The ACCC appears to have opened the door to giving Coles free rein to grant big shopper docket fuel discounts while limiting Woolworths to a four cent limit under the terms of its BP deal.

On the surface, this will give Coles a significant advantage when its undertaking with the ACCC expires in November next year.

It can withdraw from the undertaking and apply whatever discount or loyalty bonus it likes, while Woolworths is subject to tight conditions.

Woolworths is considered the most aggressive of the big players in petrol pricing and Coles is caught by a restrictive supply deal from the new owner of the Shell brand, Viva.

The folk at Coles are understandably a little wary over the apparent regulatory free kick not having been given too many chocolates by the ACCC in years past.

But the words are clear and they don’t apply to Coles because it is not part of the BP deal.

In a draft decision out today, the regulator has approved the transfer of discounts to the stations BP will acquire from Woolworths for $1.8 billion.

But the deal comes with restrictions which Woolworths will not like.

The petrol docket limits have long been controversial, with former ACCC chair Graeme Samuel attacking them as being a form of sanctioned price fixing to help small business in the independent petrol station business.

Previously, Coles and Woolworths were competing to have the biggest discount which was treated by the ACCC as bordering on predatory pricing.

It restricted the retail giants from offering discounts out of supermarket profits and instead limited it to petrol profits which are skinny at fewer than five cents a litre.

The deal was applauded by the independent retailers who found it hard to compete with the shopper docket discounts.

As the discounts accrue digitally on retail loyalty cards, the competitive threat is magnified.

The ACCC, while giving draft authorisation to the transfer to BP, also expressed reservations about the scheme. The regulator said the public benefits were uncertain to the extent they “are likely to be funded through higher pre-discount prices and grocery sales.”

It added: “The public benefit of expansion of the WOW Rewards Loyalty network to BP sites is likely to be low because the rewards are funded by higher fuel prices.”

The ACCC also said: “The expansion of an unconstrained Shopper Docket discounts and Reward Loyalty Program to the BP network would have significant public detriments.”

This is why it is holding Woolworths to a restriction for the next 10 years but Coles is not covered by the deal.

Extracted from The Australian.