31 January 2018
On 19 December 2017, the Competition Commission of Singapore (“CCS”) released a report titled “Market Inquiry on Retail Petrol Prices in Singapore” (“Market Inquiry Report”). The Market Inquiry Report, following an interim report published on 23 February 2016, finds that the information available to CCS does not indicate collusion or exchange of information between the petrol retailers in Singapore. However, to encourage a more competitive market in Singapore, CCS recommends improving the transparency of the effective retail petrol prices by developing a web portal and/or mobile application that shows a comparison on petrol prices and discounts to allow consumers to make more informed petrol purchase decisions.
In addition, based on a consumer survey commissioned by CCS that was conducted between April and June 2016, a majority of motorists in Singapore purchased a higher octane grade of petrol than is recommended for their vehicles by the vehicle manufacturers. CCS is of the view that greater awareness among consumers regarding octane grades and other technical aspects of petrol usage may help consumers make more informed purchase decisions.
Key findings relating to transparency of petrol prices
The Market Inquiry Report states that while petrol is a homogeneous product and listed petrol prices are similar across petrol retailers, CCS has observed that effective petrol prices (namely the final prices that consumers pay after discounts and rebates) vary. The complexity of the petrol discounts and rebates scheme structures may make it difficult for consumers to compare effective prices and make informed decisions on their petrol purchases.
In a competitive market, consumers may be expected to switch between petrol retailers to secure the best deals. This is especially so in the retail petrol market as petrol is a homogenous product and large part of the competition takes place between the petrol retailers based on pricing. The Market Inquiry Report states that factors directly related to pricing, namely, attractiveness of credit/debit card promotions, attractiveness of brand loyalty programmes and low listed petrol prices are consistently ranked highly by consumers in their choice of petrol brand. A key finding by CCS is that despite the importance of pricing to consumers and the fluctuations of petrol prices over time, three in five respondents to the Consumer Survey did not switch petrol brands in the last five years, and most of those who switched tried only one other petrol brand. The Market Inquiry Report states that the paradox that consumers attach importance to petrol pricing, yet most did not switch petrol brands despite the fluctuations of petrol prices over time, could be due to the lack of ready access to and awareness of retail petrol prices by consumers, and hence the lack of necessary information to make the best petrol purchase decision.
To encourage competition, CCS is exploring opportunities to develop a web portal and/or mobile application showing a comparison on petrol prices and discounts with the intention of further empowering consumers to make more informed purchase decisions and encouraging more effective and transparent competition amongst the petrol retailers, given the potential entry of a fifth petrol retailer in Singapore.
The following materials are available on the CCS website www.ccs.gov.sg:
- Media release
- Report: Market Inquiry on Retail Petrol Prices in Singapore
- Consumer Survey on the Purchase of Retail Petrol in Singapore