Offered the chance to save 45 cents a litre on petrol, few drivers are going to turn it down. However, the Australian Competition and Consumer Commission (ACCC) argues that those shopper docket discounts are actually damaging to petrol prices in the long term.
Petrol picture from Shutterstock
Speaking at a business lunch in Melbourne yesterday, ACCC chairman Rod Sims explained what the potential issue is:
Our concerns have been intensified by the expanded use of shopper docket and other discounts by both Coles and Woolworths recently. These have varied in level of discount, frequency and duration, and have now reached up to 45 cents per litre. While large shopper docket discounts provide short term benefits to some consumers, the likely harm to other fuel retailers and therefore to competition and the competitive process for petrol retailing could well be substantial. Even at the level of eight cents, it would be difficult to see how an unsubsidised fuel retailer could compete on a sustainable basis. Now, the discounts are substantially higher. If Coles and Woolworths wish to offer their customers a discount, it should be off supermarket products, not petrol. The ACCC believes this activity is likely to have a negative effect on competition in the petrol industry. Over time, higher petrol prices could be the result.
In other words: too many discounts could drive everyone other than Coles and Woolworths-backed outlets out of business, at which point they could charge whatever they liked.
Despite that logic, I can’t imagine many people turning down a shopper docket on principle. Plenty of people are vocal in their criticism of the dominance of Coles and Woolworths and their potential impact on local suppliers. In practice, though, we’re more than happy to buy store brands when they’re cheaper.
It’s a tricky area for the ACCC, since it can’t ban the issuing of shopper dockets. It has been investigating whether these represent an abuse of market power since last year, and says it will report by the end of this year. The two supermarket giants are subject to scrutiny in several other areas, including presenting vegetables as Australian-sourced when they weren’t and claiming goods were baked fresh in store when they were imported and reheated.