Asda’s fuel margin targets were three times the 2019 level by 2023, MPs told
Asda told the CMA that it decided to pass down retail price falls in 2022 more slowly in areas where it had no direct competition, MPs were told.
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Your support makes all the difference.Asda’s pence per litre fuel margin targets were three times their 2019 level by 2023, and the retailer deliberately passed on reductions to retail prices more slowly in areas where they had no competition, the competition watchdog has told MPs.
Competition and Markets Authority (CMA) director of markets Dan Turnbull told the Business and Trade Committee that Asda repeatedly told it over the course of its market study that it had not changed its fuel pricing strategy because it had consistently maintained the strategy of being the lowest cost provider in any particular area.
However, Mr Turnbull said: “On that particular point we didn’t find any evidence that that had changed. But what we did find were two very significant changes to Asda’s pricing approach: the first of those was around their internal margin targets.
“So we found that between 2021 and 2023 they significantly increased their internal fuel margin targets on a pence per litre basis, and indeed by 2023 those pence per litre targets were three times what they’d been in 2019.
Asda told us that they saw an opportunity as the wholesale price fell to pass through reductions in the retail price more slowly than they previously would have done
“The second of these areas was the decision that Asda took during 2022 to deliberately feather prices on fuel as they came down from the peak.
“Asda told us that they saw an opportunity as the wholesale price fell to pass through reductions in the retail price more slowly than they previously would have done.
“And they said that they applied that over 100 petrol stations where they faced no direct competition from another supermarket in the local area.”
Mr Turnbull added: “They also said that there was a greater opportunity to do that on diesel in 2023 because of the volatility in the market.”
Asda was fined £60,000 by the CMA for failing to provide relevant information in a timely manner.
Later addressing Asda co-owner Mohsin Issa, committee chairman Darren Jones said: “I don’t know if you heard the testimony from the CMA before but they were essentially not very happy with the way that you and your colleagues engaged with their inquiry into petrol prices and said that if they could have charged you more than £60,000 because of your behaviour they would have done.
“Do you have any reflections on that?”
Mr Issa replied: “That’s unfair, personally, cos we sort of complied with all regulatory sort of requests.”
Mr Jones said: “You have nothing further to add.”
Committee member Ian Lavery interrupted: “Can I just say that I’m personally not very happy at all with the responses from Mr Issa, who is the co-owner of Asda. You’ve asked him some fairly simple questions and unfortunately Mr Issa says he’s not in a position to answer.”
It came amid a volatile session which also saw bosses at the business come under scrutiny regarding its employees.
When asked whether the private equity-backed company was currently considering any restructuring among its workforce, he replied: “We are a dynamic company with a large workforce.
“Any company of our scale and size is constantly evaluating our options around our operating model.”
MPs also questioned Asda over its current dispute with the GMB union related to 39 stores across the south of England.
In May, the union accused the company of threatening 7,000 workers with “fire and rehire” tactics, as part of discussions which could see night shifts reduced and pay cut by 60p per hour.
Asda has said a reduction in this pay would put them in line with other staff.
Hayley Tatum, senior vice president of Asda and chief people and corporate affairs officer at the company, said: “We don’t know whether we would end up in a fire and rehire position.
“It’s a last resort – we are not in that place now.”