The Australian Competition and Consumer Commission has found that a proposed loyalty program involving BP Australia and Velocity Frequent Flyer Program has the potential to promote competition.

The ACCC has granted interim authorisation to allow BP and BP-branded fuel retailers to participate in the Velocity program.

Customers will be able to earn points through purchases at BP outlets and BP plans to offer opportunities to redeem points through participating BP outlets.

Authorisation was sought for any boycott conduct that technically arises from restriction or limiting of resellers’ participation in competing loyalty programs.

BP and resellers gave an undertaking that they had not and would not engage in any boycott for the purposes of negotiating with Velocity.

Authorisation was also sought for any third-line forcing conduct that would arise if BP or its resellers offered to supply benefits to a Velocity program member on the condition that the program member acquired loyalty program services from Velocity.

Third-line forcing would also technically arise if BP made the supply of goods or services to resellers conditional upon their participation in loyalty program activities.

The ACCC said there was limited scope for such conduct. It said benefits of the arrangement included additional opportunities for Velocity program members to earn points and the potential for competitive responses from other fuel retailers or reward program providers.

It said that any negative impact on competitors was likely to be limited.

Extracted in full from Banking Day.