ACCC green lights use of Woolworths shopper docket fuel discounts at BP service stations

ELI GREENBLAT
August 29, 2017
The Australian

Woolworths will be able to expand its popular shopper docket fuel discount scheme to a number of BP service stations after the competition regulator gave the green light to the proposal, at a time when the Australian Competition and Consumer Commission is also considering the purchase of Woolworths service stations by BP.

The ACCC has this morning issued a draft decision proposing to grant conditional authorisation to a commercial alliance between BP Australia, BP Resellers, and Woolworths (WOW). 

Authorisation will allow participating BP service stations to accept Woolworths shopper dockets and participate in the Woolworths Rewards loyalty program, if BP is successful in acquiring Woolworths’ service stations. 

“Customers value fuel-related discounts and loyalty programs. We believe giving consumers more opportunities to redeem shopper docket discounts and earn and redeem points through Woolworths’ loyalty program will likely result in some public benefits,” ACCC Chairman Rod Sims said. 

However, the ACCC said it has long standing concerns that these kinds of fuel discounts can have anti-competitive effects if they are at a level that is unable to be matched by otherwise efficient fuel retailers. 

“The ACCC considers that fuel discount offers in excess of 4 cents per litre could have longer-term effects on the structure of the retail fuel markets and that the detriments from reduced competition may outweigh any benefits,” Mr Sims said.

The ACCC had been investigating shopper docket offers by the major supermarkets since mid-2012 and one year later signed up supermarket majors Coles and Woolworths to enforceable undertakings to cap their shopper docket discounts for supermarket customers at a maximum 4c per litre. 

To address potential harm, the ACCC is proposing this morning to grant authorisation to Woolworths and BP on condition that the parties not offer fuel discounts from shopper dockets and the loyalty scheme in excess of 4 cents per litre in total.

These proposed shopper docket and loyalty scheme arrangements form part of a broader transaction between BP and Woolworths, where BP is proposing to acquire Woolworths’ network of service stations. The ACCC is conducting a separate merger review of that proposed acquisition.

The proposed shopper docket and loyalty scheme arrangements will only occur if the proposed acquisition is completed.

“The proposed acquisition by BP of Woolworths service stations is subject to separate consideration by the ACCC. This draft decision regarding authorisation does not in any way indicate the ACCC’s view of the proposed acquisition,” Mr Sims said.

Earlier this month the ACCC delayed its ruling on BP’s $1.8 billion deal to buy Woolworths 527 fuel sites, flagging preliminary concerns about the impact on competition and the retail supply of fuel across metropolitan areas. 

The ACCC is now seeking submissions before making its final decision. The ACCC expects to release its final decision in October.