The Australian Competition and Consumer Commission Chairman, Professor Allan Fels, today cautiously welcomed evidence of changed market conditions for the sale of LPG (autogas) in Western Australia.
In 1999 the ACCC undertook a review into LPG pricing in Western Australia, following complaints about the relatively high level of LPG prices in Perth compared with those in other capital cities in Australia.
A draft report was issued in September 1999. It found that LPG prices in Perth were higher and more stable than those in other capital cities in Australia and that this disparity appeared to reflect a lack of competition in the Perth market. The report found that the Western Australian market was a smaller market with less competitive pressure than other capital city markets.
The report also noted that retail price movements in Perth seemed to have a less direct relationship with changes in producer prices than in other cities in Australia and this supported the view that pricing may reflect factors other than cost. Underpinning this pricing behaviour were a number of distinct supply arrangements, and possible structural problems, in the Western Australian market.
After the release of the report an extensive investigation was undertaken by the ACCC's Perth Office into supply arrangements within the industry. On the basis of this investigation, Professor Fels announced today that the ACCC could find no evidence at this stage of breaches of the Trade Practices Act 1974 by participants in the LPG market in Western Australia.
Furthermore, close monitoring of the LPG pricing patterns in Perth since September 1999 has shown that the pricing disparity which previously existed between Perth and the other capital cities throughout much of the 1990s has largely disappeared. This is shown in the attached Chart.
"Perth motorists are now able to buy LPG at roughly the same prices as motorists in the other capital cities", Professor Fels said. "While the ACCC welcomes this change in the Perth market, it does so in the context that LPG price levels in Western Australia have been an issue of longstanding concern to the ACCC and its predecessor, the Prices Surveillance Authority.
"Consequently, the ACCC will continue to closely monitor movements in LPG prices in Perth and the other capital cities to determine whether this alignment represents a fundamental change or is only a temporary adjustment".