Shopper docket fuel discounts investigation by ACCC wins support
The Australian Competition and Consumer Commission (ACCC) has expressed “significant and further” concern about the escalating shopper docket petrol discounts, which it says have reached 45 cents per litre in some cases. The ACCC’s concerns and its investigation have been welcomed by convenience and petrol industry representative body, the Australasian Convenience and Petroleum Marketers Association (ACAPMA).
Addressing the Australian Institute of Company Directors’ Leaders Edge Lunch in Melbourne on 29 July 2013, ACCC Chairman Rod Sims said the ACCC was concerned about the expansion of shopper docket discounts for petrol.
“The ACCC has previously signaled its concerns about the impact of shopper docket petrol discounts by Coles and Woolworths on the competitive process,” Mr Sims said. “Our concerns have been intensified by the expanded use of shopper docket and other discounts by both Coles and Woolworths recently. These have varied in level of discount, frequency and duration, and have now reached up to 45 cents per litre,” he said.
May benefit consumers, but harm other fuel retailers
Mr Sims said that while large shopper docket discounts provided short term benefits to some consumers, “the likely harm to other fuel retailers and therefore to competition and the competitive process for petrol retailing could well be substantial”.
“Even at the level of eight cents, it would be difficult to see how an unsubsidised fuel retailer could compete on a sustainable basis. Now, the discounts are substantially higher,” Mr Sims said. “If Coles and Woolworths wish to offer their customers a discount, it should be off supermarket products, not petrol,” he said.
Mr Sims said the ACCC believed shopper docket discounting was likely to have a “negative effect in the petrol industry”, and that, over time, it could lead to higher petrol prices.
Supermarket group Woolworths has denied its shopper docket fuel discounts are harmful to other fuel retailers.
Mr Sims said the ACCC was also investigating whether the duration, frequency and extent of the fuel offers may have an “adverse impact on the underlying level of fuel prices”, particularly in circumstances where fuel retailers who would otherwise compete for price conscious customers are unable to do so.
“The ACCC has no power to ban shopper docket offers,” Mr Sims said. “As an enforcement body, however, the ACCC can investigate market activity and, where appropriate, take court action seeking injunctions to stop the conduct and seeking penalties in appropriate cases,” he said.
According to Mr Sims, the ACCC, which has been investigating shopper docket offers by the major supermarkets since mid-2012, expects its investigation will be finalised in the next few months.
ACCC concerns seconded by ACAPMA
The ACCC’s concerns and its investigation have been welcomed by the fuel industry association representing independent service stations, the ACAPMA.
The ACAPMA said that the recent appointment of Mr Sims to the petrol monitoring role, after ACCC Commissioner Joe Dimasi announced he would not seek reappointment to the Commission, provided an “opportunity for renewed focus on industry competition”.
“Under the stewardship of Commissioner Dimasi we have seen many of the petrol myths and confusions held by the wider community addressed,” said Nic Moulis, ACAPMA Chief Executive Officer. “There are still structural competition issues the ACCC need to address and the opportunity of the Chairman dealing directly with these should not be downplayed,” he said.
The ACAPMA said many independent petrol convenience operators “struggle to compete” against the industry’s major players.
“The continued use of discounts, which sell petrol below cost for weeks on end, and the cross subsidy of profits between supermarket, liquor and hardware to support shopper dockets has had a damaging anti-competitive effect on the fuel industry,” Mr Moulis said.
“Over the last four years we have seen close to 1,000 independent service stations close their doors,” Mr Moulis said. “The continued loss of small to medium independents from the fuel industry will eventually leave it in the hands of a few multinationals. This is not to the benefit of motorists in the long term,” he said.