Petrol Prices and Australian Consumers: Release of the ACCC Report Into Unleaded Petrol Prices

The Rudd Government has received the Australian Competition and Consumer Commission's (ACCC) report into unleaded petrol prices which has highlighted 'fundamental structural issues that raise concerns about current operations and future competitiveness' of the Australian petrol industry.

The Rudd Government is committed to promoting competition and transparency in Australia's petrol market.

The Minister for Competition Policy and Consumer Affairs, Chris Bowen, has outlined three measures as part of the government's preliminary response to the report. They include:

• Writing to the ACCC giving it formal monitoring powers over petrol prices;
• Making the ACCC report to the government every year on its monitoring;
• Beginning the search process for a Petrol Commissioner and writing to all of the State and Territory leaders seeking their input on possible candidates for the role.

The inquiry found that there was 'no obvious evidence of price fixing or collusion between the major participants in the industry' and 'fundamental pricing of petrol is dictated by international factors'.

However, it also found that:

• The major refiners have established 'a comfortable oligopoly', with the Australian industry being relatively concentrated.
• There are 'significant impediments to the large-scale importing of petrol by parties other than refiner-marketers, resulting in very little independent importing'.
• The 'well-defined price cycles in Australia's retail unleaded petrol markets are an enigma' and the ACCC was not given a satisfactory explanation of divergences in prices between Australia and price decreases in Singapore.

Importantly, it says the cost of petrol could be reduced by a few cents a litre if some of the issues identified in the inquiry are addressed.

Mr Bowen said the report acknowledged the 'high level of consumer frustration about price fluctuations and the lack of transparency in prices'.

"I have written to the Chair of the ACCC giving him formal monitoring powers over petrol prices," Mr Bowen said.

"The search process for a Petrol Commissioner has commenced and the government intends to make an announcement about the Petrol Commissioner in the near future."

The ACCC has made a number of recommendations, including the consideration of measures to correct the imbalance of information between retailers and consumers, for example, a 'Fuel Watch' system based on the Western Australian model.

The ACCC has also made it clear that a 'detailed assessment addressing these issues would have to be made before government could confidently embark on any one of the suggested options'.

Mr Bowen said the Government and the ACCC had agreed the Commission will:

• undertake a more detailed examination and on-going monitoring of buy–sell arrangements;
• complete an audit of terminals suitable for importing refined petrol into Australia, covering terminal capacity, use and leasing and sharing arrangements;
• provide on-going monitoring of the use, leasing and sharing of terminals suitable for importing refined petrol into Australia; and
• monitor developments relating to shopper dockets as they arise, including any changes in the extent of the impact of shopper docket arrangements on competition.

"I would like to thank the ACCC for a very comprehensive report which will inform the government's decision making process and invigorate public debate," Mr Bowen said.

Commonwealth of Australia

Trade Practices Act 1974

Monitoring of the Prices of Unleaded Petroleum Products

I, CHRIS BOWEN, Minister for Competition Policy and Consumer Affairs, pursuant to section 95ZE of the Trade Practice Act 1974, hereby direct:

1. the Australian Competition and Consumer Commission (‘the Commission’) to monitor prices, costs and profits relating to the supply of unleaded petroleum products in the petroleum industry.
2. the Commission to report to me on its monitoring activities in paragraph (1) for a period of three years commencing from the date of this direction.
3. the reports of the Commission to be provided annually, no later than the anniversary of the  date of this direction.

CHRIS BOWEN
Minister for Competition Policy and Consumer Affairs