Petrol chains head for OFT

Click to follow
The Independent Online
INDEPENDENT petrol retailers, whose very survival is threatened by last week's launch of a nationwide price war at the pumps, are set to launch a counter-offensive to safeguard thousands of jobs by taking their case to the Office of Fair Trading.

Esso and Shell led the offensive, aimed at recapturing market share from supermarkets such as Sainsbury and Tesco, which have muscled in with cut- throat pricing.

Bruce Petter, director of the Petrol Retailers' Association, is writing formally to the OFT in the next few weeks to seek an investigation into allegedly anti-competitive supply deals between some large oil companies and their independent outlets.

He claims these agreements favour the oil giants' own outlets at the expense of privately owned garages and smaller chains.

Some independents, he claims, can be locked in to contracts obliging them to sell petrol at up to 5p a litre above the market price; if they try to find a cheaper supplier, the oil company can sue for breach of contract. "Our main concern is where the retailer is held to contract by the oil company," said Mr Petter. "We will be looking at the OFT to intervene to stop the abuse. We are trying to help those retailers who would not normally go out of business."

Mr Petter says he has evidence of up to a dozen such cases that have come to light since Esso launched a limited price-cutting campaign four months ago in Scotland and the North-east. The company took the scheme nationwide last week, promising to match prices at its 2,100 service stations - the UK's largest network - with the lowest available. In response, Shell took 4.4p off a litre of four-star unleaded, cutting the recommended price to 59.5p

The supermarkets, which now command almost a quarter of the market, have yet to respond, but according to stockbroker NatWest a 3p cut in unleaded fuel to keep up their price differentials would mean not just lower profits from their garages but losses.

But the biggest victims are likely to be the independents, who operate 10,000 sites and will find it hardest to withstand the falling margins the war brings. An early casualty was petrol retailer Frost Group, whose shares fell 26p to 155p in two days as analysts cut forecasts for 1996 profits by a third to pounds 14m.