Metcash boss takes shot at supermarkets over fuel discounts

The new boss of Australia's biggest grocery wholesaler, Metcash, has attacked the fuel discounting strategies of supermarket heavyweights Woolworths and Coles, suggesting the two were ramping up bowser prices to make their discounts appear more generous.

The new boss of Australia's biggest grocery wholesaler, Metcash, has attacked the fuel discounting strategies of supermarket heavyweights Woolworths and Coles, suggesting the two were ramping up bowser prices to make their discounts appear more generous.

Ian Morrice's comments come at a sensitive time with the shopper docket marketing scheme under investigation by the competition regulator.

"What we see as unfair about that is the price of petrol has been increasing and as that price of petrol increases then shortly afterwards a very large docket scheme gets put out there by the supermarkets," Mr Morrice said.

"The coincidence between petrol prices going up and followed shortly after by very large discounts on fuel is at a time when they [Coles and Woolworths] own the fuel distribution and they own the supermarkets - that's the issue."

Speaking to BusinessDay along with retiring Metcash chief Andrew Reitzer, Mr Morrice said the control of petrol distribution by the big retailers meant independent supermarket chains, such as those that operate under Metcash's IGA banner, were facing the supermarket giants with one arm tied behind their back.

"It's definitely against my sense of fair competition and that of individual business people who are quite prepared to go out and compete on a level playing field."

The pair were on the Gold Coast this week for IGA's annual convention, which brings together hundreds of independent supermarket owners. Independent retailers have watched petrol prices rally to as high as $1.70 a litre, robbing customers of disposable income, only to see Woolworths and Coles use their deep pockets to fund shopper discount schemes.

Coles has an offer in the market as high as 40¢ a litre discount for selected FlyBuys shoppers, while Woolworths has had a range of shopper docket discounts of between 16¢ and 45¢ a litre.

The deals require shoppers to spend between $30 and more than $200 to receive the discount.

Mr Reitzer, who will retain a consultancy role with Metcash, also criticised the creeping power of the supermarkets and their canny use of petrol and groceries together to squeeze competition.

"What you have in Australia is a regulation that allowed the two biggest retailers in the world from a concentration level that bank something like 23¢ in every dollar spent in the country - doesn't happen anywhere else - to then use that power to acquire power in the petrol market," Mr Reitzersaid. "Now they have done it and everyone has stood back and let them do it, now you see unrealistic petrol prices and then all of a sudden a 40¢ discount offer is there."

The Australian Competition and Consumer Commission is investigating the use of the shopper docket schemes, and Mr Reitzer said Metcash had supplied information to the regulator to prove its case. But the ACCC has conceded in some reports petrol prices are linked to global prices and the exchange rate.

A spokesman for Coles said fuel dockets had been in Australia for years and were used by many grocery retailers and fuel operators, including many of Metcash's IGA stores.

"There is no link between the level of discount offered by Coles and the increase in petrol prices experienced by most of the country last week."

A spokeswoman for Woolworths said the retailer had been offering petrol discounts for 17 years.

The reporter was flown to Queensland courtesy of Metcash.

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