Woolworths breached ACCC fuel dockets deal, Federal Court finds

Posted by AFN Staff Writers on 14th April 2014
Woolworths breached ACCC undertakings, Federal Court finds

The Federal Court of Australia has today found supermarket giant Woolworths breached an undertaking on fuel shopper dockets, but that its rival Coles did not break the agreement.

Australian Food News reported in February 2014 that the Australian Competition and Consumer Commission (ACCC) had taken court action against the supermarket giants, alleging they had breached an earlier enforceable agreement about bundled discounts. The agreement between the supermarkets and the ACCC to limit petrol discounts to 4 cents per litre came amid concerns that subsidised heavy fuel discounting was hurting independent service stations.

The ACCC has welcomed the Federal Court’s decision on Woolworths, but has expressed disappointment in the Court’s finding that the supermarkets can bundle a supermarket fuel offer with a petrol station offer.

Coles did not breach the agreement, court finds

The Federal Court found Coles did not breach the agreement, because it funded its discounts of up to 14 cents per litre mostly through its Coles Express convenience stores. These stores are located within service stations branded by Shell and Coles.

“Since 1 January 2014, the 4 centre per litre offer has been wholly funded by Coles Express,” said Justice Alan Robertson in his judgement.

The Federal Court found that prior to 1 January 2014, Coles Supermarkets had typically borne 75 per cent of the cost of the offer by way of internal rebate from Coles supermarkets to Coles Express.

Woolworths discounts subsidised by supermarket business

However, the Federal Court found that Woolworths had breached the agreement for the first three months of 2014, when it offered discounts of up to eight cents a litre.

Justice Robertson said that the 8 cents per litre discount was “contingent on the acquisition of Woolworths supermarket (non-fuel) goods or services since, as a matter of the terms and conditions of the offer, the customer could not obtain that discount absent the customer’s satisfying the prerequisite”.

ACCC disappointed in Coles decision

The ACCC has welcomed the decision that the Woolworths fuel discount on supermarket purchases breached the undertaking to the ACCC, but has said it is disappointed about the implication of the Coles finding.

“The ACCC is pleased that the judgement also makes clear that bundling of supermarket fuel offers greater than 4 cents in a single acquisition of fuel will not be permitted,” said Rod Sims, ACCC Chairman.

“We are disappointed however that the Court has found that Coles and Woolworths can bundle a supermarket fuel offer with a petrol station offer,” Mr Sims said. “We will carefully consider the judgment and its implications for competition in fuel markets and any detrimental price impact on fuel consumers,” he said.

“But it is significant that the undertaking continue to prevent Coles and Woolworths offering fuel discounts that are subsidised by their supermarket operations,” Mr Sims said.