the CMA estimates that drivers have paid 13 PPL more for diesel from January 2023 to the end of May 2023 than if margins had been at their historic average.

Sarah Cardell, Chief Executive of the CMA, 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 6 pence 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 and that means two things. It needs to be easier for drivers to compare up to date prices so retailers have to compete harder for their business.

“This is why we are recommending the UK government legislate for a new fuel finder scheme which would make it compulsory for retailers to make their prices available in real time. This would end the need to drive round and look at the prices displayed on the forecourt and would ideally enable live price data on satnavs and map apps.

“Given the importance of this market to millions of people across the UK this needs to be backed by a new fuel monitor function that will hold the industry to account. As we transition to net zero, the case for ongoing monitoring of this critical market will grow even stronger, so we stand ready to work with the UK government to implement these proposals as quickly as possible.”

Local factors also contribute to how much drivers pay at the pump. The CMA identified that there are significant price differences in local areas, and that the difference between the highest and lowest prices in local areas has increased as average fuel prices have risen.

Lower prices are typically associated with having a supermarket retailer nearby, and where there are no supermarkets, for example, in remote areas, fuel retailers are likely to have higher costs and prices are likely to be higher. The fuel finder scheme will be important to help people find the best deal possible but it is essential that the monitoring function keeps a close eye on local variations in prices.

The price premium at motorway service stations has grown in real terms since 2012, and price variation on motorways is low, due to limited competition between service stations. A fuel finder scheme would allow drivers an easy way to see where they can find cheaper fuel in the area if they come off the motorway.

The CMA has also imposed fines totalling £60,000 on Asda for failing to provide relevant information in a timely manner.

Asda received two fines, each of £30,000 (the statutory maximum), for:

Sending a representative to attend a compulsory CMA interview who was not equipped to provide evidence on certain topics the CMA had identified in advance.
Failing to respond completely to a compulsory written request for information.

Asda has now provided the CMA with the required information.

The final report on the Road Fuel Market Study is available to read in full.

RAC Foundation: Lack of competition pushing up pump prices

Supermarkets not as competitive as they once were

Fuel retailers have been pushing up their margins on pump prices meaning higher prices for drivers.

The latest findings from the Competition and Markets Authority (CMA) reveal that between 2019 and 2022 supermarkets pushed up their margins on petrol and diesel by 6p per litre (PPL).

The CMA also found that “increased margins on diesel across all retailers have cost drivers an extra 13 PPL from January 2023 to the end of May 2023.”

The organisation goes on to say:

“Over the last year, the CMA has investigated the road fuel market in detail and reached the conclusion that competition is not working well and greater transparency in pricing is needed to improve consumer confidence and bring down prices for drivers.”

However, the CMA could find “no evidence to suggest that there has been cartel behaviour taking place and the CMA has no plans to open an enforcement case.”

The CMA’s study on road fuel prices identified a reduction in competition amongst the supermarkets:

“Supermarkets are generally the cheapest places to buy fuel, with Asda typically the cheapest of those. This has anchored prices in the past. The CMA found that in 2022, Asda and Morrisons each made the decision to target higher margins. Asda’s fuel margin target in 2023 was more than three times what it had been for 2019, while Morrisons doubled their margin target in the same period.

“Other retailers, including Sainsbury’s and Tesco, did not respond in the way you would expect in a competitive market and instead raised their prices in line with these changes. Taken together this indicates that competition has weakened and reinforces the need for action.

“Diesel prices have been slow to drop in 2023, partially down to Asda ‘feathering’ (reducing pump prices more slowly as wholesale prices fell) its prices and other firms not responding competitively to that. As a result, the CMA estimates that drivers have paid 13 PPL more for diesel from January 2023 to the end of May 2023 than if margins had been at their historic average.”

The CMA is calling for the compulsory release of price data by fuel retailers so that apps can be developed which allow drivers to check what is the best price in their local area.

It also wants to see a new monitoring body to hold the industry to account.

According to the CMA “motorway service stations are charging around 20 PPL more for petrol and 15 PPL more for diesel compared to other fuel stations.”

Music streaming report published

The CMA has concluded its independent study into the music streaming market

The Competition and Markets Authority (CMA) has published its final report and found that consumers have benefited from digitisation and competition between music streaming services.

Prices for consumers have fallen by more than 20% in real terms between 2009 and 2021 – with many services also offering music streaming for free with ads.

The study found that there were around 39 million monthly listeners in the UK, streaming 138 billion times a year.

