ACCC concludes investigation into Armidale fuel prices

18 May 2015

The Australian Competition and Consumer Commission has concluded an investigation into alleged anti-competitive conduct by fuel retailers in Armidale, following concerns raised late last year regarding high petrol prices.

The ACCC did not find evidence of cartel conduct during the course of this investigation and has decided to end its investigation.

Fuel prices in Armidale remained very stable during the first 40 weeks of 2014, and were observed as being higher than nearby towns. As this type of market behaviour can be an indication of underlying cartel conduct, the ACCC undertook an investigation of Armidale’s retail fuel sites.

“The stable pricing behaviour observed in Armidale is unusual and indicated a general lack of competition. This may have been a symptom of collusion amongst competitors or as the result of a number of other market conditions,” ACCC Chairman Rod Sims said.

“In Armidale the most notable factor which could contribute to a lack of competitive pressure on petrol prices is the concentration of ownership across a number of sites.”

“In order to attribute this pricing behaviour to cartel conduct by competitors, there must be evidence of agreements between competitors, and we have not been able to find that here.”

Under direction from the Minister, the ACCC is conducting a series of regional fuel studies. The outcome of this investigation will be considered in that broader context.

Background

Higher prices in regional areas can often be attributed to a lower population and therefore less demand, higher costs for transport and storage, and less demand for the convenience store sales which enable sites to remain profitable with a lower margin on fuel sales.

Under the petrol monitoring Direction launched in December 2014, the ACCC will conduct regional market studies to understand why prices are higher in certain regional locations and to identify and explain each component of the prices paid at the bowser.

The ACCC announced Darwin as the location for the first regional petrol market study on 10 March 2015 and Launceston as the location for the second study. For more information, see:

Release number: 
MR 86/15
Media enquiries: 
Media team - 1300 138 917

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