On 18 December 2009, the Australian Competition and Consumer Commission (ACCC) released its second annual report on the prices, costs and profits of unleaded petrol in Australia. This report responds to a direction issued by the previous Assistant Treasurer and Minister for Competition Policy and Consumer Affairs, the Hon. Chris Bowen MP, in late 2008. The direction requires the ACCC to monitor the price, cost and profit of unleaded petrol in Australia for a period of three years and to report to the Minister by 17 December each year.
The 2009 report states two key findings:
- Recent petrol prices reached a peak above 160 cents per litre (cpl) in July 2008, and then fell rapidly between October and December 2008 due to the global financial crisis. In January and February 2009, prices increased by around 20 cpl. Since then, prices have remained relatively stable.
- During the period, the most important influences on retail petrol prices have been:
- the international price of refined petroleum (Mogas 95)
- the exchange rate of the Australian dollar against the US dollar, and
- the well-established weekly retail petrol price cycles in the large capital cities which affect day-to-day pricing of petrol.
The ACCC also indicated in its report that it was concerned the regular weekly petrol price cycles exhibited coordinated effects. The ACCC believes that petrol markets in Australia are predisposed to coordinated conduct which may lead to less competitive outcomes. In that context, the ACCC referred to its review of Caltex Australia Limited’s (Caltex) proposed acquisition of Mobil Oil Australia’s retail assets. In that review, the ACCC concluded that the proposed acquisition would be likely to increase the ‘effectiveness of current market practices which act to limit competition in petrol retailing’.1 The ACCC believes that the increase in Caltex’s market share that would result from the acquisition would increase the likelihood of stable price increases as compared to a counterfactual in which more sale sites are acquired by ‘more aggressive’ retailers.2
In its report the ACCC is also expressed its concern that the practices which facilitate coordinated conduct are not adequately addressed under the well-established judicial interpretation of section 45 of the Trade Practices Act 1974 (Cth) (TPA) (ie the regular exchange of price information via Informed Sources).