Petrol wars and predatory pricing – the
ACCC’s latest rant on the mega grocer
duopoly
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 ColeWorths.
Anti-competitive conduct
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 keep up.
Michael Bradley
Managing Partner
+61 2 8216 3006
[email protected]
Kiran Bath
Lawyer
+61 2 8216 3084
[email protected]
Marque Lawyers Pty Ltd
Level 4, 343 George St
Sydney NSW 2000
Ph: +61 2 8216 3000
Fax: + 61 2 8216 3001
www.marquelawyers.com.au
Continued...
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.
Questions? Give us a call.
Marque Lawyers Pty Ltd
Level 4, 343 George St
Sydney NSW 2000
Ph: +61 2 8216 3000
Fax: + 61 2 8216 3001
www.marquelawyers.com.au
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