UK supermarket Asda says fuel pricing strategy has not changed

By James Davey

LONDON (Reuters) -British supermarket group Asda’s fuel pricing strategy has not changed since Mohsin and Zuber Issa took over the supermarket group in 2021, Mohsin Issa told lawmakers on Wednesday.

“The pricing strategy has not changed, we remain the price leader in fuel,” he said in evidence to the lower house of parliament’s Business and Trade Committee.

Asda is Britain’s third largest supermarket group after market leader Tesco and Sainsbury’s.

The committee had called Issa to clarify a statement his chief commercial officer, Kris Comerford, made at a June 27 hearing that Asda’s fuel pricing strategy has “not changed over many years”.

The committee said this appeared at odds with the findings of the competition regulator’s market study of the supply of road fuel, published on July 3.

The Competition and Markets Authority (CMA) blamed weakening 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.

Lawmakers repeatedly asked Issa if Asda had targeted an increased fuel margin but he declined to answer, despite being reminded by committee chairman, Labour lawmaker Darren Jones, that he was required to do so.

Issa said fuel and food should be considered as a single business, not separately as the committee had done, and pointed out that Asda’s profit fell 24% in 2022.

“We don’t see this as a fuel business…we see this as a holistic business,” said Issa.

“The margin is the output of the strategy…I do not control the margin, I control the strategy as the input.”

He said the market decides the margin: “We set the price and then others have the opportunity to undercut us.”

Concluding the hearing, Jones called it an “extraordinary session, not in the way I hoped it would be.”

“You’ve not answered any of our questions…It’s not in order and I think actually you’ve suffered to the detriment for the brand of Asda,” he said.

(Reporting by James Davey, Editing by Kylie MacLellan and Josie Kao)