Spain's competition watchdog rules out widespread abuse at petrol stations

The Spanish competition regulator (CNMC) has not detected any structural competition violations in the fuel sector's profit margins.

The regulator has published its report on the profitability of companies participating in the liquid hydrocarbon value chain, as per the central government's request.

The report's main conclusion was that profitability levels were, in general, consistent with a competitive market structure. In other words, the CNMC found no widespread or sustained increase in margins that would suggest excessive profits across the sector. Average profitability remained at moderate levels and the regulator found no clear evidence of a lack of competition.

The study analysed several profitability indicators, including EBITDA margin, EBIT margin and ordinary profit before tax, for wholesale and retail companies between 2019 and 2024. To do so, the CNMC used companies' annual accounts, allowing it to assess business profitability from a structural perspective rather than simply monitoring changes in fuel prices.

The report measured not only a petrol station's gross margin (the difference between the pre-tax pump price and the benchmark fuel cost) but also the overall profitability of companies in the sector. The CNMC treated the concept of "margin" as a company's economic margin in order to determine whether firms had generated persistently abnormal or excessive profits.

In the wholesale market, the CNMC highlighted the wide variation between companies. Very different operators, with business models and activities that were not always directly comparable, operated under the same industry classification. Even so, the regulator found no clear relationship between company size and profitability, nor did it identify any structural trend of rising margins.

The findings for the retail sector, which covers petrol stations and other road fuel retailers, were similar. The CNMC found a diverse market that included traditional branded networks alongside independent and low-cost operators. Overall, profit margins remained at moderate levels, with the median margin among the largest retailers standing at around 3.5% in 2024.

However, the regulator did identify some cases of unusually high profitability that may involve operators banned from carrying out wholesale fuel activities.

Although the CNMC found no evidence of a widespread problem, it noted that margins had increased in some cases during 2023 and 2024, warranting continued monitoring. It also pointed to significant differences in profitability between companies, particularly among smaller operators.

The report builds on an earlier CNMC study into fuel prices and gross distribution margins. That review concluded that the market generally functioned well but identified unusual pricing patterns at around 50 petrol stations out of more than 10,000 analysed. In particular, the regulator raised concerns that some operators may not have fully passed on fuel tax reductions to consumers.

The government has since strengthened the CNMC's monitoring powers, allowing it to request additional information from wholesalers and retailers throughout the fuel supply chain. Where it identifies irregular behaviour, the regulator may name individual companies in its weekly fuel market report, without affecting any enforcement action it may decide to take.

In its recommendations, the CNMC called for stronger measures to prevent and detect irregular practices throughout the distribution chain. It said some cases of unusually high profits could involve operators barred from wholesale trading and therefore justified closer scrutiny.

The regulator also recommended continuing to monitor both business profitability and distribution margins, maintaining policies that encourage competition, increasing transparency over wholesale prices and supply costs, improving information for consumers about discounts and loyalty schemes, and refining the identification of companies genuinely operating within the fuel sector.

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