Home' Convenience and Impulse Retailing : October 2009 Contents FORECOURT
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on the ACCC to review its decision to all
the major supermarkets to offer petrol
discount dockets. The SSA agreed,
stating that the ACCC's response was
"The ACCC's stance on supermarket
shopper docket discounts has been
disappointing from day one," said Ron
Bowden. "We don't have a problem with
supermarkets rewarding loyal customers;
we have a problem with them rewarding
customers in one market with discounts
in another market -- discounts that
competitors in that other market can't
"An independent fuel retailer does not
have the financial resources to subsidise
its petrol sales out of shop sales. Only the
major supermarkets have sufficient scale
to subsidise. That has to be an abuse of
It seemed to ACAPMA that the ACCC still
does not understand the fuel industry.
"The ACCC's response to the 40-cpl
promotions by the big two supermarkets
ignores the impact on the fuel market,
and completely misses the point," said
Nic Moulis. "The ACCC called last week's
stunts 'one-off' promotions, but it was not
the first time that the supermarkets have
paid customers to buy fuel.
"Over and above the 4-cent discount
that has been a constant feature of the fuel
market for many years, there have been
periods of much higher discounting -- 10
cents, 12 cents, even 20 cents. The 40-cent
fuel discount offer took it to a new high --
creating a new 'low' for the fuel industry.
"Although Metcash -- a major wholesale
distributor to independent supermarkets
-- matched the fuel discounts to support
its independent grocery retailers, no-one
in the fuel industry followed."
According to Mr Dimasi, the 40-cpl
discounts were clearly supermarket
promotions. "There is little doubt in my
mind that the offers were aimed at getting
customers into their supermarket stores,"
conviction for predatory pricing the way the
law is currently written."
Mr Dimasi disagrees. "The Act is strong
enough," he said. "It is not a question of the
Act; it is more complex than that. We are
trying to separate good discounts and lower
prices which we want to encourage from bad
intent. This can't be resolved by changing the
Act or introducing additional provisions; it is
the facts on the ground that matter."
C&I asked, "What if the effect is that
competitors are being driven out of the
market, even if that was not the intent? What
if we lose a significant competitive force in
"Competitors leave markets all the time
as businesses find new ways to compete,"
said Mr Dimasi. "We are not here to protect
them. We are here to make sure that market
participants abide by the rules of competition.
We don't want to see competitive businesses
driven out by predatory conduct, and we will
act if the facts demonstrate this."
There are two other groups affected by these
market activities -- the major oil companies
and consumers. The major oil companies are
not keen to enter into this debate; however,
he said. "They link the promotion to fuel
because fuel is close to customers' hearts
"However, it did have an effect on
the fuel industry. This is inevitable. The
issue for the ACCC was whether these
promotions were legal. If we thought
the schemes were predatory, we would
respond under those provisions."
So, it came down to whether the 40-cpl
discount was tantamount to predatory
"If this is not predatory, what is?" asked
Nic Moulis. "If the ACCC lets these bouts
of below-cost pricing be repeated again
and again, eventually there will be no
independent fuel retailers left. We would
like to know -- at what level of discount over
what period of time will fuel discounts by
Coles and/or Woolworths be considered a
breach of the Act?"
Mr Dimasi pointed out that these would
be issues for the courts. "If we believed
that an entity was selling below cost for
a sustained period of time with an anti-
competitive intent, we would investigate.
Whether it would go to court would
depend on the evidence.
"With regard to intent, if someone
was to target an individual business in a
specific area over and over and over again,
that would lead us to be suspicious.
We have powers under the Act to enter
premises and examine documents to see
what these decisions are based on, but we
have to have reason to believe the Act has
Is the Act adequate?
This begs the question, "Is the Trade Practices
Act adequate?" Not according to the SSA.
"The ACCC has no power to stop these
activities," said Ron Bowden. "But, it does
have the capacity to advise governments
to change the law. The behaviour of the
supermarkets and what they get away with
highlight the inadequacies of the Trade
Practices Act. It is impossible to get a
they are not impressed by the supermarket
"Over the long-term, cross-subsidised
fuel discounts do not support competition
and lower prices," said a spokesperson for
BP Australia. "These kinds of discounts are
not sustainable long-term," said a Caltex
Australia spokesperson. "We did not respond
to the offer because our average retail margin
on fuel is only a few cents per litre and we are
not in a position to offer such discounts."
And, when MotorMouth (www.
motormouth.com.au) asked 1,200 of its
price-conscious website visitors the question,
"Should large supermarket operators be
allowed to offer 40-cpl discounts for spending
large sums in their stores?" nearly 90% said
Should large supermarket operators
be allowed to offer 40-cpl discounts for
spending large sums in their stores?
"From the ACCC's viewpoint we are
interested in the consumer and we want
lower prices for them," said Mr Dimasi. "We
encourage competition, lower prices, specials
and discounts -- they are good things -- they
are what a competitive market provides for
consumers, and we don't want to discourage
Poll period: 1 August 2009 to 31 August 2009-09-04 Copyright © 2009 Informed Sources
(Australia) Pty Ltd A.B.N 85 003 714 332
FUEL PRICES BY REGION
Low High Avg
Low High Avg Low High Avg Low High Avg Low High Avg
Low High Avg
New South Wales
110.9 132.9 120.4 108.9 129.9 119.0 110.7 131.9 120.2 110.7 133.9 122.1 107.9 137.9 124.9 113.9 137.9 125.7
110.9 131.8 122.8 110.9 129.9 121.6 109.9 131.9 122.0 114.9 134.8 124.6 117.5 139.7 128.4 118.9 138.8 129.9
109.9 131.9 119.0 106.9 131.9 117.0 108.9 131.9 120.6 113.9 133.9 12 3.1 112.9 136.9 125.7 118.9 137.9 126.9
116.3 129.9 123.3 114.9 129.9 121.9 111.5 131.9 122.4 115.9 133.9 124.9 112.9 136.9 127.0 120.7 137.9 129.3
111.9 137.9 120.2 109.9 137.9 117.4 10 9.5 135.0 118.1 112.5 139.0 120.2 108.9 139.0 121.9 112.9 139.0 121.5
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