In a landmark move to curb the fuel discounting practices of the supermarkets, and its damaging effect on other fuel retailers, Australia’s Competition and Consumer Commission (ACCC) has brokered a voluntary ceasefire by the two biggest grocery chains.
It has accepted undertakings from Coles and Woolworths that they will each voluntarily cease making fuel saving offers which are wholly or partially funded by any part of their business other than their fuel retailing business, and will in addition limit fuel discounts which are linked to supermarket purchases to a maximum of four cents a litre.
The ACCC had launched an investigation into whether fuel-saving offers issued by major supermarkets were causing a substantial lessening of competition in markets for the retail sale of fuel.
Chairman Rod Sims said the investigation was nearing completion, and although it had yet to make a decision on the matter, the investigation had caused it to consider the competition effects arising from the fuel-saving offers.
“We had focused on the offers by the major supermarket chains of fuel discounts of eight cents a litre, which were made for sustained periods during 2012 and 2013, and we were concerned that those 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.”
Some retailers had complained that they simply could not afford to match the supermarkets’ fuel discounts of eight cents or more, because the discounts were being funded from markets that were separate and unrelated to the fuel retailing markets. By removing the funding by supermarkets and limiting the supermarket offers to a maximum of four cents a litre, the ACCC considers that other fuel retailers will be able to compete on a more level playing field.