Coles and Woolworths to cap fuel discounting at four cents per litre

The voluntary agreement, which will come into effect on January 1, states fuel discounts must not exceed four cents per litres, and that all fuel discounts must be funded by Coles and Woolworths’ fuel retailing operations alone, and not subsidised by their supermarket activities.

It comes after the ACCC investigated the business practices of the two companies, following prolonged periods of fuel price discounting of up to eight cents per litre. Coles and Woolworths were able to offer discounted prices far lower than independent fuel retailers because of the financial support of their own supermarket operations, decreasing competition as a result.

The Victorian Automobile Chamber of Commerce has welcomed the announcement, however it has warned the supermarket chains it will be monitoring the agreement closely, and has urged the ACCC to step in immediately if the agreement is breached.

“This agreement comes after considerable VACC pressure, through our members and public awareness campaigns. We have argued for more Government intervention in cases where big business dominates small business,” VACC executive director David Purchase said.

“We hope this will create a more open market in which independent fuel retailers can compete.”

Prior to the agreement, both Coles and Woolworths denied their discounts amounted to a breach of ACCC laws.

Woolworths said it was disappointed with the ACCC’s investigation and would continue to offer more substantial fuel discounts before the beginning of 2014.

“Woolworths has been offering petrol discounts for more than 16 years, and will continue to do so,” an official statement said.