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Supermarket fuel discounts raise watchdog’s ire again

A fuel and its money: The Australian Competition and Consumer Commission says the latest round of fuel discount offers breach voluntary undertakings form both Coles and Woolworths.

Supermarket giants go back to court as fuel discounts raise ACCC concerns

25 Feb 2014

THE competition watchdog said today it would drag Australia’s two supermarket giants back into court over what it claims are market-skewing discount fuel offers.

According to the Australian Competition and Consumer Commission (ACCC), which launched the Federal Court action today, Coles and Woolworths both appeared to have breached court-enforced undertakings relating to fuel discounts on shopping dockets.

“The ACCC takes alleged breaches of undertakings extremely seriously. Such undertakings are generally accepted by the ACCC as an alternative to the ACCC taking court enforcement action,” ACCC chairman Rod Sims said in a statement released this afternoon.

The case relates to a court case late last year in which both Coles and Woolworths said they would voluntarily limit fuel discounts to 4 cents a litre from January this year.

However, the ACCC has alleged Woolworths’ current discount of 8 cents a litre extended to customers who buy certain items is a breach of that undertaking.

Coles, meanwhile, has fallen back under the competition watchdog’s radar after it also bumped its fuel discount up to 14 cents a litre if customers bought certain products.

“Following an extensive investigation, the ACCC had been concerned that fuel savings offers could have longer-term effects on the structure of the retail fuel markets and also short term effects of increasing general pump prices in those markets,” Mr Sims said.

“We accepted the undertakings because they addressed the ACCC’s principal competition concerns and allowed the matter to be resolved quickly and efficiently.

“It is pleasing that Coles and Woolworths advise that they are honouring their undertakings to fund all fuel discounts from their fuel operations, but we are concerned that the bundled discount offerings in excess of 4 cents per litre are contrary to the terms of the undertakings,” Mr Sims said.

The ACCC said it was seeking declarations, costs and other orders from both the supermarket companies.

Coles and Woolworths have not responded publicly to the new court action.

The ACCC launched an investigation into shopping docket discount vouchers after receiving complaints from competing fuel retailers that they could not match the high 8 cents a litre discounts of the two supermarkets, which were funding the discounts through parts of their business unrelated to fuel.

Several retailers complained that this created an uneven playing field and gave Coles and Woolworths an unfair competitive advantage.

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