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NEWS
Coles and Woolworths come to the party
Supermarkets offer ACCC self-imposed docket discounts of no more than four cents a litreBoth the AAA and the VACC have welcomed an agreement between major supermarket chains, Coles and Woolworths, to limit 'shopper dockets' to fuel discounting of four cents a litre, or less.
But the AAA (Australian Automobile Association ) has warned that the voluntary agreement will be difficult to police, and the VACC (Victorian Automobile Chamber of Commerce) has echoed that sentiment, adding that it will monitor the supermarkets lest they return to the previous price discounting regime. Any breach of the agreed code of conduct will be immediately reported to the ACCC (Australian Competition and Consumer Commission), says the VACC's Executive Director, David Purchase.
"Today Coles and Woolworths have agreed not to use their market power and dominance to unreasonably discount fuel or use their groceries to cross subsidise the fuel discounts," Purchase declared in a press release.
"However, we do not see today's news as the end of the issue. VACC will be watching Coles and Woolworths closely to ensure they adhere to the agreement and hope this will create a more open market in which independent fuel retailers can compete. If competition diminishes businesses will close and fail and competition will be reduced.
"We congratulate ACCC Chairman, Rod Sims, on his strong leadership on this matter and urge him to step in immediately if it looks like there is a breach of the agreement."
In accordance with the agreement, which takes effect from January 1, the supermarkets are not to offer fuel docket discounts in excess of four cents per litre, and those discounts are to be funded out of the budgets of their fuel retailing operations alone. The reason the VACC and the AAA have been concerned by the previous discounting programs offered by the supermarkets is that they argue it erodes the competitive edge of independent fuel retailers.
"The supermarkets have not been providing shopper docket offers as a form of charity but rather as a mechanism to distort the marketplace," AAA Chief Executive Andrew McKellar said in a press release.
"Offers of eight, sixteen or up to forty cents per litre have reduced competition and ultimately it is the customer who ends up paying somewhere else.
"This agreement is a step in the right direction and shows the ACCC can achieve results in the interests of consumers."
78 per cent of motorists obtain fuel discounts with shopper dockets, a survey by the AAA has revealed, but only 42 per cent of motorists believe that they are actually saving money. Referring to that perception, McKellar had some further advice for the two supermarket chains.
"Motorists are smarter than the supermarkets think and they realise that reducing competition will end up costing them money in the long run."
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