7 August 2007
United Petroleum has called for the ACCC to act to save Australian motorists from an increasingly uncompetitive retail market.
United Petroleum is Australia's largest independent petrol retailer and operates nationally. United purchases its petrol supplies from the major oil companies and resells it to the public, through a network of some 200 United Branded locations. United is an independent fuel discounter and has introduced petrol discounting in numerous country markets.
United Petroleum believes that the substantial divergence between movements in domestic petrol prices and movements in the international benchmark price for refined petrol that the ACCC detected, is a symptom of an industry out of balance with falling levels of retail competition. One of the main reasons the industry is out of balance is the uneven playing field that the Shopper Docket has created.
In a submission to the ACCC United has warned that the introduction of the Shopper Docket by Woolworths and Coles has in fact delivered higher prices to motorists. The current ACCC inquiry into the price of unleaded petrol has been sparked by reduced levels of retail petrol competition, which can be attributed directly to the introduction of Shopper Dockets. David Szymczak said today, "I am confident that the ACCC are taking a very close look at Shopper Dockets and the anti-competitive outcomes they have delivered to the consumer. It is the classic two card trick, increase the discounts on the Docket and at the same time lift the Petrol Board Price".
The introduction of Shopper Dockets have:
- Resulted in higher prices for consumers for petrol and groceries.
- Reduced the importance of the price board price (ie. The price on the board may not be the price you pay, consumers are less able to compare).
Many small independents have left or are leaving the market, those remaining are increasingly less able to compete. Coles and Woolworths have used 12 cpl Shopper Dockets as a predatory tool against other market participants.
This has massively reduced the incentive for market participants to vigorously drop the board price as so many consumers are locked into Shopper Dockets.
Coles and Woolworths unquestionably dominate the retail petrol market.
Coles and Woolworths continue to build market share via creeping acquisition.
The bundling of essentially unrelated products (groceries and petrol) in two increasingly oligopolistic markets is a recipe for decreasing levels of competition in both markets. In order to restore strong competition in the retail petrol market the ACCC must take steps to even up the playing field.
United propose the following measures:
- Remove or restrict the impact of the Shopper Docket.
- ACCC to determine that the Shopper Docket is no longer in the public interest and remove its support of the scheme and commence the enforcement of third line force provisions of the Trade Practices Act.
OR
- Restrict the discount to such a level that it cannot be used as a predatory pricing tool. For example put a cap on the discount to 4 cpl or 2 cpl in total including other non price board discounts
AND/OR
- Restrict the acceptance of the Shopper Docket to a 1 km zone from the issuing supermarket store.
- Increase transparency of the petrol price to consumers.
- Regulate standards for price boards such that the price boards only display the price applicable to all customers.
- The current practice of displaying a discounted price can be confusing and at times misleading to consumers.
- Restrict the site numbers or market share of the supermarkets.
- Restrict the ability of the Supermarket competitors to continue to increase their stranglehold on the retail petrol market by creeping acquisition. This could be achieved by setting a maximum market share percentage or maximum site number allowed by Supermarket market participants.
- Open up the liquor market to allow sales through retail petrol sites.
- Encourage the various Liquor licencing agencies to open up the sale of liquor through convenience stores. Clearly the sale of Liquor through service station convenience stores is a more controlled environment than Drive-through Bottle Shops and special age checking procedures could be put in place.
This initiative would increase the scope of the other Retail Petrol market participants to compete with the Supermarkets, and assist independents and others become less reliant on petrol volumes. It will also open the liquor market up to increased competition at the same time.