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Woolworths slapped for breaching fuel competition rules

Supermarket giant Woolworths has been caught out engaging in anti-competitive behaviour in a new ruling that has given the green light to the bundling of fuel “shopper docket” discounts.

The Federal Court today found that Woolworths had breached a court enforceable undertaking made with the competition watchdog last December to cap fuel discounts linked to supermarket purchases to only 4 cents a litre.

By contrast, the Wesfarmers-owned Coles was cleared of any breach despite offering a total discount of up to 14 cents per litre.

The practice of providing fuel discounts via “shopper dockets” earned at supermarkets has long been a sore point for other independent retailers who argue they are unable to compete on a level playing field.

While Coles and Woolworths entered into the undertaking with the Australian Competition and Consumer Commission (ACCC) last year, both responded by introducing separate schemes in January. This effectively allowed their supermarket customers to continue to claim fuel discounts of well over 4 cents per litre.

The workaround initially saw Woolworths introduce a scheme allowing supermarket customers to claim a total discount of eight per cent at the pump.

Under this arrangement, customers who spent more than $30 at a Woolworths supermarket could increase their normal fuel discount from four to eight cents per litre by spending an additional $5 at a convenience store linked to the retailer’s service stations.

After the ACCC initiated proceedings, alleging the 4+4 per cent discount was contingent on supermarket purchases, Woolworths modified the offer to ensure both discounts were independent of one another.

From March 10, this meant the four cent discount for $5 purchases at service stations was available without a supermarket purchase – although it could still be used in conjunction with one to claim the full eight per cent discount.

By separating the discounts, Woolworths argues it is abiding by the agreement reached with the ACCC in December to limit fuel discounts linked to supermarket purchases to only 4 cents per litre.

In his judgment, Justice Alan Robertson said that Woolworths had acted in breach of the agreement until March 10 this year.

“It follows, in my opinion, that the 8 cents per litre discount on the single acquisition at retail of fuel was contingent on the acquisition of Woolworths supermarket (non-fuel) goods or services since, as a matter of the terms and conditions of the offer, the customer could not obtain that discount absent the customer’s satisfying the prerequisite,” he said.

However, Justice Robertson found that Coles had not breached its undertaking with the ACCC at any time despite the fact that it had offered a 14 per cent discount in total.

Like Woolworths, Coles offered fuel discounts linked to supermarket purchases of four per cent. However, unlike Woolworths, the additional 10 cent  fuel discount available at its “Coles Express” outlets was never contingent on supermarket purchases.

The ACCC was disappointed by the court ruling. It argued that both Coles and Woolworths were still in breach of the agreement because they were still providing discounts of 14 and 8 cents respectively that were contingent on supermarket purchases.

“We are disappointed… that the Court has found that Coles and Woolworths can bundle a supermarket fuel offer with a petrol station offer,” ACCC chairman Rod Sims said.

“We will carefully consider the judgment and its implications for competition in fuel markets and any detrimental price impact on fuel consumers. But it is significant that the undertakings continue to prevent Coles and Woolworths offering fuel discounts that are subsidised by their supermarket operations.”

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Joe Kelly

Joe Kelly

Joe Kelly is a writer for Dynamic Business. He has previously worked in the Canberra Press Gallery and has a keen interest in business, the economy and federal policy. He also follows international relations and likes to read history.

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