Coles and Woolworths shopper dockets and their s87B undertakings
Coles and Woolworths were issuing shopper dockets with fuel discounts of 8 cents or more to customers who made purchases over a certain value in their supermarkets.
The ACCC were investigating whether, by doing this, the big supermarket retailers were lessening competition in the retail fuel market. Some fuel retailers had complained to the ACCC that they could not afford to match the supermarkets’ fuel discounts of 8 cents or more, because those discounts were being funded from markets that were separate and unrelated to the fuel retailing markets.
Before the investigation was complete, at the end of 2013 the 2 supermarket retailers voluntarily gave undertakings not to offer fuel savings which are wholly or partially funded by any part of their business other than their fuel retailing business. They also undertook to limit fuel discounts which are linked to supermarket purchases to a maximum of 4 cents per litre.
By removing the funding by supermarkets and limiting the supermarket offers to a maximum of 4 cents per litre, the ACCC considered that other fuel retailers would be able to compete on a more level playing field.
On 6 December 2013 the ACCC accepted court enforceable undertakings from each of Coles and Woolworths. The undertakings allowed Coles and Woolworths to continue to offer fuel saving discounts to their supermarket customers, but any discounts on fuel offered to supermarket customers from 1 January 2014 are not to exceed 4 cents per litre. They could still offer discounts with purchases from their service station convenience stores. All discounts discounts have to be funded from within their fuel-related retailing operations.
Continuing to discount petrol- the alleged breaches of the s87B undertakings
The ACCC has now started proceedings in the Federal Court against Woolworths alleging that Woolworths’ current fuel discount offer of a bundled 8 cents per litre discount (4 + 4 cents) is a breach of its undertaking because the discount is only available to a customer who has made a qualifying supermarket purchase.
Similarly it has started proceedings against Coles for its bundled 14 cents per litre discount (10 cents from convenience store purchase + 4 cents from supermarket purchase).
The ACCC Chairman has said “It is pleasing that Coles and Woolworths advise that they are honouring their undertakings to fund all fuel discounts from their fuel operations, but we are concerned that the bundled discount offerings in excess of 4 cents per litre are contrary to the terms of the undertakings.”
What are s87B undertakings and who do they apply to?
One of the enforcement actions available to the ACCC when companies or individuals breach the Australian Consumer Law is to ask for an undertaking under section 87B of the Australian Consumer Law. The person or company giving the undertaking will undertake to stop the breaching conduct, and will often also undertake to do other things such as:
- implement a compliance program or review the one in place
- implement a complaints handling procedure
- provide practical trade practices training to relevant employees
- publish corrective advertising
Section 87B undertakings are enforceable by a Court, which means breaching them can mean punishment for contempt of Court and may result in the ACCC instituting Court proceedings as it has in this case- both can be very costly.