A £5bn auction of Britain’s biggest petrol forecourt operator is in jeopardy amid fears the Government will intervene over concerns that private equity owners would jack up prices at the pumps.
Suitors for Motor Fuel Group (MFG) are worried that ministers will order a competition inquiry into the sale of the business to protect households as they navigate the cost of living crisis, according to City sources.
MFG, owned by private equity firm Clayton Dubilier & Rice (CD&R), runs more than 900 fuel forecourts in the UK under brands Shell, BP, Esso, Murco, and Texaco. It sells around 6pc of all the fuel sold at the pumps in Britain.
Citi, Deutsche Bank, Royal Bank of Canada, and Goldman Sachs are among a long list of advisers that have been lined up to explore options, including a sale, on behalf of CD&R.
Fortress Investment Group, which was pipped by CD&R in a bidding war for Morrisons last year, has been linked with making an offer for MFG.
But a source involved in the process warned that investment firms are wary of intervention by the Government, which is armed with new post-Brexit powers to investigate takeovers.
Of particular concern is that private equity houses could exploit record prices at the pumps by keeping prices artificially high.
“The Government has no control to control fuel prices,” a source said. “But the control they do have is when forecourt operators change hands.”
Whitehall officials are not thought to be monitoring the situation yet. A source close to CD&R said that no firm decision had been taken on whether to sell the business or not.
Forecourt operators have long faced criticism for increasing prices quickly when the price of oil jumps, but failing to pass on the savings when it falls again.
The AA said that the price of fuel minus VAT and duty has continued to rise throughout February and March despite wholesale prices falling sharply during the middle of the month.
Analysis by the AA found that the average profit margin excluding tax and duties among UK operators had swelled from 11p-a-litre to 14p-a-litre between the start of February and the end of March.
Howard Cox of the FairFuelUK campaign, said: “When oil prices drop, pump prices never fall as fast as they went up.”
A source close to MFG said that the operator made a fixed profit on its petrol and diesel, and the company made a loss when Rishi Sunak reduced fuel duty by 5p last month.