Proposal to authorise big box retailers to negotiate for cheaper electricity prices

20 September 2019

The ACCC has issued a draft determination proposing to authorise members of the Large Format Retail Association (LFRA) to jointly tender and negotiate with electricity suppliers for cheaper power prices.

The ACCC has also granted interim authorisation to the LFRA, allowing members to begin the initial stages of the tendering and negotiation process while the ACCC completes its assessment.

“LFRA and its members want to jointly tender so they can pay less for their electricity,” ACCC Commissioner Stephen Ridgeway said.

“We propose to allow this joint tendering because we expect it will lead to more competition between suppliers for the group’s combined electricity demand.”

“Collectively tendering is also likely to save the retailers time and money compared to individual negotiations for electricity supply,” Mr Ridgeway said.

The arrangements are unlikely to cause any significant public detriments, given participating LFRA members’ aggregate demand for electricity is a very small proportion of total electricity consumption of electricity in each State and Territory.

The ACCC’s authorisation would also allow LFRA to add new members to the group in future, provided the total demand of the group does not exceed one per cent of the annual consumption of electricity any state or territory.

The ACCC’s draft determination is available at: Large Format Retail Association.

Background

The Large Format Retail Association is the national peak industry association for Australia’s large format retail sector, otherwise known as ‘big box’ retail. Big box retailers are stores that occupy a large physical footprint, offer a wide variety of products, often sold in bulk. Big box retailers in Australia include Ikea, Costco, Bunnings Warehouse and Officeworks.

There are 41 current members of the proposed joint tendering group, including retailers, owners, developers, investors and service suppliers in the big box retail sector. These businesses compete with each other, meaning collective tendering would be a breach of the Competition and Consumer Act 2010 (CCA) without authorisation.

Authorisation provides statutory protection from court action for conduct that might otherwise raise concerns under the competition provisions of the CCA.

Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment.

Release number: 
172/19
ACCC Infocentre: 

Use this form to make a general enquiry.

Media enquiries: 
Media team - 1300 138 917

Tags

Audience
Topics