BP/Woolworths deal sparks competition concerns

Master Grocers Australia (MGA) has written to the ACCC, expressing concerns about BP’s proposed acquisition of Woolworths’ network of service stations and calling for the Commission to protect the interests of small businesses against any future anti-competitive activity.

MGA CEO Jos de Bruin notes that a consequence of the acquisition is that BP is seeking to enter a partnership with Woolworths in respect of the retailer’s loyalty program and shopper-docket discount scheme.

“BP, and Woolworths as the retailer, will together have the ability to enter into arrangements that relate to fuel discounts that will be passed on to consumers under the Woolworths loyalty program and the shopper-discount scheme,” he said. “While the shopper-docket scheme may appear to have some competitive benefits for the consumer, MGA is conscious of the potential danger for anti-competitive consequences for smaller grocery retailers generally.”

According to Mr de Bruin, there has been relative calm over the continued use of shopper-discount benefits for consumers since the “shopper-docket wars” in 2013.

“At that time, there was great concern about the link between the sales of goods in supermarkets and the sale of petrol in service stations,” he said. “The discounts were initially around 4 cents a litre, but that gradually increased – in many cases to a much higher amount, causing considerable market distortions. What might have seemed, in some cases, to be beneficial to consumers was in fact destructive for many small retailers in Australia.”

Mr de Bruin says BP’s acquisition of the Woolworths service-station outlets will increase BP’s control of the petrol market from a low of 18 per cent to as high as 39 per cent – with a greater opportunity for Woolworths to utilise the shopper-docket system in a number of new outlets.

“Although it was stated by Caltex, when BP was successful in its bid for the Woolworths petrol outlets, that the shopper dockets were no longer a drawcard, the potential remains for a resurgence of their higher-value usage and the possibility of resulting damage for small independent retailers,” he said.

“MGA urges the ACCC, in its consideration of the application for authorisation by BP, BP resellers and Woolworths, to ensure there is no serious effect on competition in the supermarket and liquor-store industries, and in relation to the motor-fuel market. Accordingly, we seek that the ACCC monitors any anti-competitive system of marketing, which could result in a drastic loss of retail diversity for the retail industry.”

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