Supermarket chains to end steep fuel discounts

Supermarket chains Woolworths and Coles will walk away from decades of deep fuel discounts, capping their popular shopper dockets at 4¢ a litre, to avoid a possibly bruising court battle with the competition regulator which it believed it would have won.

Australian Competition and Consumer Commission chairman Rod Sims told BusinessDay the regulator was days away from a meeting at which it was to deliberate whether to launch court action against the supermarkets before a voluntary undertaking was made by the two powerful retailers.

"What we have got here is the end of cross-subsidisation from the supermarkets to their petrol companies," Mr Sims said. "That's what we wanted.

"Our biggest concern was not so much to punish them for the past, but it was to stop the behaviour going forward, and had we gone to court it would have taken a couple of years, and while we were confident we would have won, who knows, it would have been a complex case.

"So when you are presented with an undertaking that gives you what you want, there is no point going to court."

The deal, which follows nearly two years of investigations by the ACCC into the popular fuel shopper dockets scheme, will see Woolworths and Coles from January 1 stop fuel savings offers that are wholly or partially funded out of the pockets of the supermarkets or any other parts of their retail empire.

For consumers it will mean the end of steep fuel discounts as high as 45¢ a litre off the bowser price, with discounts linked to supermarket purchases capped from next year to a maximum of 4¢ a litre.

Mr Sims said the deal was a win for the 80 per cent of Australian consumers who don't use fuel shopper dockets, with Woolworths and Coles still able to discount petrol, but only fund that from their petrol station businesses.

For Woolworths and Coles the decision to make the voluntary undertaking to ring-fence their petrol operations from their supermarkets will place pressure on the combined $1.3 billion annual petrol revenue they take in from their 1300 branded petrol stations.

A spokesman for Coles said the retailer would continue to offer 4¢-a-litre discounts to its supermarket customers, with the chain also offering an 8¢ deal.

Coles boss Ian McLeod said the supermarket firmly believed there was no breach of law from any of its fuel deals, but it did recognise the concerns expressed by the ACCC that there could be adverse competition effects over time.

Woolworths, which has offered petrol discounting for 16 years, also said it would continue to offer a 4¢ discount offer, as well as an 8¢ offer when shoppers spend $5 on merchandise at its petrol sites.