The ACCC is prosecuting petrol retailers including BP, Caltex, 7-Eleven and Woolies for price sharing via a website called Informed Sources, which provides petrol price data on an almost real-time basis.
The trick is that only petrol retailers have access to the website. According to the ACCC, the conduct is likely to increase petrol price coordination and cooperation, and decrease competitive rivalry.
The concern is that Informed Sources allows the retailers to monitor the effect of their price increases. If the other retailers don’t follow; the first retailer can withdraw the increase. Or the others can take the bait and up their prices too.
The retailers disagree. They say that they use the information to make sure their prices are competitive, benefiting consumers.
Here’s the thing though; the ACCC isn’t prosecuting a price fixing claim under the cartel conduct rules. It has opted to rely on the more general prohibition of conduct likely to substantially lessen competition. Interesting call. We’re not so sure it was a good idea.
The effect of the decision is that the ACCC doesn’t have to prove a contract, arrangement or understanding between competitors in order to succeed. That would be hard because Informed Sources deals separately with each retailer and isn’t itself their competitor.
The trade off is that it has to prove a substantial reduction of competition, which it needn’t prove for a cartel claim. Interestingly, the retailers’ main defence is that the conduct improved competition. That wouldn’t have helped them much if the ACCC had relied on the cartel provisions.
The case has implications beyond the petrol industry. There are a bunch of businesses offering price sharing services like Informed Sources; even (gulp) in the legal industry. If you use these services, best to watch this space.
This is the second time recently that the ACCC has sought an easier path for a prosecution. In its case against Coles it opted to pursue unconscionable conduct claims rather than misuse of market power. Some might say a win is a win. We reckon they’re looking a bit soft, while trying madly to signal to the Government that the legislation needs to be beefed up.