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Australian Competition and Consumer Commission chairman Rod Sims says if Woolworths and Coles want to help shoppers with lower prices, they should stick to groceries instead of subsidising fuel.
So a bureaucrat second guessing private decisions and advocating higher fuel prices. Abolishing this organisation would not only result in direct budget savings it would also end the economic sabotage of our national prosperity.
Conventional wisdom does not regard Communism with the same abhorrence as fascism, even though if you want to be an accountant about it and add up the skulls of the dead, you will find that the Communists murdered many more people than the fascists did, began murdering before fascists came to power and carried on murdering after the fascists had gone. Yet few can bring themselves to see fascism and Communism as moral equivalents.
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Don’t agree with that Sinc. Companies behave ever so much better when someone is looking over their shoulders.
But as usual you need someone to watch the watchers. Power corrupts.
Bruce
22 Feb 13 at 11:03 am
ACCC,like ICAC and the NSW Ombudsman appear to be useless for the general public.Their function appears to be to act as some sort of convenient political leverage for the current government (independent??)
Re economic terrorism.
I have correspondence from Peter Duncan (former DFS DG) and Anthony Lean (ADG,DFS) where they spruik a “limited competition” policy for NSW procurement.That is,they actually think that models of 2 airlines,4 major banks and 2 major supermarkets work for the benefit of us all.
That their “limited competition” provides government agencies with best value/best prices which in fact has cost the public $millions in wasted public funds
(and made a few well connected people very rich).
These clowns rake in $400k+ and $300k+ respectively and like the ACCC chairman,are either (allegedly)criminally negligent (they ignore complaints about the wasted $millions which they could have prevented) or they are (allegedly) mentally retarded.
Maybe they all share drinks together after a hard day at the gravy train.
And the convicted drug dealer’s (Coutts-Trotter,DG of
DFS) wife put on notice the state governments “stealing” health dollars from the public.
Whilst her convicted drug dealer husband’s department allegedly “steals” and wastes huge amounts of NSW public funds.
The economy is in the hands of imbeciles who don’t have a clue.
They couldn’t run a hot dog stand (with no disrespect to those running a hot dog stand.They have more economic credibility than any senior public servant and at least run an honest business)
I have documentation to back the above comments.
Peter
22 Feb 13 at 11:03 am
Could we go for the ‘daily double’ and abolish the A.C.C. while we’re at it?
After last week’s “Look over there!” fiasco with two McTernan-rehearsed drones from A.L.P. Federal Cabinet, suggesting that all Australian athletes are druggies and cheats, the A.C.C. representative’s toadying performance was a disgrace. That man displayed more suction than a Dyson vacuum cleaner!
If that organization allows itself to be used like a tissue of Sorbent by dodgy politicians living in the pockets of the likes of “Honest Eddie” Obeid, or “Big Bill” Ludwig, then they need to go the way of the Dodo.
Up The Workers!
22 Feb 13 at 11:14 am
Bruce, and the unknown bureaucrat, you don’t understand what the fuel-saver dockets have achieved for the supermarkets.
We (should) all realise that businesses don’t do this sort of thing out of sheer altruism.
The dockets have had the effect of raising the average value of checkout transactions, improving the overall efficiency of checkout lanes. The same applies to the self-serve checkouts, which handle the small value simple stuff.
No doubt the supermarkets like the idea of having fewer staff in the boring checkout jobs, reducing RSI, staff turnover and the like.
All this also negates the impact on checkout throughput of the smart alecks who try to take advantage of the rounding to 5c.
So if you want to undo those benefits, don’t expect to save money on your groceries. And of course, you will no longer save money at the petrol bowser either.
JohnA
22 Feb 13 at 11:19 am
Bruce,you are totally correct.
If an agency with some credibility and the ability to enforce rules,regulations,penalties to keep businesses in line,then it is all the best for the public.
And open and transparent government is essential for this to happen
However,show me where this actually happens?
ACCC,Ombusdman,Fair Trading,ICAC in general are feeble
and ineffective (hey,even Obeid has an AO as does Ipp yet they are on the opposite sides of the dock).
The Ombudsman was alleged to allow the use of pirated software in the Ombudsman’s office,resulting in a multi-million dollar settlement at the taxpayers expense.
He doesn’t even investigate serious complaints of misconduct,maladminstration & corruption by senior gov.officials.
