Ireland’s fuel market remains competitive, with rising international prices responsible for increases at the pump ahead of a cut in excise duty earlier this year rather than a lack of competition or illegal co-ordinating of pricing, competition regulators have found.
The Competition and Consumer Protection Commission (CCPC) said its analysis of pricing in the retail motor fuel sector found evidence to suggest that the excise duty cuts were largely passed onto consumers, although not immediately.
The CCPC analysis focused in particular on the 19-day period between March 2nd and 20th, with detailed pricing information relating to 50 per cent of the service stations in the State.
The competition watchdog received more than 200 complaints about the motor fuel market once the excise cuts were introduced. Among the issues raised were lack a of competition driving up prices, prices not clearly or correctly displayed to the public, service stations in the same area co-ordinating to charge the same retail price, and a failure to pass on the excise cut in full to consumers.
CCPC chairperson Jeremy Godfrey said that following the cut in excise duty, the difference between pump price and the wholesale price generally remained within the normal range for the industry.
“The analysis shows that there was effective price competition between petrol stations in all counties in the State. Changes in the price of fuel at the pump were largely driven by changes in the wholesale price that petrol station operators had to pay for their supplies,“ he said.
“However, pump prices did not immediately fall on the day the excise duty cut came into effect and it is understandable that consumers were concerned about this. Our analysis found the main reason was that it took time before petrol stations received supplies of fuel that had been taxed at the lower rate. The delay varied from station to station because of difference in stock levels and differences in the supply arrangements between petrol stations and their suppliers. Additionally, the pump price was affected by volatility in the underlying cost of fuel, which made it difficult to isolate the impact of the excise duty cut.”
The CCPC said similar trends were observed in international markets, with excise duty cuts taking time to work through to pump prices. “We recommend that policymakers take this into account when communicating with consumers about the likely impact of comparable changes in the future,” Mr Godfrey said.
The report found evidence no evidence of co-ordinated pricing behaviour during the period analysed.
