Petrol war inaction raises hackles

A WAR of words has broken out over petrol discounts of up to 40 cents a litre by the two major Australian supermarket chains in a three-day promotion that critics say is an “obscene abuse of power” that threatens another nail in the coffin of many independent service stations.

Despite pleas by the independents for protection from what they believe is predatory behaviour, the Australian Competition and Consumer Commission (ACCC) has so far declined to intervene, sticking by its 2004 findings that such shopper-docket discounts benefit the consumer.

Speaking on ABC Newsradio this week, ACCC chairman Graeme Samuel said competitors of Coles and Woolworths had the power to match the big 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.

Left: ACCC chairman Graeme Samuel.



“They can, and my challenge would be in the competitive environment, to them, do so.” The comments enraged the Victorian Automobile Chamber of Commerce (VACC), which represents many of the independent petrol resellers in Victoria – the state at the heart of the latest discount battle.

VACC executive director David Purchase said that contrary to Mr Samuel’s comments, the small independents could not match that level of discounting and remain in business.

He said they did not stock the thousands of grocery items to subsidise a 40-cent discount.

“Most small independent service station owners are only surviving by the skin of their teeth, and this discount war has the potential to tip many over the edge,” he said.

Mr Purchase said the ACCC should be considering the impact on the future of fuel retailing in Australia with the two dominant supermarket chains being prepared to sell fuel at below cost.

“Could it be that there will be a pay-off in the future once competitors and small independent service stations owners have been eliminated?” he asked.

Independent Senator Nick Xenophon described the discounting as “proof of obscene power”.

“The Australian Competition and Consumer Commission should be asking Coles and Woolworths serious questions about this offer,” he said.

“Will they lose money on this deal, and if so, how much? And if they don’t lose money on this deal, how can they justify their undiscounted prices.” The Australian Convenience and Petroleum Marketers Association (ACPMA), which represents mostly small-to-medium sized fuel distributors and resellers in regional Australia, says the 40-cent discount – offered by supermarkets on purchases of $300 or more in groceries – was well below the wholesale cost of fuel, currently at 115 cents a litre.

ACPMA president Jeff Griffiths said: “If the ACCC does not regard this blatant act of below-cost pricing as predatory, then what is it.” Mr Griffiths said his organisation welcomed reports that ACCC petrol commission Joe Dimasi would investigate these so-called promotions if they happened regularly.

“It is disappointing that Mr Dimasi did not put a stop to them before they could do any damage,” he said.

Mr Dimasi was quoted by The Australian as saying the ACCC would examine the promotions to make sure they were within the bounds of the law.

“That’s not to suggest we think there is anything wrong with it,” he said.

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