Federal Court Rules on ACCC Dispute About Petrol “Bundled Discounts” by Woolworths and Coles
Tuesday 22 April 2014 @ 11.54 a.m. | Trade & Commerce
In the wake of rising petrol prices, the Australian Competition and Consumer Commission (ACCC) has been pursuing Court action against both Coles and Woolworths in the Federal Court, alleging the big supermarkets had breached an undertaking not to offer petrol discounts over 4c per litre. Last week, judgments were handed down in Australian Competition and Consumer Commission v Woolworths Limited [2014] FCA 364 (the Woolworths judgment) and Australian Competition and Consumer Commission v Coles Group Limited [2014] FCA 363. Justice Robertson, who heard both proceedings, found that Coles had not breached the undertaking. He found that Woolworths had breached the undertaking in 1 of the 2 offer periods in question.
The Undertaking
Both Coles and Woolworths were bound by the relevant undertaking, which they had given to the ACCC under s 87B of the Competition and Consumer Act 2010 (Cth). The provision being considered in the Woolworths judgment was as follows:
(10) Woolworths undertakes for the purposes of section 87B of the Act, that from the Commencement Date, it will not, and will ensure that its subsidiaries do not:
(a) make any offer pursuant to which a person may obtain a discount on their acquisition at retail of petrol, diesel or LPG; or
(b) allow any discount to a customer on their acquisition at retail of petrol, diesel or LPG,
where the discount is:
(c) funded in whole or in part (and whether by way of cents per litre or product contribution) by any division or subsidiary of Woolworths other than Woolworths Petrol Division; or
(d) on any single acquisition greater than 4 cents per litre (or the equivalent of greater than 4 cents per litre) and contingent on the past or future acquisition of other goods or services (except goods or services acquired from a petrol station operated by Woolworths Petrol Division, or from a petrol station from which Woolworths Petrol Division sells fuel, or from a business physically located and operated in conjunction with the petrol station (such as a convenience store, car wash, or fast food outlet)).
The Coles undertaking was in similar terms.
The Offers
Woolworths’ first offer operated between 1 January 2014 and 9 March 2014. It offered a saving of 4c off fuel where the customer spent a “qualifying amount” (which varied) at a supermarket. It also made an “extra 4c offer” where the customer had spent this qualifying amount and then spent $5 or more on in-store items at the petrol outlet.
Woolworths’ second offer operated after 10 March 2014. It offered the same saving of 4c off fuel where there customer spent a qualifying amount at a supermarket. However, the in-store discount was changed, so that any customer who spent a qualifying amount at a petrol outlet would receive a 4c/litre discount. Advertising and the conditions on the receipt made it clear that this could add to an 8c/litre discount in total, but the offers could be redeemed separately.
The Coles’ offer in question was also made of two separate discounts. Coles Express petrol stations between 6 February 2014 and 5 March 2014 offered savings of 10c per litre if $20 were spent in-store. However, this discount could be combined with a 4c/litre discount from making a qualifying purchase at Coles Supermarkets, which would mean the customer received a total of 14c/litre in discounts.
Decision
His Honour had to consider in these cases whether this “bundling” was within the terms of the undertaking. He found that:
"the central question is whether the discount was contingent on the past acquisition of other goods or services from (Woolworths) supermarkets within the meaning of paragraph (10)(d)"
(Emphasis added, at [41] of Woolworths).
He found that only the first Woolworths offer breached the undertaking, because it was an “essential condition” that to qualify for the extra 4c/litre discount, a purchase needed to be made at a Woolworths supermarket. Although, in the other instances the full discount could not be reached without making a supermarket purchase, all the components in the offers could be individually accessed without making such a purchase.
Reaction
A statement from Coles reported by ABC News that said the decision was “a win for its customers”:
"All we were trying to do was bring together two separate offers that the ACCC was happy with individually and allow customers to use them together for maximum value and convenience…We are pleased that the court has agreed with us."
ABC News also reported that Woolworths “has welcomed the “clarity” created by the court’s decision”, saying that the offer that was ruled to breach the undertaking had been replaced by the new offer that was found not to be in breach.
ACCC chairman Rod Sims was “disappointed… that the Court has found that Coles and Woolworths can bundle a supermarket fuel offer with a petrol station offer” and said it would “consider the judgement and its implications for competition in fuel markets and any detrimental price impact on fuel consumers”. However, he re-iterated that the undertakings are playing a significant role by preventing the supermarkets from entirely subsidising these discounts.
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Sources:
Australian Competition and Consumer Commission v Woolworths Limited [2014] FCA 364
Australian Competition and Consumer Commission v Coles Group Limited [2014] FCA 363
Woolworths found to have breached ACCC fuel dockets deal (Amy Bainbridge, ABC News, 14/04/14)
