ACCC’s quid pro quo on Woolies, BP deal

woolworths caltex petrolAustralia’s competition regulator has given the green light to a “commercial alliance” between Woolworths and BP, while it decides separately on the energy giant’s takeover of Woolies’ petrol business.

The consumer watchdog says it will allow Woolworths fuel discounts at BP petrol stations if BP is successful in buying the supermarket giant’s service sites.

The Australian Competition and Consumer Commission said it had issued a draft decision proposing to grant authorisation allowing BP service stations to participate in Woolworths’ Rewards Loyalty Program and accept shopper dockets, as it will likely result in “some public benefits”.

It said it will grant the authorisation on the condition the discount does not exceed four cents per litre in total, to combat anti-competitive effects, and if the proposed acquisition is completed.

“Customers value fuel-related discounts and loyalty programs. We believe giving consumers more opportunities to redeem shopper docket discounts and earn and redeem points through Woolworths’ loyalty program will likely result in some public benefits,” said Rod Sims, ACCC chairman.

Sims said “these kinds of fuel discounts can have anti-competitive effects” and “considers that fuel discount offers in excess of 4 cents per litre could have longer-term effects on the structure of the retail fuel markets and that the detriments from reduced competition may outweigh any benefits.”

As a result, the ACCC is proposing to grant authorisation on condition that the parties not offer fuel discounts from shopper dockets and the loyalty scheme in excess of 4 cents per litre in total.

These proposed shopper docket and loyalty scheme arrangements form part of a broader transaction between BP and Woolworths, where BP is proposing to acquire Woolworths’ network of service stations. The ACCC is conducting a separate merger review of that proposed acquisition.  

The proposed shopper docket and loyalty scheme arrangements will only occur if the proposed acquisition is completed.

“The proposed acquisition by BP of Woolworths service stations is subject to separate consideration by the ACCC. This draft decision regarding authorisation does not in any way indicate the ACCC’s view of the proposed acquisition,” Sims said.

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