The competition watchdog has begun a formal investigation into whether major fuel retailers are involved in price fixing.

The Australian Competition and Consumer Commission (ACCC) says it has concerns over petrol retailers' current practice of frequently exchanging private and comprehensive price information.

The ACCC believes the arrangement may be lessening competition by allowing petrol retailers to quickly signal price movements and monitor competitors' responses.

In a statement on the ACCC website, commissioner Joe Dimasi said the watchdog was concerned fuel retailers may have breached the Competition and Consumer Act 2010.

"The ACCC has put the industry on notice for some time about its concerns in this area," he said.

ACCC chairman Rod Sims says a dedicated team has been assigned to investigate the matter.

"While the ACCC does not usually comment on its current investigations, the ACCC considered it appropriate to inform the public that it is undertaking this investigation given the significant public interest regarding petrol pricing," he said.

Mr Sims says the fuel industry has been on notice for some time that the price-sharing arrangement may be stifling competition

In 2007 the ACCC's petrol price inquiry found an imbalance in pricing transparency which affected competition.

The watchdog says it expects the current investigation will be complex and could take some time.