Supermarket giants face ACCC investigation

Posted by Daniel Palmer on 14th July 2009

Coles and Woolworths are set to be scrutinised by the ACCC after the supermarket behemoths released details of staggering petrol discounts yesterday.

The discounts will be offered to their supermarket customers until Wednesday; with a 40 cents/litre discount for shoppers who spend $300 or more, a 25 cent discount for $200 or more, 10 cents for $100 or more and four cents for $30 or more.

The competition watchdog is looking into the promotion to assess whether it constitutes predatory pricing. New laws have recently been introduced to strengthen the ACCC’s ability to tackle predatory pricing, which sees smaller competitors pushed out by rivals who set price levels below their cost price. However, predatory pricing is still difficult to prove as the ACCC admits that the “initial signs are pro-competitive”.

Indeed, any assessment of the current offer by Coles and Woolworths will likely see no action taken as there must be a “clear anti-competitive purpose” and the businesses must not sell goods at their relevant cost of supply for a “sustained period”.

ACCC Petrol Commissioner Joe Dimasi told AAP the competition regulator would assess the offer to determine if it breaches the Trade Practices Act.
“I’m not suggesting for a moment we think there is anything wrong with it, discounts that enable consumers to get lower petrol prices are generally a good thing,” he said. “But having said that, there are provisions in the Act to make sure there is nothing wrong with the promotion, and we will have a look at it.”

“If we’ve got two supermarket chains competing to get people into their stores, providing benefits to consumers on a regular basis, that’s well and good,” Mr Dimasi added. “So long as it isn’t aimed at a particular competitor and done with the aim of driving someone out of business by pricing below cost in a sustained way over a long period of time.”

“If we see (the promotion happening) every month, we would have to see what it is doing and what it is trying to do.”