The CMA also heard concerns from creators – artists and songwriters – about how much they earn from streaming. With an increasing number of artists, tracks and streams, the money from streaming is shared more widely – with those that have the highest number of streams earning the most. The CMA found that over 60% of streams were of music recorded by only the top 0.4% of artists.

The CMA found that the concerns raised by artists are not being driven by the level of concentration of the recording market. Analysis found that neither record labels nor streaming services are likely to be making significant excess profits that could be shared with creators.

Consequently, the issues concerning creators would not be addressed by measures intended to improve competition, but instead would need other policy measures in order to be addressed.

Digitisation has led to a major increase in the amount of music people have access to and to large increases in the number of artists releasing music (up from 200,000 in 2014 to 400,000 in 2020) partly by opening up new direct routes to listeners.

This has also meant that there is greater competition to reach listeners and for the associated streaming revenues. The study found that an artist could expect to earn around £12,000 from 12 million streams in the UK in 2021, but less than 1% of artists achieve that level of streams.

Some parts of the streaming market have improved for some creators in recent years, with the CMA finding a greater choice of deals with record labels available. Whilst individual deals can vary considerably, the report highlighted on average royalty rates in major deals with artists have increased steadily from 19.7% in 2012 to 23.3% in 2021. For songwriters, the share of revenues going to publishing rights has increased significantly from 8% in 2008 to 15% in 2021.

While the CMA understands the concerns from creators about the level of income many receive, the analysis in the study suggests it is unlikely that an intervention by the CMA would release additional money into the system to pay creators more.

The study does however highlight that the issues raised by creators could be further considered by government and policymakers as part of their ongoing work following the DCMS Select Committee’s inquiry into the economics of music streaming.

Sarah Cardell, Interim CEO of the CMA, said: “Streaming has transformed how music fans access vast catalogues of music, providing a valuable platform for artists to reach new listeners quickly, and at a price for consumers that has declined in real terms over the years.

“However, we heard from many artists and songwriters across the UK about how they struggle to make a decent living from these services. These are understandable concerns, but our findings show that these are not the result of ineffective competition – and intervention by the CMA would not release more money into the system that would help artists or songwriters.

“While this report marks the end of the CMA’s market study, which addresses the concerns previously posed about competition, we also hope the detailed and evidence-based picture we have been able to build of this relatively new sector will provide a basis that can be used by policymakers to consider whether additional action is needed to help creators.”

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Consumers ‘at risk’ if Digital Markets Unit not given teeth, say MPs

A new report by Westminster’s influential Business, Energy and Industrial Strategy Committee has urged the Government to publish a draft Digital Markets Bill that would help deter predatory practices by big tech firms ‘without delay’.

Proposals for a Digital Markets Competition and Consumer Bill were trailed by the Government in the Queen’s Speech. It announced measures that would empower the Competition and Markets Authority’s (CMA) Digital Markets Unit (DMU) to rein in abusive tech giants by dropping the turnover threshold for immunity from financial penalties from £50 million to £20 million, and hiking potential maximum fines to 10% of global annual income.

The Committee concluded that fines have been viewed as ‘a small business cost’ by large companies, adding that there is ‘strong evidence of abuses of market dominance’ within digital markets. It warned that ‘consumers and others are at risk’ until a Bill is published and passed.

BEIS Committee Chair Darren Jones said: “The Competition, Consumer and Digital Markets Bill has wide support and should be prioritised, especially given the difficulty the Government currently has at passing other laws which are more controversial.

“There are many areas in the economy where stronger competition is required in the interests of consumers, small business and economic growth and this bill is an essential stepping stone to driving this issue forward.”

The report also called on the Government to ‘end [the] uncertainty’ caused by its failure to publish final guidance on the post-Brexit subsidy control regime, which the Committee found had left subsidy awarding bodies ‘in limbo’. The guidance needs to be published as soon as possible, MPs said.

Passed in April, and due to come into full force in early January, the Subsidy Control Act omits key details of the regime for public authorities to follow when awarding money. These gaps are due to be filled in by final guidance, which authorities will need if they are to have confidence when preparing bids for funding from the Shared Prosperity Fund. The Fund is a replacement for money formerly awarded through EU structural funding.

Mr Jones added: “The Government promised to replace previous EU funding into projects across the country as part of its Brexit and levelling up offers to the public. This has not yet been delivered and without full guidance and proper financing of the new subsidy schemes, funds that help deliver projects will be further delayed.

“The public will no doubt be disappointed to have not yet seen the so called ‘Brexit opportunities’ that were promised to level up their local community.”

