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40c fuel discounts do not breach law: ACCC

Fuel to the flames: 40-cent shopper-docket fuel discounts have angered independent service station owners.

Consumer watchdog rules that 40c-a-litre fuel discounts are not anti-competitive

24 Jul 2009

THE Australian Competition and Consumer Commission (ACCC) has ruled that massive fuel discounting by Australia’s two leading supermarket chains in a promotion earlier this month did not constitute a breach of the Trade Practices Act.

While the decision has prompted a fresh round of criticism from opponents who believe such campaigns threaten the livelihood of independent fuel retailers, the ACCC’s petrol commissioner Joe Dimasi said the one-off promotions operated within the boundaries of the legislation.

Instigated by Coles, and followed by Woolworths, the promotions ran for three days and offered customers discounts on fuel purchases of a maximum of 40 cents a litre if they spent up to $300 in a single transaction in a participating supermarket between July 13-15.

“After considering the Coles and Woolworths discount schemes, we have formed the view that these one-off promotions do not breach the Trade Practices Act,” Mr Dimasi said. “A one-off promotion of this nature results in a short-term discount for consumers. For most consumers the discounts will only apply to one weekly or fortnightly shop and to one tank of fuel.”

 center imageLeft: ACCC chairman Graeme Samuel.

Mr Dimasi also said Metcash, which is the major wholesale distributor to independent supermarkets (such as IGA), also offered similar discounts to consumers.

“This shows us that other players in the market have the ability to match the short-term competitive pressures of companies such as Coles and Woolworths,” he said. “This is competition operating in the interests of Australian consumers.

“As always, the ACCC will continue to closely monitor fuel prices, including assessing future discount schemes.”

The ACCC’s ruling is in line with the non-interventionist policy on supermarket petrol discounting it adopted in 2004, when it found that such shopper-docket fuel discounts serve to benefit the consumer.

As GoAuto reported last week, ACCC chairman Graeme Samuel reiterated this position when he told ABC radio that competitors of Coles and Woolworths had the power to match the discounts.

“It just puzzles me that what we do is say to Coles and Woolworths, ‘Stop discounting, don’t allow 21 million Australians the chance of getting cheap fuel’, but we don’t turn around and say to their competitors, ‘Hey, why don’t you match that and provide exactly the same arrangement yourselves,’” Mr Samuel said.

Those comments sparked an angry response from bodies representing independent service stations, such as the Victorian Automobile Chamber of Commerce (VACC), the Australasian Convenience and Petroleum Marketers Association and independent senator Nick Xenophon, who is co-sponsoring a private members bill with Nationals senate leader Barnaby Joyce which is designed to eliminate fuel discounting in certain areas.

Senator Xenophon said this week that the latest ruling would hurt consumers in the long run “as more and more independent retailers are driven out of business”.

“If these predatory discounts don’t breach the Trade Practices Act, there is clearly something wrong with the Trade Practices Act,” he told Fairfax Media in Perth. “The commissioner’s comments completely ignore the hundreds of independent fuel retailers who couldn’t match the discount and have suffered substantially as a result.”

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