The Australian Competition and Consumer Commission has instituted proceedings in the Federal Court of Australia against Informed Sources (Australia) Pty Ltd (Informed Sources) and several petrol retailers alleging that they contravened section 45 of the Competition and Consumer Act 2010 (the Act).
The ACCC alleges that the information sharing arrangements between Informed Sources and the petrol retailers, through a service provided by Informed Sources, allows those retailers to communicate with each other about their prices, and that these arrangements had the effect or likely effect of substantially lessening competition in markets for the sale of petrol in Melbourne.
Subscribers to the Informed Sources service provide pricing data to Informed Sources at frequent, regular intervals and in return receive from it collated data from the other subscribers, and various reports containing pricing information across particular regions.
The petrol retailers who are joined in the ACCC’s proceedings are:
- BP Australia Pty Ltd
- Caltex Australia Petroleum Pty Ltd
- Eureka Operations Pty Ltd (trading as Coles Express)
- Woolworths Ltd
- 7-Eleven Stores Pty Ltd.
“The ACCC alleges that the arrangements were likely to increase retail petrol price coordination and cooperation, and were likely to decrease competitive rivalry,” ACCC Chairman Rod Sims said.
“Given the importance of price competition in petrol retailing, the ACCC is concerned that consumers may be paying more for petrol as a result.”
“The ACCC alleges that fuel retailers can use, and have used, the Informed Sources service as a near real time communication device in relation to petrol pricing. In particular, it is alleged that retailers can propose a price increase to their competitors and monitor the response to it. If, for example, the response is not sufficient, they can quickly withdraw the proposal and may punish competitors that have not accepted the proposed increased price,” Mr Sims said.
The ACCC alleges that petrol retailers that subscribe to the Informed Sources service use the service to exchange information on the price they each offer at their petrol stations on a private and near real-time basis. The exchange of this information allows retailers to monitor and respond to each other’s prices and observe and analyse the pricing behaviours and strategies of their competitors. The Informed Sources service covers most capital cities and many regional centres across Australia.
Given the importance of price competition in petrol retailing and the reliance placed on the Informed Sources service by the major petrol retailers in setting prices, the ACCC alleges that the arrangements have had the effect or are likely to have had the effect of substantially lessening competition.
The competition provisions of the Act prohibit contracts, arrangements or understandings that have the purpose, effect or likely effect of substantially lessening competition.
The proceedings follow an extensive investigation by the ACCC into price information sharing arrangements in the retail petrol industry.
The ACCC is seeking declarations, injunctions, pecuniary penalties and costs.
This matter is listed for a directions hearing in Melbourne on 26 September 2014.
Photo credit: Michael Welsh