ACCC takes action against Coles and Woolworths for allegedly breaching fuel shopper docket undertakings
The Australian Competition and Consumer Commission (ACCC) has instituted proceedings in the Federal Court against supermarket groups Coles and Woolworths.
The ACCC alleges that Coles and Woolworths have breached the court enforceable undertakings each provided to the ACCC in relation to their fuel shopper dockets.
Australian Food News reported in December 2013 that the ACCC had accepted court enforceable undertakings from Coles and Woolworths to voluntarily limit fuel discounts that are linked to supermarket purchases to a maximum of 4 cents per litre. The undertakings took full effect on 1 January 2014.
“The ACCC takes alleged breaches of undertakings extremely seriously,” said Rod Sims, ACCC Chairman. “Such undertakings are generally accepted by the ACCC as an alternative to the ACCC taking court enforcement action,” he said.
The ACCC alleges that Woolworths’ current offer of a bundled discount of 8 cents per litre (4 + 4 cents) is a breach of its undertaking because the discount is only available to a customer who has made a qualifying supermarket purchase.
The ACCC alleges that Coles is offering and allowing a bundled discount of 14 cents per litre (10 + 4 cents). As the discount of 14 cents per litre is only available to a customer who has made a qualifying supermarket purchase and because it exceeds 4 cents per litre, the ACCC alleges that it is a breach of Coles’ undertaking.
Undertakings addressed ACCC’s principal concerns
Following an extensive investigation, the ACCC said it had been concerned that fuel savings offers could have longer-term effects on the structure of the retail fuel markets as well as short term effects of increasing general pump prices in those markets.
“We accepted the undertakings because they addressed the ACCC’s principal competition concerns and allowed the matter to be resolved quickly and efficiently,” Mr Sims said.
“It is pleasing that Coles and Woolworths advise that they are honouring their undertakings to fund all fuel discounts from their fuel operations, but we are concerned that the bundled discount offerings in excess of 4 cents per litre are contrary to the terms of the undertakings,” Mr Sims said.
Where there is a dispute between the ACCC and a party which has given a court enforceable undertaking and the ACCC considers that there is non-compliance with the undertaking, which the ACCC said is the case with Coles and Woolworths, the ACCC will take prompt court action to enforce the undertaking.
The ACCC is seeking declarations, costs and other orders.
In separate proceedings, Woolworths has sought a declaration in relation to a proposed future fuel discount offer, which the ACCC also considers would breach Woolworths’ undertaking.
Directions hearings for the ACCC action against Coles and Woolworths are set for 3 April 2014 in the Federal Court Sydney.
Woolworths currently offers a bundled fuel discount of 8 cents per litre. To obtain the bundled discount, a consumer must first purchase $30 worth of groceries in a Woolworths supermarket to obtain a 4 cents per litre shopper docket discount. The consumer can then receive an additional 4 cents per litre discount by purchasing $5 worth of convenience items at the Woolworths petrol station. In this way, the ACCC said Woolworths gives a total discount of 8 cent per litre on a single acquisition of fuel to customers who have qualified for the initial discount on the basis of their supermarket purchases.
Since 6 February 2014, Coles Express petrol stations have offered a fuel saving of 10 cents per litre when consumers spend $20 or more on groceries at the petrol station. Consumers are able to obtain a further 4 cent per litre discount in the same transaction if they present a Coles shopper docket obtained by having purchased $30 worth of groceries in a Coles supermarket. The total discount available on a single acquisition of fuel at a Coles Express petrol station is 14 cents per litre and is advertised as such.