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About time?

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About time?

Last week, the ACCC reported it was commencing action against Informed Sources and petrol retailers for sharing price information. An except from the report follows below.

The Australian Competition and Consumer Commission has instituted proceedings in the Federal Court of Australia against Informed Sources (Australia) Pty Ltd (Informed Sources) and several petrol retailers alleging that they contravened section 45 of the Competition and Consumer Act 2010 (the Act).

The ACCC alleges that the information sharing arrangements between Informed Sources and the petrol retailers, through a service provided by Informed Sources, allows those retailers to communicate with each other about their prices, and that these arrangements had the effect or likely effect of substantially lessening competition in markets for the sale of petrol in Melbourne.

Subscribers to the Informed Sources service provide pricing data to Informed Sources at frequent, regular intervals and in return receive from it collated data from the other subscribers, and various reports containing pricing information across particular regions.

The petrol retailers who are joined in the ACCC’s proceedings are:
1. BP Australia Pty Ltd
2. Caltex Australia Petroleum Pty Ltd
3. Eureka Operations Pty Ltd (trading as Coles Express)
4. Woolworths Ltd
5. 7-Eleven Stores Pty Ltd.

The ACCC alleges that the arrangements were likely to increase retail petrol price coordination and cooperation, and were likely to decrease competitive rivalry,” ACCC Chairman Rod Sims said.

Given the importance of price competition in petrol retailing, the ACCC is concerned that consumers may be paying more for petrol as a result.

The ACCC alleges that fuel retailers can use, and have used, the Informed Sources service as a near real time communication device in relation to petrol pricing. In particular, it is alleged that retailers can propose a price increase to their competitors and monitor the response to it. If, for example, the response is not sufficient, they can quickly withdraw the proposal and may punish competitors that have not accepted the proposed increased price,” Mr Sims said.

The ACCC alleges that petrol retailers that subscribe to the Informed Sources service use the service to exchange information on the price they each offer at their petrol stations on a private and near real-time basis. The exchange of this information allows retailers to monitor and respond to each other’s prices and observe and analyse the pricing behaviours and strategies of their competitors. The Informed Sources service covers most capital cities and many regional centres across Australia.”

You can read the rest of the ACCC’s announcement here.

INVEST WITH MONTGOMERY

Roger is the Founder and Chief Investment Officer of Montgomery Investment Management. Roger brings more than two decades of investment and financial market experience, knowledge and relationships to bear in his role as Chief Investment Officer. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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