25 Feb 2014

Watchdog taking supermarkets to court

10:28 pm on 25 February 2014

Australia's consumer watchdog is launching court action against supermarket giants Coles and Woolworths over their fuel shopper docket schemes.

Last year, Coles and Woolworths spent more than $A500 million a year on fuel subsidies - 60 percent on subsidies higher than 4 cents a litre, which are now banned.

Woolworths service station in Sydney.

Photo: AAP

The Australian Competition and Consumer Commission (ACCC) has instituted proceedings in the Federal Court for allegedly breaching undertakings made by the companies.

ACCC chairman Rod Sims says Coles and Woolworths agreed in December last year to limit fuel discount vouchers to a maximum of four cents per litre. The limit on discounting was meant to take effect from January 1, the ABC reports.

"The ACCC takes alleged breaches of undertakings extremely seriously. Such undertakings are generally accepted by the ACCC as an alternative to the ACCC taking court enforcement action," Mr Sims said.

"We think it affects the long-term health of the petrol market and actually we think it affects how much people are paying for petrol right now at the bowser. If you've got these discounts then, yes, we accept that you're getting a benefit. If you don't have the discounts then we're concerned you're paying too much for fuel."

The commission says Woolworths is currently offering a bundled discount of up to eight cents per litre, while Coles is offering a discount of as much as 14 cents per litre.

The discounts are only available to customers who made qualifying purchases at Woolworths or Coles supermarkets.

Consumers who spend $30 at the supermarkets receive a four cent discount, which is increased if they then spend additional money at the Woolworths or Coles petrol station.

A directions hearing for the case is scheduled to be held at the Federal Court in Sydney on 3 April.

The ACCC has been investigating discount shopper dockets since 2012.

Mr Sims confirmed his concerns about fuel discounts in July last year, saying he believed they could lead to higher fuel prices in the longer term.

"If these shopper dockets continue at these levels, it's going to be very hard for other players to compete and we may end up with just two companies in the country selling petrol," he said at the time.