The Swedish Competition Authority investigates competition in the road fuel market

This is stated in the interim report “How does competition affect gasoline and diesel prices?” published by the Swedish Competition Authority as part of its study of the road fuel sector. The analysis, conducted on behalf of the government, covers fuel companies' sales, pricing, margins, business models, and strategies for the future.

The Swedish Competition Authority's analysis shows that the market is characterized by a rigid market structure with high concentration and significant entry barriers. Four companies account for about three-quarters of the sales volume of gasoline and diesel to end consumers.

Fuel prices at the pump are largely determined by the recommended prices that the major players publish on their websites. The company Circle K is the price leader. This means that other companies follow changes in the recommended prices set by Circle K. This contributes to a very homogeneous price level for fuel across the country. According to the Swedish Competition Authority's investigation, local price wars—situations where competing gas stations respond to each other's price cuts—have diminished in both scale and frequency during recent years.

"Our investigation shows that price formation in the fuel market is characterized by price leadership and that recommended prices are published publicly. Price signalling by companies can be problematic from a competition perspective," says the Swedish Competition Authority's Chief Economist, Arvid Fredenberg.

The limited competition also means that consumers' interest in the price differences that do exist is not particularly strong. It rarely pays off to take a detour to buy cheaper gasoline, according to the Swedish Competition Authority's calculations.

The Swedish Competition Authority has also studied international analyses of various road fuel markets and found that many countries face similar competition issues. Several of the studies include proposed remedies on how to promote competition, such as more up-to-date price information for consumers based on mobile apps. This is something that also Swedish consumers have shown interest in.

"We now see the need to further investigate the conditions for measures that stimulate increased price competition in the Swedish fuel market. The focus should be on issues related to companies' pricing strategies and consumers' access to current and relevant price information," says Arvid Fredenberg.

Marie Strömberg Lindvall, Press Officer, +46-76-542 15 92, marie.stromberglindvall@kkv.se
Karl Lundvall, Project Manager, +46-8-700 15 56, karl.lundvall@kkv.se

Summary of Conclusions

Full report (in Swedish): How does competition affect gasoline and diesel prices? (Report 2024:6)