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AAP News (Australasia): Qld: ACCC hears independent fuel retailers struggling to survive

Gabrielle Dunlevy,
Published: Aug 22, 2007

BRISBANE, Aug 22 AAP – Independent fuel retailers battling the big chains have appealed to the Australian Competition and Consumer Commission (ACCC) for a lifeline.

The ACCC inquiry into unleaded fuel prices today heard from Queensland independent chains Neumann Petroleum and Matilda Fuels at a public hearing in Brisbane. Neumann Petroleum general manager Charles Wright told the inquiry, headed by ACCC chairman Graeme Samuel, that his outlets were forced to set prices close to cost for weeks, in order to compete with nearby Caltex/Woolworths outlets. “We are getting down to very, very thin margins, close to break-even or in some cases, negative,” he said. “We try and stop at our cost (price) but some of the charts I have seen though, I think, show negative.”

Mr Wright said Caltex/Woolworths outlets sometimes sold petrol close to cost price for weeks or months, particularly when the outlet, or a new supermarket, had just opened. At the supply end, Mr Wright said he had little choice but to sign a long-term contract with oil giant BP, because the cost of importing was prohibitive.

Also forcing independents to deal with major companies was lack of access to shipping infrastructure, he said. While Neumann has its own terminal, it is relatively small. Mr Wright said Neumann would soon focus on its convenience store business, in an attempt to gain an advantage. It offers a four cents a litre discount on presentation of a Coles or Woolworths discount voucher, but without the backing of the chains, it must pay for the scheme. Mr Wright said the future for independents was uncertain. “(Neumann) are surviving because we were forced into producing a four cent offer,” he said. “Where the others have got a similar offer I think they are surviving, but in terms of their general health, it’s difficult to say.”

The inquiry also heard from independent fuel price monitors FUELtrac. General manager Geoff Trotter told reporters the ACCC should dismantle the Coles/Shell and Woolworths/Caltex deals, and make their imported fuel supplies “contestable”. He said this would allow independents cost effective access to imported fuel, and attract international investment in import infrastructure. Mr Trotter said banning discount schemes would also force supermarkets to concentrate on selling petrol at a competitive price, rather than selling petrol subsidised by grocery sales. “The petrol market would be better off, and the grocery market would be better off,” he said. “We had petrol price cycles regardless of Coles and Woolworths being in the market (but) it does appear that with their entry, they have been able to achieve a higher price at the top of the cycle which has meant that the average price has probably gone up a couple of cents a litre.”

The inquiry is due to report back to federal Treasury on its findings in mid-October.

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