Service Station Operators Disappointed with Government Action to Repeal Petroleum Legislation

The Motor Trades Association of Australia, which represents service station operators, is extremely disappointed that the Government has introduced legislation to repeal two long-standing Acts which provide rights and protections to service station operators, particularly franchisees, in their dealings with oil companies.

The Government proposes to repeal the Petroleum Retail Marketing Sites Act 1980, which limits the number of retail outlets an oil major can directly operate, and the Petroleum Retail Marketing Franchise Act 1980, which provides franchisees with tenure and other rights relating to their franchise arrangements. The Government proposes to replace the two Acts with a mandated code of conduct for the oil industry. Service station operators believe that the proposed code is defective because it will not ensure a level playing field that will allow small service station operators to be able to compete fairly in the market with the large supermarkets and oil companies.

The outcome of the Government’s proposed changes will be:

• the closure of more small franchised and independent retail outlets – meaning in rural and regional areas, in particular, motorists will have to drive longer distances to obtain fuel;
• increased dominance of the retail petroleum market by the two supermarket chains;
• loss of competition in the retail and in the wholesale market as independent importers will struggle to find sufficient retail outlets necessary to sustain a viable import business; and
• detrimental to motorists in the longer term as smaller competitors exit the market and the large chains gain a greater share of the retail petrol market leading to less price competition.

Service station operators wonder where the benefits to motorists and the Government are in these proposed reforms? The only winners here would seem to be the oil majors and the two supermarket chains.

It is unfortunate that the Government is proposing these reforms at a time when the misuse of market power provision in the Trade Practices Act has been found to be deficient and when small business believes that the Government’s proposal to amend that part of the Trade Practices Act is thought not to be sufficient to address concerns about the misuse of market power provision.

A copy of MTAA’s booklet, ‘The Australian Oil Industry’, which discusses the Government’s proposed changes is attached.

For further information contact Michael Delaney or Sue Scanlan at MTAA on 02 6273 4333