{"id":9120,"date":"2013-08-02T14:38:33","date_gmt":"2013-08-02T04:38:33","guid":{"rendered":"http:\/\/blogs.unsw.edu.au\/knowledgetoday\/?p=9120"},"modified":"2013-08-02T14:39:26","modified_gmt":"2013-08-02T04:39:26","slug":"petrol-docket","status":"publish","type":"post","link":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/blog\/2013\/08\/petrol-docket\/","title":{"rendered":"A docket too far"},"content":{"rendered":"

\"\"<\/a><\/strong><\/p>\n

<\/a><\/strong><\/p>\n

Michael Peters<\/strong><\/p>\n

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\n

The duopoly of the retail sector has been the elephant in the room for well over two decades.\u00a0Between them, Coles and Woolworths supermarkets control just over 80% of the grocery market.\u00a0Their foray into the fuel retail sector is no accident.
\n\u00a0
\nIt\u2019s part of a strategy to do to the petrol retail sector what they did to the grocery sector, reduce competition and set the price of fuel.\u00a0The campaign is designed to cement the dominance of the two retailers which they will use to dominant other markets in the future.
\n\u00a0
\nThe Australian Competition and Consumer Commission (ACCC) chairman Rod Sims recently noted that petrol discounts reinforces the perilous state of competition in the petrol and grocery sectors.\u00a0
\nWhen competition fails we all pay at the counter, it has an adverse impact on productivity, on our GDP, on the state of our economy.
\n\u00a0
\nThe two retailers appear to be operating a duopoly straight out of the textbooks.\u00a0They tell their suppliers the price to the terms of credit.\u00a0Their respective control of the supply chain is legendary.
\n\u00a0
\nDespite many Parliamentary enquiries and the well meaning banter from all sides of politics the duopoly continues. Why?
\n\u00a0
\nIf the two retailers can afford to give their loyal customers up to 45cents per litre discount on their fuel purchases, if they purchase well in excess of $50 worth of groceries, how can the retailers afford such a discount?
\n\u00a0
\nWho is paying for the discount?
\n\u00a0
\nIs it the suppliers, the farmers, the customers?
\n\u00a0
\nThis ongoing predatory campaign is more than just helping out struggling Australian families.
\n\u00a0
\nThis is a long term strategy to do to competition in the fuel sector what they have done in the grocery sector.
\n\u00a0
\nThe cross subsidisation of these campaigns may be clever marketing, it\u2019s also hardly in line with the objectives of Australian competition law and unlikely to be for the public benefit in the long term.\u00a0The temporary savings offered to the few, subsidised by the many will lead to an absence of choice and opportunity for most.
\n\u00a0
\nThe campaign is designed to divert customers away from independent petrol suppliers, undermine their viability, and when they disappear we will be assured that it was simple market forces at work. Or was it?\u00a0Within the next five years petrol sites throughout Australia will go through a consolidation process, like it has in Darwin, and we will awaken one day to the fact we have replicated a duopoly from the grocery to the fuel sector.
\n\u00a0
\nIf these were real discounts then the two retailers could perhaps be more transparent as to the real cost of the campaign. Who is paying for the discount and by how much?\u00a0The supermarkets sheer size means that the cross-subsidised predatory nature of the campaign will be effective, as they can spread the cost over thousands of products and millions of sales. Perhaps we will never know.
\n\u00a0
\nWe fill the fuel tank regardless of price. Sure, when it\u2019s more expensive we may only fill half a tank. The reality is that petrol is relatively price inelastic; it\u2019s increasingly a necessity of daily life. Like groceries.\u00a0The current legislation does not provide the ACCC with much. The ACCC cannot ban shopper dockets or petrol discounting unless it\u2019s an abuse of market power.
\n\u00a0
\nHere is an opportunity to send a signal that crossing subsidising to dominate new markets and adversely impact not enhance long term competition is neither seamless nor without scrutiny.
\n\u00a0
\nThe response that the ACCC needs more power to do\u00a0 more than just monitor and report on the petrol price, has been argued for years. In this instance, the depth of the discounts must ring bells of questionable use of market power at the least. The call to apply public policy in an election year cannot be ignore, it\u2019s perhaps a call for \u201cdon\u2019t just stand there do something\u201d.<\/p>\n

Michael Peters<\/a> is a Lecturer in Business Law and Taxation at the Australian School of Business. This opinion piece previously appeared in Australian Financial Review<\/a>.<\/strong><\/em><\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Michael Peters The duopoly of the retail sector has been the elephant in the room for well over two decades.\u00a0Between them, Coles and Woolworths supermarkets control just over 80% of the grocery market.\u00a0Their foray into the fuel retail sector is no accident. \u00a0 It\u2019s part of a strategy to do to the petrol retail sector […]<\/p>\n","protected":false},"author":336,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-9120","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/posts\/9120","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/users\/336"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/comments?post=9120"}],"version-history":[{"count":5,"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/posts\/9120\/revisions"}],"predecessor-version":[{"id":9125,"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/posts\/9120\/revisions\/9125"}],"wp:attachment":[{"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/media?parent=9120"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/categories?post=9120"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/wp-json\/wp\/v2\/tags?post=9120"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}