ACCC allows BP shopper docket scheme to stand

The Australian Competition and Consumer Commission has recently received several notifications* from BP Australia and 35 BP-branded service stations advising that they, in conjunction with Action Supermarkets, have began a 'shopper docket' promotion similar to those currently offered by Woolworths/Caltex and Coles/Shell.

The ACCC has decided to allow the BP notifications to stand.

The promotion offered by BP and Action provides consumers with a discount of 4.0 cents per litre off the price of petrol products from all BP service stations in New South Wales and Queensland once they have purchased at least $30 worth of groceries from a participating Action supermarket.

Earlier this year, the ACCC conducted an extensive review of the tying of petrol discounts to grocery sales by both Coles Myer Ltd and Woolworths Limited. On 6 February 2004, the ACCC issued a report* in which it concluded that the introduction of shopper docket schemes encouraged competition which resulted in lower prices in the fuel market.

Since the time of issuing its report the ACCC has received a further 21 notifications which have come largely from independent or single stand alone sites.

In support of its notification, BP argued, and the ACCC agrees, that their shopper docket promotion scheme is a pro-competitive response to other petrol discount schemes and therefore, consistent with its earlier decisions, the ACCC has decided not to revoke the notifications. The ACCC considers that there are benefits for consumers from shopper docket discounts and that offers of this sort drive competition between the different alignments of supermarkets/petrol retailers.

Background

*The Trade Practices Act 1974 prohibits conduct known as third line forcing. Third line forcing conduct involves the supply of goods or services at a discount on condition that the purchaser acquires a second good or service from another supplier.  While third line forcing is prohibited by the Act, it is able to be "notified".  Notification provides immunity from court action by the ACCC or any other party in respect of the notified conduct, until or unless the ACCC intervenes to revoke that immunity.

Shopper docket discounts are a form of third line forcing which is prohibited under the Act. Immunity can be sought for this conduct by way of the notification process, which requires companies engaging in third line forcing conduct to notify the ACCC of the conduct.

Woolworths began offering discounts at its Woolworths Plus Petrol sites in 1996.  Since then, the ACCC has received a number of notifications from the oil companies, service station operators and independent petrol retailers and grocers who have proposed to provide discounts to consumers across the country. Coles notified the ACCC in July 2003 that it sought to offer its customers at Coles Express petrol sites a discount on condition they had bought $30 of groceries from companies in the Coles Myer group including Coles, Bi-Lo or Liquorland stores.

The ACCC also received a shopper docket notification from Woolworths and Caltex as part of its proposed joint venture, although this notification was subsequently withdrawn following the short term arrangement reached by these parties.  The ACCC was advised by Woolworths and Caltex that in reaching the short term arrangement, it would seek to rely on notifications lodged earlier by Woolworths for discounts offered at Woolworths/Caltex sites.

In assessing any notification, the ACCC had to decide whether it is in the net public benefit to allow that conduct to continue. 

The ACCC issued its report Assessing shopper docket discounts and acquisitions in the petrol and grocery sectors on 6 February 2004.  In the report the ACCC considered that there are substantial benefits for consumers from shopper docket discounts.  These offers are pro-competitive because they drive competition between supermarkets and petrol retailers.  In addition to the effect on price, retailers must become more innovative in non-price factors, such as additional services, to gain or maintain market share.

Although petrol prices in Australia have been increasing in recent times as a result of increasing international crude oil and product prices, price data available to the ACCC indicates that relative to the international price of petrol, prices have been lower since the commencement of the alliance.