The Australian Competition and Consumer Commission announced today that it had finalised its current investigations into alleged price exploitation by Caltex Australia Petroleum Pty Ltd, The Shell Company of Australia Ltd, Mobil Oil Australia Pty Ltd and BP Australia Ltd, in relation to the introduction of the Fuel Sales Grant.
To establish a breach of the price exploitation provisions of the Trade Practices Act 1974 by any of the oil majors the ACCC would be required to prove that petrol was supplied to a particular franchisee or independent retailer at a price that was unreasonably high having regard alone to the New Tax System changes, including the introduction of the FSG, and that that price was unreasonably high even after taking into account any other relevant matter.
Caltex
The ACCC received several inquiries from Caltex franchisees alleging that Caltex had altered its price support system following the introduction of the FSG in such a way that they were unable to pass on the FSG without cutting their own margin.
The ACCC conducted an extensive investigation into these allegations. The ACCC issued statutory notices requiring Caltex and its senior executives to provide relevant information, documents and evidence under oath.
As part of its consideration of this matter the ACCC also took into account the findings in its Report on the Movement of Fuel Prices in the September Quarter, released in October 2000 and its continued monitoring of the city/country differential.
As a result of this investigation the ACCC did not establish a failure to pass on the FSG to customers. This was in the context of the interaction of Caltex's handling of the FSG along with its price support mechanism, together with the impact of market forces at the retail level. The evidence therefore does not support a case that fuel prices were unreasonably high as a result of the FSG alone. The ACCC's conclusion was based on economic, accounting and legal advice.
While the ACCC concentrated its investigation on Caltex's prices to its franchisees receiving price support, the ACCC also considered the prices Caltex charged to franchisees not in price support and to independently owned Caltex outlets. The ACCC found no evidence to suggest that Caltex had altered the prices it charged to these retailers in response to the introduction of the FSG.
Other oil majors
The ACCC also investigated alleged breaches by Shell, Mobil and BP in relation to their response to the introduction of the FSG. While the material supplied by some of the oil majors, and in particular by Shell, may have been open to an interpretation that the oil companies may have cut margins to their franchisees, and in effect appropriated the FSG, on the evidence available this could not be established.
The ACCC will continue its monitoring of petrol prices in particular through its pricing fluctuations study. If this monitoring points to any anomalies which indicate that the FSG is not being passed on either by the oil majors or franchisees the ACCC will investigate.