Making markets work for consumers is a core mission for UK agencies with competition and consumer protection responsibilities. This task assumes heightened importance in the context of current cost-of-living pressures. In this post, we discuss recent regulatory interventions that have focused on these issues.
The Office for National Statistics reported that “the price of consumer goods and services rose at the fastest rate in four decades in the year to October 2022” and the Consumer Prices Index rose by 8.7% in the year to May 2023. Against this backdrop, in its 2023/2024 Annual Plan, the Competition and Markets Authority (CMA) highlighted “the rising cost-of-living” as one of the “macro forces set to make the work of the CMA even more vital”.
On 12 May 2023, the UK Government published a consultation on its strategic steer to the CMA. The Government expects the CMA to “prioritise action that addresses cost of living challenges” and “prioritis[e] markets where consumers spend large proportions of their income, at all levels of the supply chain”. In response, on 15 May 2023, the CMA published an update on what it is doing to “help contain rising cost of living pressures” in the road fuel and grocery sectors, which Sarah Cardell, the CMA’s CEO, characterized as “critical” and “essential” for consumers.
Road fuel market study
At the request of the then Business Secretary, Kwasi Kwarteng, the CMA conducted a review of competition in the fuel market in June 2022. On 8 July 2022, the CMA published the findings of its review: (i) the government’s reduction in fuel duty was generally passed on to customers but (ii) the gap between the crude oil price and the wholesale price of petrol and diesel grew substantially and (iii) decreases in wholesale prices took weeks to be reflected in prices at the pump. Accordingly, the CMA announced the launch of a road fuel market study on the same date. On 6 December 2022, the CMA published an initial update report on the market study, finding that the gap between crude oil and wholesale prices was driven by global events rather than the nature of UK competition.
On 3 July 2023, the CMA published its final report on the road fuel market study. Although the CMA found no evidence of competition concerns in the road fuel markets, it concluded that greater transparency in pricing is needed in the retail market, as “[c]ompetition at the pump is not working as well as it should be and something needs to change swiftly to address this”.
The CMA recommended to the Government a “fuel-finder scheme” that would provide drivers with access to live station-by-station fuel prices on their phones or satnavs. Under the scheme, fuel retailers will be subject to compulsory open data requirements and a new “fuel monitor” oversight body will be set up to monitor prices and margins for petrol and diesel on an ongoing basis.
In response, the Government confirmed that it will change the law to “force retailers to comply by providing up to date price information”. It also confirmed that new powers will be handed to a yet-to-be-determined public body to scrutinise prices in the road fuel market and alert the Government if further intervention is required.
Alongside road fuel, the CMA has identified the groceries sector as a priority.
In exercise of its consumer protection powers, on 31 January 2023, the CMA launched a project to examine unit pricing (the display of product cost by reference to standard units of weight or volume to aid comparison) both in-store and online for groceries. This builds on the CMA’s 2015 investigation, in response to a “super-complaint” under section 11(1) of the Enterprise Act 2002 by the Consumers’ Association (Which?), that found examples of pricing and promotional practices that could confuse or mislead consumers.
On 15 May 2023, the CMA announced that it would expand its work “to understand whether any failure in competition is contributing to grocery prices being higher than they would be in a well-functioning market”. In particular, the CMA will:
- Examine how competition is working overall in the grocery retail market; and
- Identify which product categories, if any, might merit closer examination across the supply chain.
Rather than a single comprehensive review (e.g., by way of a market study), the CMA will carry out this work “in a targeted way, focused on those areas where people are experiencing greatest cost of living pressures”.
Railway station catering market study
On 16 June 2023, the Office of Rail and Road (ORR) launched a market study into the provision of food and beverages to customers (mainly passengers) by retailers at train stations. Grahame Horgan, the ORR’s Head of Competition, specifically called out the “rising cost of living” as a driver for the market study. The ORR wants to “ensure that passengers are getting affordable food and beverages when using station facilities”.
Financial products and services
The Financial Conduct Authority (FCA) also highlighted the relevance of cost-of-living pressures to its work in its 2023/2024 Business Plan. In response to the rising cost of living, the FCA will seek to “ensure firms give retail customers in financial difficulty appropriate forbearance and that referrals for debt advice are efficient and effective”. To date, the FCA has published guidance to consumer credit, mortgage and insurance providers on, among other things, fair treatment of, and appropriate support for, customers in financial difficulty.
Implications Despite early signs of global inflationary pressures starting to ease, the outlook remains uncertain for the UK. Prices remain materially higher than they were a year ago and are continuing to rise. Against this background competition and consumer agencies have shown a willingness to use the full range of regulatory tools to introduce or recommend measures aimed at improving outcomes for consumers.
 Bloomberg, “Markets Turn Against UK as Inflation and Growth Outlook Darkens”, 8 July 2023.