You need the quality goods to begin with,not lackies who have been promoted by seniority/connections rather than ability and integrity.
And as you say,power corrupts.
These people need to be continuously audited to ensure that they stay on the straight & narrow.
And audited by a fully independent,reputable agency.
I have a formal GIPA enquiry blocked by DFS and although I have complained to OIC,Ombudsman,ICAC,Pearce & O’Farrell.Concerns corruption in NSW procurement (as reported by Ipp).
I am stymied by self interests and disinterest.
It would be useful to have one of those independent,reputable agencies to stop the rampant misconduct and alleged corruption involved with this enquiry.
Unfortunatelt this government is a cesspit of incompetence,nepotism,misconduct and corruption.
Peter
22 Feb 13 at 11:22 am
Could not agree more, Sinclair.
They are a complete and utter waste of time.
Coles and Woolworths are the only 2 major companies in Australia that advertise their grocery pricing on the internet for the world to see.
NoFixedAddress
22 Feb 13 at 11:30 am
I like it. My decision to purchase petrol outside of a supermarket should be independent of my decision to purchase groceries. Even my individual grocery items can be bought in different stores with no impact on the price.
It’s strange they allow the petrol tie-in but won’t give a discount for bulk purchase at the supermarket. Spend over $100 get 5 % off, for instance. Just leave out the bloody tricks and let us choose.
Harold
22 Feb 13 at 11:36 am
If it’s not a trick, and the supermarkets are reasonably offering old ladies some extra value, it should be allowed to continue.
John Mc
22 Feb 13 at 11:38 am
You realise those who don’t get petrol dockets, or use petrol dockets, are being asked to pay for other people’s petrol?
There’s certainly no value being created here, just transferring profit from one side to the other to lock a customer in.
Harold
22 Feb 13 at 11:41 am
What? I don’t understand this, please explain, Harold.
Gab
22 Feb 13 at 11:45 am
OK here we go…
They are not giving you free petrol, they aren’t that generous. They aren’t even giving you discounted petrol because they aren’t that generous either.
What they are doing is getting you to pay for petrol when you buy your groceries. Then you take your docket for the petrol you bought and you go and pick up your petrol (which looks discounted at their service station).
So, how do they get you to buy petrol when you buy groceries? Easy, their grocery prices have a petrol surcharge.
When you buy groceries you pay for petrol that you never even picked off the shelf.
IMO that sucks and it is a free market distortion.
Harold
22 Feb 13 at 11:52 am
pick up your petrol (which looks discounted) at their service station.
Harold
22 Feb 13 at 11:54 am
If that is the case – and I haven’t seen their costings model so I don’t know – then it’s easy to overcome. Buy your groceries elsewhere. PS I never thought people were getting “free petrol”.
Gab
22 Feb 13 at 11:56 am
IMO that sucks and it is a free market distortion.
It’s not if people voluntarily do it. If they’re putting their prices up ‘artificially’ to cover the fuel they’ll be undercut by someone else like Aldi or someone new.
If they’re not putting their prices up, or not passing on the full cost, they’re giving old ladies extra value.
Now that’s the free market.
John Mc
22 Feb 13 at 11:57 am
Look at the number of petrol stations where you have a choice between inflated petrol price (it’s more than independent) or the discounted groceries-for-petrol price.
So unfortunately once enough sheep fall for it the rest find themselves inconvenienced by it.
It’s not needed, it’s not transparent, it’s anti-choice (anti-competitive), and adds no value.
Harold
22 Feb 13 at 12:07 pm
Don’t forget volume in this conversation. If the Servo can increase its volume then its margin on the increase is huge.
Once fixed costs are covered the extra sale produces a very healthy margin. Also the servo shop sales produce some nice fat “cream”. This is what the supermarket servos are after. The shopper dockets promote brand loyalty.
eb
22 Feb 13 at 12:09 pm
If you don’t use your petrol dockets, make contact with the volunteer groups in your area who do a lot of driving for those who can’t, they might appreciate them. Or just pin them up on the bulletin board at your church for anyone to take, someone will be grateful. <3
ManicPixie
22 Feb 13 at 12:09 pm
I paid 158.9c / litre for ULP the other day (no coupon). Even tho the tank was empty but I put in just $25. I fearlessly predict that upon election of an Abbott government, petrol prices will once again be the subject of grassroots community ‘outrage’, fanned by media reporting. It’s curious how that grassroots thingy works isn’t it?
