Coles' petrol pricing under ACCC scrutiny

Date
    May 12, 2016
    Sydney Morning Herald

The ACCC is checking on petrol prices at Coles Express after reports the retailer is using higher pump prices to subsidise grocery discounts.   :(

The Australian Competition and Consumer Commission is watching petrol prices at Coles Express amid claims the retailer is subsidising grocery discounts by charging higher prices at the pump.

Chairman Rod Sims said the ACCC was looking at reports that Coles Express fuel prices were  2¢ to 3¢ a litre higher than average market prices and the extra profit margin was being used to bolster earnings in Coles' food, liquor and convenience store business as the retailer reduced grocery prices.

"We do keep a close eye on these things," Mr Sims told Fairfax Media on Thursday.

"There's some sense that rather than reducing petrol prices they are, if anything, doing the reverse at the moment. What we're seeing rather anecdotally is consistent with the Deutsche Bank report. But it's too early to tell."


In a recent report, Deutsche Bank analyst Michael Simotas said Australian Institute of Petrol data suggested retail fuel prices had fallen 7 per cent on a year-on-year basis in the March quarter, but Coles' sales implied that its prices had fallen only 2.6 per cent.

Mr Simotas estimated that Coles' premium prices could boost margins in its food, liquor and petrol business by 12 to 34 basis points or $22 million to $65 million in the June half, depending on whether the petrol price gap was maintained, countering the impact of increased investment in grocery prices.

"We believe this tailwind, combined with operating leverage from strong like-for-like sales growth in supermarkets, should provide Coles with the firepower it needs to continue to invest heavily in prices while maintaining or continuing to grow food and liquor and petrol margins [and keeping the pressure on Woolworths]," Mr Simotas said.

Mr Sims said the ACCC needed to establish whether Coles' above-market pricing was a short-term or long-term strategy and analyse the response from competitors.

"It's very unlikely to be a breach of the act, but it is a concern if it leads to consumers paying more for fuel," he said. "We don't yet know if it's a blip and whether others will follow."   

Mr Sims said the ACCC monitored fuel prices in conjunction with the major fuel and grocery retailer's financial data.

"We'll be able to shed more light on it when we look at that as well," he said.

Coles' prices have been harder to track since the retailer stopped providing data to fuel-monitoring service Informed Sources last month as part of an undertaking to the Australian Competition and Consumer Commission (ACCC).

However, petrol pricing will become more transparent later this month, when Informed Sources starts providing data to third parties, some of whom are expected to use the information to develop new petrol price comparison apps.

Coles declined to comment.

Mr Simotas says Coles' petrol pricing strategy is a deviation from Wesfarmers' highly successful strategy of driving sales growth through value and allowing operating leverage (rather than price rises) to boost margins, and could be unsustainable if Coles starts to lose market share in petrol.

In the three months ending March, Coles' fuel volumes fell 10.1 per cent on a comparable store basis, while Woolworths' comparable petrol volumes fell 3.2 per cent.

In December 2013 Coles and Woolworths avoided legal action by reaching an agreement with the ACCC to cap fuel discounts linked to supermarket purchases to 4¢ a litre and to stop subsidising fuel discounts with profits from food and liquor.

The worse thing that ever happened to the fuel industry was tight arse dickheads and the imaginary savings they think they get from shopper dockets.

Oohh looky looky I've got a docket and I'm going to save four cents ... F$%K off idiot!

innocentbystander. wrote on May 13^th, 2016 at 7:50am:

The worse thing that ever happened to the fuel industry was tight arse dickheads and the imaginary savings they think they get from shopper dockets. Oohh looky looky I've got a docket and I'm going to save four cents ... F$%K off idiot!

For people who can't do maths.

The market will sort it out.  In my area, the BP station is cheaper than even discounted petrol from coles for many weeks.  So naturally just fill from BP instead.  And the coles station had been very quiet recently. 

tickleandrose wrote on May 13^th, 2016 at 8:51am:

The market will sort it out.

Didn't think you would be the free market type, more like the the Crook sort that thinks only an army of useless government bureaucrats can fix it.   :D

innocentbystander. wrote on May 13^th, 2016 at 9:14am:

tickleandrose wrote on May 13th, 2016 at 8:51am: The market will sort it out.   Didn't think you would be the free market type, more like the the Crook sort that thinks only an army of useless government bureaucrats can fix it.   :D

I am quiet consistently center of politics. 

Conservatives are not good at math when they are wearing shoes. They need help.

I always check prices and take the lowest after calculating in the 4c discount or whatever.  In this region there's not much difference between base prices, so it rarely matters anyway.

tickleandrose wrote on May 13^th, 2016 at 8:51am:

The market will sort it out.  In my area, the BP station is cheaper than even discounted petrol from coles for many weeks.  So naturally just fill from BP instead.  And the coles station had been very quiet recently.

;D ;D Everywhere I go BP are the dearest thieving bastards of them all ... shopper dockets or not.

Shopper dockets are a con

dumb people fall for it

and aren't there some dumb people

The ACCC are tothless tigers that have not up to this point in time done anything about petrol price collusion

and ripping us off at the bowser on a daily basis.

The price of a barrel of oil goes up & a price hike is reflected at the bowser almost immediately.

The price of a barrel of oil plummets to less than US$40 a barrel & it takes weeks for a trickle down reduction
that never goes under a AU$1.00

Oil companies are lying thieving bastards.

Fire bombing selected servos would be far more effective than the ACCC.

yeah.. spend $75 on fuel and save .60 cents with a shoppers docket..

its gweat..  :D :D :D :D :D :D

and the fuel is also watered down..  ::)

tickleandrose wrote on May 13^th, 2016 at 9:22am:

innocentbystander. wrote on May 13th, 2016 at 9:14am: tickleandrose wrote on May 13th, 2016 at 8:51am: The market will sort it out.   Didn't think you would be the free market type, more like the the Crook sort that thinks only an army of useless government bureaucrats can fix it.   :D I am quiet consistently center of politics.

Anything left of bolt is a leftard. Sorry to break it to you.