Tony O'Kane | Jul 23, 2009

AUSTRALIA'S CONSUMER WATCHDOG, the ACCC, has ruled that the heavy discounts on petrol recently offered by Coles and Woolworths weren't anti-competitive, and that neither company breached the Trade Practices Act.

Last week both supermarket retailers offered up to 40 cents per litre off fuel purchased at affiliated petrol stations to customers who spent up to - or over - $300 in a single transaction.

Both offers were only available for a limited time, however many said that the practice of heavy fuel discounting would squeeze independent fuel stations and supermarkets out of business as shoppers flocked to the big chains to take advantage of the offers.

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"After considering the Coles and Woolworths discount schemes we have formed the view that these one-off promotions do not breach the Trade Practices Act," Joe Dimasi, the ACCC's Petrol Commissioner said in a statement.

"A one-off promotion of this nature results in a short term discount for consumers. For most consumers the discounts will only apply to one weekly or fortnightly shop and to one tank of fuel.

"Metcash, the major wholesale distributor to independent supermarkets, also offered equivalent discounts to consumers.

"This shows us that other players in the market have the ability to match the short term competitive pressures of companies such as Coles and Woolworths. This is competition operating in the interests of Australian consumers."

However the practice of heavy fuel discounts is regarded by many as simply predatory pricing. David Purchase, Executive Director of the Victorian Automobile Chamber of Commerce said last week that smaller operators simply could not compete with the big chains.

"They do not stock the thousands of grocery items to subsidise a 40 cpL discount. Most small independent service station owners are only surviving by the skin of their teeth and this discount price war has the potential to tip many over the edge," Mr Purchase said.

"It is impossible for small independent fuel retailers to ‘match’ this level of discounting and remain in business."

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