Steve of Ferny Hills
22 Feb 13 at 12:10 pm
Others have this right. Turning up to the petrol station sans docket is just a way of capturing the consumer surplus of those who can’t be bothered with time-wasting activities like docket saving.
I have done the sums, and it’s not worth me hanging onto little bits of paper to save $3.00 per tank of petrol. I value my time and dignity more than that. So the petrol station captures my consumer surplus and yet manages to retain the customers who are willing to trade their time for $3.00 per fill.
In addition to that, the supermarket gathers more data on habits, and ensures that everyone trapes into the store to pay for their petrol, where they can be tempted to buy some obscenely high margin chocolates or other supplies.
Personally, I would prefer an unmanned station with a loyalty card a-la frequent flyer where reaching, say, 1000 litres a year yields x% discount for the following years purchase. But that’s just me, I hate the time it takes to fill up the car in this country, because of the waiting for the person in front to go to the checkout, hand over their docket, come back to the car, etc. In civilised countries you put in your credit card, select the fuel, fill up and drive off.
brc
22 Feb 13 at 12:19 pm
t’s not needed, it’s not transparent, it’s anti-choice (anti-competitive), and adds no value.
- you don’t decide what other people need,
- a product that is what it claims to be with a clear price on it is the only transparency you must be provided with,
- you’re the one denying people choices. Some people like this stuff just like other people like to collect frequent flyer points. So long as no one is being deceitful or fraudulent you should mind your own business and let others choose for themselves.
- If it adds no value people won’t buy it and they’ll stop doing it. If it adds no value to you go elsewhere.
John Mc
22 Feb 13 at 12:20 pm
John Mc I can see why you would be upset because you’ve just described this scheme as “value adding” and now you’ve read my posts and realise how silly that was.
If anything it’s value sapping because it has admin overheads.
I fully support free market competition which is why this scheme sucks.
Harold
22 Feb 13 at 12:24 pm
This statement contradicts itself. If it sucks it will go away. You can’t make value judgements on free choices unless you add your reference frame.
What sucks for me is going to be different to great for someone else.
This is no different to supermarket discount coupons, corporate vs education pricing, first class vs economy, bag of apples vs individual aples.
All these are attempts by business to capture more consumer surplus by segmenting their market. They’re all legitimate, and all clearly work out well enough for the business and their customers to persist.
brc
22 Feb 13 at 12:28 pm
I’m similar to you in that respect – as I work from home I don’t drive much and at 4c/litre its hardly worth the effort for me. It is changing though. Coles are at times now offering up to a 18c/litre discount. And I saw a sign in a Woolworths the other day saying that all your old 4c dockets were now worth 8c to match the standard Coles discount.
I think if we didn’t have a duopoly it wouldn’t be much of a problem. But Coles/Woolworths now have 60-80% market share and its starting to get difficult to find a petrol station which isn’t affiliated with Coles or Woolworths.
Given how low the margins are on petrol it makes it very hard for smaller independent petrol stations as Coles/Woolworths can afford to run their petrol stations at a loss for a while, essentially devaluing the worth of independents around them. Then as the independents get into financial trouble, buy them out cheap and raise prices again, perhaps more than before as there is less competition.
Chris
22 Feb 13 at 12:30 pm
brc I want petrol stations to compete with petrol stations and grocery retailers to compete with grocery retailers.
Like I alluded to before, when I buy something like eggs I can pick the cheapest grocery store and just buy those eggs.
If I want cheap petrol I have this muddied situation where I need to factor in grocery prices and what not. That isn’t transparent.
Harold
22 Feb 13 at 12:32 pm
I fully support free market competition which is why this scheme sucks.
Actually, you don’t. Your thinking is much more in line with the social democratic theory that we need to tweak and prod markets so they work fairly and properly for society. In other words, you’re not for letting the market run on the consumer’s choices; you believe consumers will make the incorrect choices and need to be ‘helped’.
John Mc
22 Feb 13 at 12:33 pm
Was is it now, around 40% of fuel price is taxes and GST?
Gab
22 Feb 13 at 12:33 pm
Don’t ignore the context here John Mc.
