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Fuel discounting is killing competition

The Australian Motor Industry Federation (AMIF) today said motorists should enjoy fuel discounts while they could – because within a few short years there will be no independent competitors left to tackle the market power of the two supermarket giants.In backing recent criticism of the discounting activities, AMIF, the national voice of State and Territory Motor Trades Associations and Automobile Chambers of Commerce, said independent fuel retailer members were being driven out of the market and the ultimate losers will be consumers. “The central issue is poor legislation and regulation and the inability of the Australian Competition and Consumer Commission(ACCC) to take action as a result.” said AMIF CEO, Richard Dudley.

Over summer the Federation and its members have again complained to the ACCC over practices it believes is eliminating or substantially damaging independent fuel retailers including:

  • The seemingly never-ending ‘temporary’ ‘double discounting’ shopper docket offer, which started in late October 2011and was extended twice until the end of January 2012;
  • The social responsibility of offering even higher discounts (up to 16 cents per litre) by combining alcohol purchases with fuel purchase; and
  • The apparent cross subsidisation of fuel discounting by increasing the size of the discounts subject to making other purchases from businesses within the two supermarket groups (up to 28 cents per litre in one instance).

“Consumers may benefit from apparent discounted fuel prices for now, but if current trends continue, then in the near future consumers will have no choice other than to fill up their car at sites controlled by only two or three fuel retailing giants, whose market power will determine the price paid at the pump.”

“We have many examples particularly in regional and rural Australia where motorists, once served by up to six or seven usually family operated franchise outlets, now only have the choice of one or the other supermarket giants."

“Hundreds of independent fuel retailers have closed nationwide over the last decade and the remainder are under extraordinary pressure to survive. They cannot compete against the increasing market power of the two dominant supermarket chains, their discounting and cross-subsidisation activities and they cannot speak out in fear of reprisals from fuel suppliers."

“The resulting loss of these independent retailers creates a snowball effect of creeping acquisition by those left in the market and reduced competition, which, ultimately, will cripple this particular small business sector and be to the significant detriment of consumers”.

For further information please contact the Australian Motor Industry Federation (02) 62738222 or 0412 146 828