CMA examines energy price hikes during Middle East conflict

The CMA is using its wide-ranging competition law and consumer protection powers – which were strengthened last year by the Digital Markets, Competition and Consumers Act 2024 (DMCCA) – to gather information from heating oil distributors and intermediaries to investigate concerns that companies are profiteering from the current crisis at the expense of UK consumers.

• Read more: what the Middle East conflict means for businesses

Just weeks into the conflict, the agency announced it was taking urgent action amid reports that some heating oil suppliers in the UK had abruptly cancelled pre-existing orders only to offer new contracts at significantly higher prices, and that automatic top-up deliveries – which are triggered by low tank levels – were suddenly being charged at steep mark-ups. The regulator said it has written to a number of firms, both direct suppliers and intermediaries, to “seek further information about their practices”.

On 20 March, the CMA also launched a formal heating oil market study to examine urgently how the retail supply of heating oil is operating across UK and whether “additional measures are needed to protect consumers”. The CMA estimates there are 150 suppliers of heating oil in the UK and the study invites industry stakeholders to submit comments by 8 April.

The CMA proposes to focus its market study on the retail supply of heating oil for domestic use, examining how recent global oil price shocks have affected retail prices; margins and profits; the role of supply constraints and shortages; the extent to which competition restrains price rises; levels of price transparency; and whether any poor conduct or market characterises may have harmed consumers, including during periods of volatile input costs. The study will cover the UK as a whole, while recognising that the heating oil market operates differently in Northern Ireland, where energy policy is a devolved matter.

The CMA is aiming to complete the statutory market study in just three months – a much shorter timeframe than the statutory requirement of 12 months – given “the acute nature of the challenges faced by consumers at this time”.

Sarah Cardell, the CMA’s chief executive, said in a statement that global conflict typically drives up wholesale oil prices, meaning some retail price increases are inevitable. However, she stressed that such rises should not be opportunistic hikes and “should reflect genuine cost pressures” and described “troubling reports” of heating oil customers facing sharp price jumps. In light of the seriousness of these concerns, she said the CMA had taken steps to launch an investigation “as a matter of urgency” to ensure that customers are not being taken advantage of and are being “treated fairly”.

The CMA is also closely monitoring petrol and diesel prices and has put petrol and diesel retailers on notice that it is intensifying oversight of fuel pump prices. In a recent statement, the regulator unveiled plans to accelerate collection of pricing data from thousands of UK fuel stations, enabling a rapid analysis of retailers’ profit margins since the crisis began. This includes examining how swiftly forecourt prices respond to changes in wholesale costs.

The CMA has warned that fuel stations must not exploit the current geopolitical volatility, indicating that evidence of exploitation or unjustified price increases will be noted in an upcoming pricing report. The CMA’s enhanced monitoring in the fuel sector is supported by a new statutory “Fuel Finder” information scheme, which was introduced to improve price transparency and competition among petrol retailers in the long term. Last year, the CMA also gained new information-gathering and fining powers under the DMCCA to support its enforcement of the scheme. For clarity, the agency has highlighted that it does not regulate or set fuel prices: its role is to monitor and enforce competition law and consumer protection rules, not price control.

While the CMA’s examination of price surges during the Middle East conflict are at an early stage with no assumption of wrongdoing, the CMA has indicated in its correspondence with the UK Chancellor that enforcement action will follow “without hesitation” if evidence shows competition or consumer protection law has been breached.

Commenting on the CMA’s recent announcements, Giles Warrington, a competition law expert at Pinsent Masons, said: “Competition and consumer regulators will understandably wish to act swiftly to address suspected non-compliance with competition law or consumer protection rules, however, no assumptions should be drawn about the reasons underlying such price increases or the legality of such practices. Businesses may themselves be experiencing unanticipated cost increases and may be unable to absorb these without increasing prices for consumers.”

Warrington added that the compressed three-month timeframe set by the CMA for completing its heating oil market study may also put “significant time and administrative pressures” on businesses. “Companies will need to engage promptly and appropriately with CMA mandatory information-gathering requests or risk substantial fines for non-compliance,” he said.

