By Aimee Chanthadavong

Australian Competition and Consumer Commission (ACCC) has warned Coles and Woolworths over escalating shopping docket petrol discounts – which in some cases are now reaching 45 cents per litre – with belief it could potentially push to creating a duopoly in the market.

ACCC chairman Rod Sims, who addressed the Australian Institute of Company Directors’ Leaders Edge lunch in Melbourne on Monday, said what the supermarkets are doing could have a long term negative effect on competition in the petrol industry, including leading to higher petrol prices.

“Our concerns have been intensified by the expanded use of shopper docket and other discounts by both Coles and Woolworths recently. These have varied in level of discount, frequency and duration, and have now reached up to 45 cents per litre,” he said.

“While large shopper docket discounts provide short term benefits to some consumers, the likely harm to other fuel retailers and therefore to competition and the competitive process for petrol retailing could well be substantial.”

The ACCC has been investigating shopper docket offers by the major supermarkets since mid-2012, which will be finalised in the next few months. However, while the ACCC does not have the power to ban shopper docket offers, Sims warned it will seek court action to stop the conduct and penalties in appropriate cases.

“If Coles and Woolworths wish to offer their customers a discount, it should be off supermarket products, not petrol,” Sims said.
Although, the supermarkets claim their higher discount offers are only available as a reward to loyalty customers and fuel prices are not set by them but the global crude oil market.

“Fuel dockets reduce the cost of motoring for millions of Australians and along with the $1billion a year we are saving customers through lower grocery prices they are helping hard working families deal with the rising cost of living,” a Coles spokesperson said.

“We think customers should have lower prices on groceries and be able to save on fuel.”

The Australian Association of Convenience Stores (AACS) has thrown its support behind the ACCC. CEO Jeff Rogut said putting the supermarket chains on notice was the right move.

“We have already seen the impact of the ‘milk wars’ on the supply chain with job losses and the closure of small farming businesses. Likewise, in a ‘petrol war’, it will simply not be possible for smaller petrol retailers to sustain their businesses and compete with price discounting of this magnitude,” he said.

“These heavily discounted offers might seem to be a win for consumers in the short term, but the long term outcome is increased pressure on small retailers and a further erosion of competition in the marketplace.
“This latest move to grow market share through very high discount dockets for selected supermarket shoppers further highlights the growing market share and power of the duopoly, potentially forcing more and more small businesses out of business and robbing consumers of choice.”