For the consumer, fuelling up and getting the groceries
are the bare necessities and fuel shopper dockets have been
softening the blow of fuel prices or "a huge help to families
balancing household budgets" as Woolies CEO Grant O'Brien
retorted to the ACCC's latest attack on
What is all the fuss about? Well, its slightly confusing as the
ACCC is canvassing a number of potential competition law breaches
so that whichever way you look at it, the supermarket giants are
ripping everyone off. On the one hand it's alleged they are
engaging in predatory pricing to drive out other petrol pump
competitors by selling petrol below cost. On the other hand the
ACCC is looking into whether the pair have been colluding over
petrol prices. In tandem with this conduct is the jacking up of
grocery prices to make up for the crosssubsidising losses on
petrol. The formula is basically, the more I fill up my trolley,
the more likely I will go fill up at the affiliated pump with my
shopper discount. In other words, the more business I give
ColeWorths in groceries the more business I'll give them in
fuel. It's a no brainer for the mega grocers and its got the
competition watch dog ready to pounce.
Going with predatory pricing, the ACCC will need to prove
ColeWorths is in breach of section 46 of the Competition and
Consumer Act. This means proving that they have substantial market
power or market share; they're selling products below cost for
a sustained period; and they're doing so for the purpose of
driving competitors out of the market.
The ACCC has never won a predatory pricing case. The problem is
that the High Court interprets s46 as meaning that if the alleged
predator's conduct has a business rationale, and it would have
behaved the same way if it didn't have market power, then it
hasn't done anything anti-competitive. The logic being, if
I'm clever enough to compete in a way that gets me more
business I shouldn't be punished if my competitors can't
Game on for Coles and Woolies?
Coles and Woolies have market power, and let's assume
they're selling petrol below cost, but we don't think the
ACCC can say with much confidence that the shopper docket schemes
are devoid of any strategic merit. Even if they didn't have
market power, its likely they would still offer the shopper dockets
because let's face it, it works.
Shopper dockets are over a decade old, and the ACCC knows it
won't win a predatory pricing case over this, so it's kind
of odd that the watchdog is making noise now about a prosecution.
Or is it? With a federal election a month away it's a perfect
opportunity to get up on the soap box and remind the politicians
that it badly wants s46 amended to make it easier to get a win.
Sore losers, we say.
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