Coles and Woolworths to cease supermarket subsidised fuel discounts

The ACCC has today accepted undertakings from each of Coles and Woolworths that they will each voluntarily cease making fuel saving offers which are wholly or partially funded by any part of their business other than their fuel retailing business, and will in addition limit fuel discounts which are linked to supermarket purchases to a maximum of 4 cents per litre.

The ACCC has been conducting an investigation into whether fuel saving offers issued by major supermarket chains (sometimes referred to as “shopper dockets”) were causing a substantial lessening of competition in markets for the retail sale of fuel.

The Chairman of the ACCC, Rod Sims, said today: “I welcome the voluntary cooperation of each of Coles and Woolworths in addressing our concerns, particularly as they each maintain that none of their fuel saving offers breaches the Act.”

“The ACCC’s investigation was nearing completion and although we had yet to make a decision in the matter, our investigation had caused us to consider the competition effects arising from the fuel saving offers. We had focussed on the offers by the major supermarket chains of fuel discounts of 8 cents per litre, which were made for sustained periods during 2012 and 2013, and we were concerned that those 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.”

“We’ve accepted the undertakings because they address the ACCC’s principal competition concerns and allow the matter to be resolved quickly and efficiently.”

Some fuel retailers had complained that they simply could not afford to match the supermarkets’ fuel discounts of 8 cents or more, because those discounts were being funded from markets that were separate and unrelated to the fuel retailing markets. By removing the funding by supermarkets and limiting the supermarket offers to a maximum of 4 cents per litre, the ACCC considers that other fuel retailers will be able to compete on a more level playing field.

The key aspects of the undertakings include:

  • Coles and Woolworths may continue to offer fuel saving offers to their supermarket customers, but any discounts on fuel offered to supermarket customers from 1 January 2014 are not to exceed 4 cents per litre;
  • at their service stations, Coles and Woolworths may still offer discounts on fuel (including discounts in excess of 4 cents per litre), but from 1 January 2014, all fuel discounts (including those offered by the supermarkets) must be funded from within their fuel retailing operations (including associated convenience stores and other activities at their service stations).

The ACCC remains concerned about any other fuel discount offers funded by non-fuel retailing operations and any other fuel discount offers above 4 cents per litre which are conditional on purchases of goods or services (other than purchases at the petrol outlet). It will assess the lawfulness of any such offers made by other parties and take appropriate action to deal with any traders it considers are engaging in anti-competitive conduct.