The government has taken an increasingly tough tone on rising fuel prices following the surge in global oil costs linked to conflict in the Middle East. In respect of heating oil (that is, kerosene used for heating applications, for businesses or domestically), the CMA has launched work considering two issues:

• Existing orders for heating oil being cancelled, and customers then being offered new quotes at significantly increased prices
• Price increases for “automated deliveries” of heating oil 

The CMA’s focus here is on consumer protection law.  It may be concerned with whether pricing terms were sufficiently transparent, and / or whether the cancellation of orders is fair under the terms that had been agreed.

Many will remember the furore around the prices of PCR testing and hand sanitiser, for example, during the Covid 19 pandemic.  While then (like now) politicians were talking about rip-off pricing and profiteering, the concerns that CMA is more likely to look at are not to do with competition law rules about excessive pricing (which only apply to businesses which are “dominant” (i.e. have significant market power).  Consumer protection law does not allow the CMA simply to find that prices are too high, but instead focuses on how businesses communicate and engage with their customers. 

In the past, the CMA has pushed back on some government calls to investigate high pricing in particular sectors.  The CMA will instinctively recognise that oil prices increasing due to the conflict in Iran will flow through to higher prices for some consumer facing products. This can be seen in the CMA’s CEO’s comments, who said: “It’s inevitable that some prices will rise.”  What’s different here is that the CEO goes on to say that price rises “should reflect genuine cost pressures.”  But as above, that’s not what the CMA is actually investigating at this stage: the legal concern is not a general one about price levels. Companies are, in general, allowed to price how they see fit. 

Government has other levers it could pull, but at this stage it does not seem likely that it would consider more drastic options (like prices caps) or a more wide-ranging CMA investigation using its market investigation powers, which, while powerful, would be slow. It may be that the government, and indeed the CMA, want companies to feel the spotlight on them, and so to pressure them to keep prices as low as they can even as oil prices climb.