ACCC takes Woolworths, Coles to court

ELI GREENBLAT
Last updated 15:45 25/02/2014

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Australia's competition watchdog has taken Federal Court action against supermarket giants Coles and Woolworths for allegedly breaking promises over fuel shopper dockets schemes.

In December, the Australian Competition and Consumer Commission accepted court enforceable undertakings from Coles and Woolworths to voluntarily limit fuel discounts that are linked to supermarket purchases to a maximum of 4 cents per litre.

The undertakings took full effect on January 1, 2014.

In its latest action, the ACCC alleged that Woolworths' offer of a bundled discount of 8 cents per litre (4 + 4 cents) is a breach of its undertaking because the discount is only available to a customer who has made a qualifying supermarket purchase.

The ACCC alleges that Coles is offering and allowing a bundled discount of 14 cents per litre (10 + 4 cents). As the discount of 14 cents per litre is only available to a customer who has made a qualifying supermarket purchase and because it exceeds 4 cents per litre, the ACCC says Coles is also in breach of its undertaking.

"The ACCC takes alleged breaches of undertakings extremely seriously. Such undertakings are generally accepted by the ACCC as an alternative to the ACCC taking court enforcement action," ACCC chairman Rod Sims said.

Before the deal between the ACCC and both supermarket chains was struck in December, the competition regulator had been investigating the popular fuel shopper dockets for more than a year. Some independent fuel retailers and grocery chains claimed the discount fuel offer was being used to squeeze them out of the market.

The petrol shopper docket discounts, which typically sat at 4 cents per litre but before the December deal were known to spike to between 20 cents and 45 cents, also drew flack from politicians and retailer associations.

Sims has previously spoken out against the shopper docket schemes. Last July, he warned the shopper docket schemes may actually push up the price of petrol and create an unassailable duopoly.

"If these shopper dockets continue at these levels it's going to be very hard for other players to compete, and we may just end up with two players in the country selling petrol, which is not going to be in your interest," Sims told a business lunch at the time.

This morning, Sims said that following an extensive investigation, the ACCC had been concerned that fuel savings offers could have long-term effects on the structure of the retail fuel markets, as well as the short-term effect of increasing general pump prices.

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"It is pleasing that Coles and Woolworths advise that they are honouring their undertakings to fund all fuel discounts from their fuel operations, but we are concerned that the bundled discount offerings in excess of 4 cents per litre are contrary to the terms of the undertakings," Sims said.

"Where there is a dispute between the ACCC and a party which has given a court enforceable undertaking and the ACCC considers that there is non-compliance with the undertaking, as is the case here, the ACCC will take prompt court action to enforce the undertaking."

The ACCC is seeking declarations, costs and other orders.

Directions hearings are set for April 3 in the Federal Court.

In separate proceedings, Woolworths has sought a declaration in relation to a proposed future fuel discount offer, which the ACCC also said it would consider a breach Woolworths' December shopper docket undertaking.

- Sydney Morning Herald

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