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Desperate ploy to keep supermarket merger afloat will decimate consumer fuel choice

PRA 25/03/2019

“The proposed measures to save the struggling merger between Sainsbury’s and Asda will put thousands of independent petrol retailers out of business and decimate consumer choice across the UK, particularly in rural areas”, said Brian Madderson, Chairman of the Petrol Retailers Association (PRA).

The PRA is very concerned that the measures proposed by Sainsbury’s to get their controversial merger with Asda approved by the Competition and Markets Authority (CMA), which include a cap on the amount of profit they make on petrol, could lead to job losses and closures across Britain’s network of independent fuel retailers.

All Supermarkets have the ability to share the cost of petrol operations with areas of their business that are not available to independent petrol retailers, this has the potential to distort the commercial forces acting on petrol stations.

Since 2000, nearly 70% of independent fuel retailers have been forced to close; a fact that coincides with the rapid growth of supermarkets and their entry into the fuel market. These closures have, significantly reduced the choice for the consumer and are forcing motorists to drive ever further to fill up.

Some commentators rightly regard the proposals as a 'desperate'* bid to save the merger and the PRA agrees with the CMA’s fears that the merger will lead to reduced consumer choice and higher prices in the long run, through a substantial reduction in competition.

Madderson continues, “The PRA and its members view the latest proposal from Sainsbury’s and Asda to cap fuel margins as unenforceable and running counter to the CMA’s guidelines that the remedies should not involve behavioural change that requires high level monitoring and enforcement.

“Independent petrol retailers are already struggling with very high costs including a business rates system that is not fit for purpose, sharply rising wage bills from the government’s National Minimum Wage, increasing insurance premiums and energy costs.

“This latest attempt by Sainsbury’s and Asda to keep their merger afloat will lead to the closure of hundreds of often small, family-run businesses providing essential services to hard-pressed rural communities.”

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Brian Madderson is available for interview.

About the RMI

The Retail Motor Industry represents the interests of operators in England, Wales, Northern Ireland and the Isle of Man providing sales and services to motorists and businesses. The RMI has a formal association with the independent Scottish Motor Trade Association which represents the retail motor industry in Scotland.