The Australian Competition and Consumer Commission has instituted proceedings in the Federal Court against Coles and Woolworths for allegedly breaching the court enforceable undertakings each provided to the ACCC in relation to their fuel shopper 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.
On 6 December 2013, the ACCC accepted court enforceable undertakings from Coles and Woolworths to voluntarily limit fuel discounts that are linked to supermarket purchases to a maximum of 4 cents per litre. The undertakings took full effect on 1 January 2014.
The ACCC alleges that Woolworths’ current offer of a bundled discount of 8 cents per litre (4 + 4 cents) is a breach of its undertaking because the discount is only available to a customer who has made a qualifying supermarket purchase.
The ACCC alleges that Coles is offering and allowing a bundled discount of 14 cents per litre (10 + 4 cents). As the discount of 14 cents per litre is only available to a customer who has made a qualifying supermarket purchase and because it exceeds 4 cents per litre, the ACCC alleges that it is a breach of Coles’ undertaking.
“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.
“Where there is a dispute between the ACCC and a party which has given a court enforceable undertaking and the ACCC considers that there is non-compliance with the undertaking, as is the case here, the ACCC will take prompt court action to enforce the undertaking.”
The ACCC is seeking declarations, costs and other orders.
In separate proceedings, Woolworths has sought a declaration in relation to a proposed future fuel discount offer, which the ACCC also considers would breach Woolworths’ undertaking.
Directions hearings for the ACCC action against Coles and Woolworths are set for 3 April 2014 in the Federal Court Sydney.