The government will require supermarkets and retailers to give drivers access to live fuel prices at every petrol station on their phones or satnavs after the country's antitrust regulator said competition had weakened in the sector since 2019.
Last week, Chancellor Jeremy Hunt met regulators to agree steps to ensure consumers are being treated fairly amid a cost of living crisis.
Publishing the results of its investigation into the road fuel market, the Competition and Markets Authority (CMA) said UK drivers who bought fuel at supermarkets in 2022 paid around 6 pence per litre more than they would have done otherwise due to the 'big four' supermarkets increasing their margins.
The CMA blamed the weakening in competition on a decision by Asda and Morrisons, the traditional price-leaders on fuel, to compete less hard so as to achieve higher margins, and a lack of competitive response to this by others, including Tesco and Sainsbury's.
"Competition is not working well and greater transparency in pricing is needed to improve consumer confidence and bring down prices for drivers," it said on Monday.
However, it said there was no evidence to suggest "cartel behaviour" had taken place and the CMA has no plans to open an enforcement case.
It proposed the government implements an open data "fuel finder" scheme to help drivers find the cheapest fuel in their area, and the government said in a separate statement it would change the law to force retailers to comply.
"Consumers need to be treated fairly, and so we’re empowering drivers to find the best prices possible for their fuel by taking swift steps following the CMA’s recommendations," Hunt said.
Last week Tesco, Sainsbury's, Asda and Morrisons told lawmakers they would back more transparency on fuel pricing, such as a similar initiative to what the CMA is proposing which is already in operation in Northern Ireland.
The watchdog also recommended the government create a new road fuels prices monitoring body with information-gathering powers to hold the industry to account.
This body would also recommend further action if competition continues to weaken in the market.
Asda was fined £60,000 for failing to provide relevant information in a timely manner to the CMA's year-long investigation, it added.
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