ACCC eyes clamp on shopper-docket petrol discounts

BLAIR SPEEDY
The Australian
July 18, 2012

DEEP petrol discounts of up to 40c a litre are under threat, with the competition regulator launching an investigation into the fuel price wars estimated to save motorists about $400 million a year.

The Australian Competition & Consumer Commission is seeking detailed information from Coles and Woolworths about their popular “shopper-docket” schemes.

In 2007, an ACCC petrol inquiry report found the schemes benefited consumers and promoted competition. However, it is understood the regulator is now concerned about the expansion of the schemes, which generally reward supermarket shoppers with a 4c a litre price reduction if they spend more than $30 in Coles or Woolworths supermarkets but increasingly feature discounts of up to 30c a litre.

ACCC Petrol Commissioner Joe Dimasi in 2009 ruled that 40c-a-litre discounts offered by Coles and Woolworths for a three-day period were not anti-competitive, but the commission has received a number of complaints about similar discounts being made available for longer periods and with increasing regularity.

While the ACCC does not have the power to ban the discounts, an adverse finding – carrying an implied threat of legal action for behaviour identified as anti-competitive – would be likely to see the retailers scrap the higher discounts, effectively capping the savings on offer at 4c a litre.

Neither Coles nor Woolworths would comment on the ACCC investigation, while the regulator would confirm only that the probe was under way.

“The ACCC is currently seeking further information to assess the impact on competition arising from the current approach by participants to the level and frequency of their shopper-docket discounts,” an ACCC spokeswoman said.

Coles is offering members of its Flybuys loyalty card scheme a discount of 16c a litre on fuel if they spend $160 in one transaction; in March, Woolworths offered a 20c-a-litre discount to shoppers spending at least $150.

Between them, the two supermarket giants account for about 50 per cent of national petrol sales despite controlling only 18 per cent of the petrol stations by number through their alliances with Shell and Caltex. If all of those sales were made at a 4c-a-litre discount, the savings to shoppers would be about $400m.

Colin Long, senior manager of the Service Station Association, representing smaller fuel retailers, said he was pleased the ACCC was investigating a practice “that unfairly disadvantaged independent operators”.

“We think it’s an unfair advantage that supermarkets have, because they’re getting it back in their other grocery lines in terms of increased grocery prices, and giving it back with the other hand while decimating the independent fuel retailers,” he said.

“The number of independents is going down by about 5 per cent a year . . . It’s getting tougher and tougher. In Sydney alone, we’ve lost one every month this year.”
Automobile Association of Australia executive director Andrew McKellar also cheered news of the probe.

“This needs to be investigated – nobody would say that if you’re getting a discount, you shouldn’t make use of it, but the concern we have is whether these dockets are being used as a device to effect competition, which would mean in the longer term there’s a risk that consumers pay a higher price,” he said.

“That is anti-competitive conduct and would be illegal. Shoppers using shopper dockets is perfectly rational but . . . there are trade-offs when supermarkets offer these sorts of loyalty programs.”

Matt Levey from consumer lobby group Choice said while fuel discounts were good for shoppers, any impact on overall competition should be addressed. “We’re not against petrol discounting – if the ACCC found there was a consumer detriment, we’d want them to take appropriate action – but we certainly wouldn’t be calling for them to be abolished,” he said.