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All together now: Firms fined for fixing prices of Rangers merchandise

The CMA has imposed fines totalling over £2 million on Elite Sports, JD Sports and Rangers FC after they admitted to fixing the prices of certain Rangers FC merchandise

The Competition and Markets Authority (CMA) has found that Elite Sports and JD Sports broke competition law by fixing the retail prices of a number of Rangers-branded replica kits and other clothing products from September 2018 until July 2019.

Rangers FC also took part in the collusion but only to the extent of fixing the retail price of adult home short-sleeved replica shirts from September 2018 to mid-November 2018. All three firms colluded to stop JD Sports undercutting the retail price of the shirt on Elite’s Gers Online store.

Elite Sports has been fined £459,000, JD Sports £1,485,000 and Rangers £225,000. The penalties include a settlement discount, reflecting resource savings to the CMA as a result of all 3 parties admitting to acting illegally and helping bring a swifter resolution to the CMA’s investigation.

Elite Sports’ and JD Sports’ penalties also include a discount for coming forward with information about their participation in the illegal conduct and cooperating with the investigation under the CMA’s Leniency Programme.

Michael Grenfell, Executive Director of Enforcement at the CMA, said: “At a time when many people are worried about the rising cost of living, it is important that football fans are able to benefit from competitively priced merchandise. Instead, Elite, JD Sports and, to some extent, Rangers, worked together to keep prices high.

“Today’s decision sends a clear message to football clubs and other businesses that illegal anti-competitive collusion will not be tolerated.”

During the time of the infringement, Elite was the manufacturer of Rangers-branded clothing and also sold Rangers-branded products directly through its Gers Online store and later in bricks-and-mortar shops in Glasgow and Belfast. The only UK-wide major retailer selling those products at the time was JD Sports.

The CMA’s investigation found that Rangers FC became concerned about the fact that, at the start of the 2018 to 2019 football season, JD Sports was selling the Rangers replica top at a lower price than Elite, which was seen at the time as the club’s ‘retail partner’.

This resulted in an understanding between the 3 parties that JD Sports would increase its retail price of the Rangers adult short-sleeved home replica shirt by nearly 10%, from £55 to £60, to bring it in line with the prices being charged by Elite on Gers Online.

The CMA also found that Elite and JD Sports – without involvement from Rangers – colluded to fix the retail prices of Rangers-branded clothing, including training wear and replica kit, over a longer period. This included aligning the level and timing of discounts towards the end of the football season in 2019, to avoid competition between them and protect their profit margins.

More information can be found on the case page: Suspected anti-competitive behaviour in relation to the pricing of Rangers FC-branded replica football kit.

CMA to investigate Amazon and Google over fake reviews

The CMA has opened a formal probe into Amazon and Google over concerns that they have not been doing enough to combat fake reviews on their sites.

In this next phase of the work, the Competititon and Markets Authority (CMA) will gather further information to determine whether these two firms may have broken consumer law by taking insufficient action to protect shoppers from fake reviews.

The move comes after an initial CMA investigation, which opened in May 2020, and assessed several platforms’ internal systems and processes for identifying and dealing with fake reviews.

This work has raised specific concerns such as whether Amazon and Google have been doing enough to:

Detect fake and misleading reviews or suspicious patterns of behaviour. For example, where the same users have reviewed the same range of products or businesses at similar times to each other and there is no connection between those products or businesses – or where the review suggests that the reviewer has received a payment or other incentive to write a positive review.
Investigate and, where necessary, remove promptly fake and misleading reviews from their platforms.
Impose adequate sanctions on reviewers or businesses to deter them and others from posting fake or misleading reviews on their platforms – including those who have published these types of reviews many times.

The CMA is also concerned that Amazon’s systems have been failing adequately to prevent and deter some sellers from manipulating product listings – for example, by co-opting positive reviews from other products.

Fake and misleading reviews have the potential to impact on businesses’ star ratings and how prominently companies and products are displayed to consumers, changing their whole shopping experience.

Andrea Coscelli, the CMA’s Chief Executive, said: “Our worry is that millions of online shoppers could be misled by reading fake reviews and then spending their money based on those recommendations. Equally, it’s simply not fair if some businesses can fake 5-star reviews to give their products or services the most prominence, while law-abiding businesses lose out.

“We are investigating concerns that Amazon and Google have not been doing enough to prevent or remove fake reviews to protect customers and honest businesses. It’s important that these tech platforms take responsibility and we stand ready to take action if we find that they are not doing enough.”

