The Australian Competition and Consumer Commission* has expressed concerns about multiple site franchising in the petrol industry.
"The ACCC has been examining the moves by Shell and Mobil to introduce multiple site franchising systems into the industry, whereby one franchisee would operate a number of retail sites, which in Shell's case may be up to 30 sites," ACCC Chairman, Professor Allan Fels, said today.
" The ACCC considers that the arrangements will result in a substantial increase in concentration of retail sites particularly in metropolitan areas, which whilst possibly generating some operational efficiencies as claimed by the companies, also raise significant potential anti competitive implications.
"Neither Shell nor Mobil has applied for authorisation from the ACCC to demonstrate that the public benefits flowing from these efficiency gains would outweigh their anti competitive effects.
"The arrangements have generated considerable community interest, including the request for the ACCC's assessment of this issue. The ACCC considers it desirable to publicly announce its stance.
"After giving Shell's and Mobil's multiple site franchising arrangements careful consideration, the Commission obtained advice from Senior Counsel on the possible application of the Trade Practices Act 1974 to the arrangements.
"That advice provides the ACCC with a basis to have serious concerns that the arrangements could involve a number of contraventions of the Act.
"The ACCC's concerns are not confined to the multiple site franchising arrangements but extend to and are coupled with arrangements for provision of pricing support to multiple site franchisees, the exclusive dealing arrangements for supply of motor fuel, and possible unconscionable conduct in relation to termination of certain single franchise agreements.
"The ACCC has written to Shell and Mobil expressing its concerns about the apparent contraventions of the Act involving these arrangements, and has requested a response from the companies on its concerns.
"The ACCC will consider what, if any, action it should take on this matter following an assessment of the responses it receives from Shell and Mobil.
"It will also continue to discuss the issue with other participants in the industry such as resellers."
