ACCC goes after petrol price colluders

Competition watchdog asked to investigate possible anti-competitive practices by oil majors over petrol prices

December 3, 2009

The competition watchdog has been asked to investigate possible anti-competitive practices by oil majors over petrol prices.

Following the Australian Competition and Consumer Commission’s (ACCC) rejection of Caltex’s proposed takeover of 302 Mobil stations, the government agency will now look at weekly petrol price cycles.

Small Business and Competition Policy Minister Craig Emerson requested the ACCC look into the matter, saying the Government has been concerned for some time about possible coordinated conduct between companies.

Emerson asked for initial advice to be given to the Government before Christmas.

"The Government has asked the ACCC to assess whether coordinated activity among major oil companies is affecting the pattern and height of the regular price cycle to the detriment of motorists," he says.

He says the ACCC’s decision to reject Caltex’s takeover of Mobil also raised concerns of deliberate conduct among oil majors to hike petrol prices.

"The ACCC considers that the speed with which petrol pricing information is exchanged between competitors, via the industry website Informed Sources, makes it more likely that price rises stick during the hiking phase," Emerson says.

"The ACCC has observed that firms discount heavily, including below cost during the discounting phase of the petrol price cycle, confident of being able to restore profit during the hiking phase."

Emerson says those who subscribe to the website receive information on prices every 15 minutes.

He says the Government has already taken action to stop predatory pricing and cartel conduct.

"In addition, the Government has funded the ACCC to prepare regular petrol price monitoring reports as a basis for better understanding commercial behaviour in the industry," Emerson says.

The ACCC decided to oppose Caltex’s planned takeover of Mobil because it would lead to anti-competitive behaviour at 53 sites.

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