If, after investigating, the CMA considers the firms have broken consumer protection law, it can take enforcement action. This could include securing formal commitments from the firms to change the way they deal with fake reviews or escalating to court action if needed. However, the CMA has not reached a view on whether Amazon and Google have broken the law at this stage.

This latest work builds on action taken by the CMA last year over the trading of fake reviews, which resulted in Facebook, Instagram and eBay removing groups and banning individuals for buying and selling fake reviews on their sites.

The CMA’s investigation into fake reviews is part of a broader programme of CMA work, which includes establishing a new pro-competition regulatory regime for digital markets, to curb the power of big tech. This will be achieved through the Digital Markets Unit. As the CMA works with the Government on proposals, it will continue to use its existing powers to their fullest extent in order to examine and protect competition in these areas.

Rocio Concha, Which? Director of Policy and Advocacy, said: “We have repeatedly exposed fake reviews on websites including Amazon and Google, so this investigation is a positive step. The CMA must now move swiftly towards establishing whether these companies have broken the law.

“This should prompt Amazon and Google to finally take the necessary steps to protect users from the growing tide of fake reviews on their platforms and, if they fail to do so, the regulator must be prepared to take strong enforcement action.

“The government must also give online platforms greater legal responsibility for tackling fake and fraudulent content on their sites – including fake and misleading review activity.”

More information about the CMA’s probe into Amazon and Google can be found on the Online Reviews case page.

CMA intervention leads to further Facebook action on fake reviews

Facebook to make it harder for people to find groups and profiles that buy and sell fake reviews
16,000 trading groups removed with suspensions or bans for users who create these groups
it comes after CMA investigation found more evidence of misleading content

This latest action by the Competition and Markets Authority (CMA) follows reports that fake and misleading reviews continued to be bought and sold on the social media platforms.

In January 2020, Facebook committed to better identify, investigate and remove groups and other pages where fake and misleading reviews were being traded, and prevent them from reappearing.

Facebook gave a similar pledge in relation to its Instagram.com business in May 2020, after the CMA had identified similar concerns.

A follow-up investigation found evidence that the illegal trade in fake reviews was still taking place on both Facebook and Instagram and the CMA intervened for a second time.

Facebook has now removed a further 16,000 groups that were dealing in fake and misleading reviews. It has also made further changes to its systems for identifying, removing and preventing such content on its social media platforms to ensure it is fulfilling its previous commitments.

These include:

suspending or banning users who are repeatedly creating Facebook groups and Instagram profiles that promote, encourage or facilitate fake and misleading reviews
introducing new automated processes that will improve the detection and removal of this content
making it harder for people to use Facebook’s search tools to find fake and misleading review groups and profiles on Facebook and Instagram
putting in place dedicated processes to make sure that these changes continue to work effectively and stop the problems from reappearing

Andrea Coscelli, Chief Executive of the CMA, said: “Never before has online shopping been so important. The pandemic has meant that more and more people are buying online, and millions of us read reviews to enable us to make informed choices when we shop around.

“That’s why fake and misleading reviews are so damaging – if people lose trust in online reviews, they are less able to shop around with confidence, and will miss out on the best deals. It also means that businesses playing by the rules miss out.

“Facebook has a duty to do all it can to stop the trading of such content on its platforms. After we intervened again, the company made significant changes – but it is disappointing it has taken them over a year to fix these issues.

“We will continue to keep a close eye on Facebook, including its Instagram business. Should we find it is failing to honour its commitments, we will not hesitate to take further action.”

This move follows the UK Government’s announcement that a dedicated Digital Markets Unit (DMU) will be set up within the CMA from April 2021.

Once the necessary legislation is in place, this will introduce and enforce a new code for governing the behaviour of platforms that currently dominate the market. As part of this process, the CMA has been advising government on the design and implementation of a pro-competition regime for digital markets.

Rocio Concha, Director of Policy and Advocacy at Which?, said: “We’ve previously raised the alarm about fake review factories continuing to operate at scale on Facebook, leaving online shoppers at huge risk of being misled. The tech giant failed to meet its earlier commitment to the CMA, so it is positive that the regulator has stepped in and demanded more robust action.

“Facebook must deliver this time round – it has shown it has the sophisticated technology to eradicate these misleading review groups and needs to do so much more swiftly and effectively.

“The CMA and Facebook now need to monitor the situation and if the problems persist the regulator must take stronger measures to ensure that trust in online reviews does not continue to be undermined.

“Online platforms should also have greater legal responsibility for tackling fake and fraudulent content and activity on their sites.”

For more information on the CMA’s fake reviews work, please see the dedicated webpage: Fake and misleading online reviews trading.