Tadeusz Gielas, a competition and consumer law expert at Pinsent Masons, said the CMA’s vigilance over crisis-driven pricing mirrors its earlier approach during the Covid-19 pandemic when it took a firm stance against suspected ‘price gouging’ and other exploitative practices. “During that period, the CMA – together with major retail trade bodies – issued warnings to businesses not to unjustifiably hike prices of essential goods,” he said. “It also launched multiple competition law investigations into retailers suspected of charging excessive prices for hand sanitiser under abuse of dominance rules, although those investigations were ultimately closed without penalties or findings of illegal behaviour.”

The CMA also used its consumer protection powers throughout the pandemic to curb suspected harmful conduct and secured refunds and remedies for consumers, and may seek to do so again in appropriate cases, said Gielas.

Paul Williams, a competition law expert with Pinsent Mason, said the CMA’s actions are a timely warning that businesses suspected of exploiting the conflict for financial gain may attract scrutiny by the authority: “The CMA’s approach during previous crises – such as during the Covid-19 pandemic – and now indicates that it will actively examine business practices to ensure firms are not behaving unlawfully,” he said. “Ensuring fair prices for consumers, especially on essential products, remains a top priority for the UK’s lead competition and consumer protection enforcer. The CMA’s current examination of heating oil, and petrol and diesel pricing – backed by its strategic focus and recently expanded enforcement powers – demonstrates a continuation of the CMA’s pro-consumer enforcement stance.”

The CMA can use its full range of powers – from competition law to its recently-strengthened consumer law tools – to examine whether certain pricing practices might be unlawful and take redressive action against businesses and individuals.

These interventions align closely with the CMA’s strategic priorities. In its Annual Plan for 2026–27 –which was recently finalised following public consultation – the CMA highlighted “championing consumers” and tackling practices that harm household budgets as core objectives. The annual plan references the CMA’s recent work on road fuel prices as part of its continued efforts to ease cost of living pressures for UK consumers. By examining pricing practices in heating oil and petrol and diesel, the CMA aims to visibly act on these commitments to shield UK consumers from unfair costs.

The CMA’s moves come as the chancellor Rachel Reeves has also announced UK government plans to launch a new anti-profiteering framework “to protect working people to deal with businesses unfairly putting up prices to profiteer during this crisis.” As part of this initiative, the government says it “will not hesitate to introduce time-limited, targeted powers if needed to ensure the CMA and other regulators can clamp down on price gouging if it takes place.”

Warrington noted that the CMA is generally unable to intervene in unilateral pricing behaviour unless a company is dominant and engages in excessive pricing that may breach competition law, or uses unfair commercial practices or contract terms that may breach consumer protection laws. He said that one route the CMA might explore under current powers would be to find certain companies to be dominant on a temporary basis only, which might open up consideration of excessive pricing as an abuse of dominance. 

However, he added that this would not be an easy route for the CMA as there is very limited support, if any, for dominance to be established on this basis. He noted that many other jurisdictions have concepts of abuse of an unequal bargaining position or similar, which would be more useful to a regulator in the current context, but the UK does not have an equivalent regime.

Warrington also said that powers for the CMA to deal with allegations of price gouging more generally would seek to address this enforcement gap, albeit on a temporary basis.  He noted that the government was generally sending a message to businesses around pricing during the crisis.

Competition and consumer protection authorities in other jurisdictions are also monitoring whether traders may be exploiting the current conflict in the Middle East to unlawfully increase consumer prices in breach.

In Ireland, the Competition and Consumer Protection Commission (CCPC) has reported receiving multiple consumer queries about the legality of price increases in home heating oil and alleged ‘price gouging’.  Relevant authorities in Germany, France, and Poland are also understood to be scrutinising similar consumer price increase concerns, while the European Commission is working with EU countries on measures to help mitigate the impact of high oil and gas prices on energy markets. In a recent speech Teresa Ribera, who heads EU competition law enforcement at the Commission, noted that competition policy can help address global crises and challenges.

Given the increased vigilance by the CMA and other regulators on price increases during the Middle East conflict, businesses are advised to ensure they fully comply with relevant competition and consumer protection laws, including by verifying and updating their internal procedures around pricing and ensuring that relevant personnel receive targeted and up-to-date compliance training, Gielas said.