ACCC flags action on fuel dockets

The Australian Competition and Consumer Commission boss Rod Sims looks set to take legal action against the two major supermarket chains in an attempt to stop or at least curtail the controversial discount fuel dockets.

He heralded the possibility of taking action when the investigation into petrol dockets is completed in a few months.

If this is just a case of regulator bluff it is not working.

Having publicly reminded (read warned) the supermarket chains twice that these schemes are being being closely examined, the response from Woolworths and Coles has been to increase the size of the discount and the frequency of their use.

The latest offer (albeit a limited one) allows some supermarket shoppers to receive 45¢ a litre off petrol. When Sims started to get worried about the effects of fuel discount dockets the supermarkets were offering just 8¢ off a litre.

"Even at the level of 8¢ it would be difficult to see how an unsubsidised fuel retailer could compete on a sustainable basis," Sims said.

Fuel discounts are a particularly effective way for the supermarkets to entice loyalty and at the same time mine their customers for data.

If they were of only marginal benefit the supermarkets would have ditched them to appease the regulator, which is already fighting the two industry giants on their treatment of suppliers and potential abuse of market power.

The ACCC has always been sensitive to the perceptions of the general public and how the media portrays the effectiveness of its bite. The behaviour of the big supermarket chains is one that has caught the attention of the media and Canberra. Sims has long wanted to make some inroads into curtailing their power.

The treatment of suppliers was the obvious channel but getting them to break ranks and complain publicly has frustrated the regulator's investigation.

The non-supermarket aligned service stations should be another matter entirely. They should be desperate for redress. But they need to be careful given most independent service stations are also hooked up with independent supermarkets to provide some kind of (much smaller) discount.

The noisiest critic has been Metcash, whose new chief executive, Ian Morrice, recently suggested Coles and Woolworths ramped up the price of petrol to make their discounts appear more generous. But getting between consumers and a discount is always a tricky issue for the competition regulator. The possible breaches of competition legislation won't get support from the general public.

Thus the ACCC has to tiptoe around the issues and be doubly sure that the long-term detriment outweighs the short-term benefits.

It has to mount a successful legal argument that discount fuel dockets will retard non-supermarket service stations or smaller independent supermarkets - potentially putting them out of business and thereby reducing competition which would lead to increased prices over the longer term.

"The ACCC has no power to ban shopper docket offers," Sims says. "As an enforcement body, however, the ACCC can investigate market activity and, where appropriate, take court action seeking injunctions to stop the conduct and seeking penalties in appropriate cases."

Sims has certainly turned up the rhetoric - having mentioned it several times before and most recently at the Budget Estimates Committee hearing in February.

Perhaps his statement that the ACCC has no power to ban shopper dockets is a message to the government (whoever they may be by the end of the year) that legislation needs to be toughened.

The ACCC and the supermarkets are engaged in regular discourse (Sims will be seeing Wesfarmers in a few weeks) at which time his concerns about fuel dockets will be made clear. It appears more likely the supermarkets will respond to the challenge and argue their case in court.