Small number of grocery retailers and small number of petrol providers. High entry costs and regulatory hurdles for petrol, the Vietnamese immigrants can’t just set up a new petrol station like they can a milk bar or fish n chip shop.
Harold
22 Feb 13 at 12:38 pm
Two points:
1 Even in the (I personlly think somewhat doubtful) world of Austrian thought about “muscular competition”, the existence of artificial legal barriers to competition – in this case planing rules – can create “market power” of the kind the ACCC is intended to limit. This may be a case of targetting the tail rather than the dog that wags it, but the existence of thes rebates really does suggest some real meausure of monopoly distortion of the kind that, prima facie, might attract poliy action. If anyone wishes to deny the effect of planning instruments to create market power, I suggest they have a chat with the nice people at Aldi about how easy it is to set up in compeitiotn with our remarkably stable duopoly. Whether the ACCC is any good a it – a government failure question – is open, but that isn’t the gravamen of Sinc’s point.
2 – as an innner-city non-motorist, it irks me that these rebates favour those with high fuel expenses: the “discount” (= rebate on purchases) is effectivley non-transferable.
Pyrmonter
22 Feb 13 at 12:39 pm
Was is it now, around 40% of fuel price is taxes and GST?
If you include income tax, then for someone on $80K, it’s something like 60c out of every dollar you earn to put petrol in your car goes to the government.
John Mc
22 Feb 13 at 12:39 pm
Small number of grocery retailers and small number of petrol providers.
I agree Australia is a somewhat of a smaller and less competitive market than say, USA or UK, but is that meant to be a joke? You have more options than you can poke a stick at for both. And if it’s not enough we should be lowering those barriers to entry and encouraging foreign companies to come in.
John Mc
22 Feb 13 at 12:42 pm
I’d like to add my two pence here.
One. I can’t get groceries cheaper than at Coles and Woolies. Two.I value the dockets and use them to reduce my fuel costs. Three. I’d love to know what proportion of cars are fully maintained by the drivers’ employer;- they couldn’t give a toss how much a litre fuel is. This allows the Fuel sellers to overcharge. There’s is no true competition in the Fuel market. I doubt if 10% of the correspondents here truly buy their own fuel.
Dexter Rous
22 Feb 13 at 1:03 pm
So I gather that all those who find the dockets a rip-off would also spurn retailers, like say Myers, when they have 20 – 50% sale becuase this will only lead to overcharging in the future?
Gab
22 Feb 13 at 1:09 pm
I can at Aldis. Much cheaper, in fact.
I go to Woolies to buy a few things they don’t sell at Aldis and make sure the bill goes over $30 so I get the fuel docket. If I’m subsidising their prices, it won’t be much.
And I don’t need the ACCC to tell me I can’t do that.
DavidLeyonhjelm
22 Feb 13 at 1:13 pm
I wouldn’t describe the dockets as a rip-off Gab, they are just a pain in the ass which make it more difficult to wise exercise consumer choice.
Harold
22 Feb 13 at 1:20 pm
Its not about shopper dockets. Petrol retailing in Australia is competely non-competitive. When the Coles/Woolworths stations up the price mid-morning by 15c a litre (for no reason other than they want to) all the so called competition of non-aligned petrol stations do the same. Unless there is genuine competition in the petrol market we will always pay too much – with or without grocery store discounting.The ACCC is supposed to be about comptetion so thats what it should be demanding of this industry.
Andre Lewis
22 Feb 13 at 1:21 pm
that “wise” was inserted after “exercise”.
Harold
22 Feb 13 at 1:21 pm
Next up the ACCC will forbid suppliers who give volume discounts to high-volume purchasing customers because low volume purchasing customers don’t get the discounts.
Gab
22 Feb 13 at 1:29 pm
The biggest profit centre in a gas station where I worked was………..600 ml cokes!!!!
face ache
22 Feb 13 at 1:38 pm
Don’t bother to save the docket, just get a friggin Woolies Rewards card.
FFS the contry is broke and going worse at every minute and we’re alking about supermarket petrol prices.
The ACCC is staffed by parasites whose main job is to get high profile publicity to convince the mug punters to keep voting for parties which support the ACCC so that their continued employment is possible. Much like most of the regulatory apparatus of government.
Eyrie
22 Feb 13 at 1:49 pm
Yeah, let’s get rid of the police after the ACCC. Then in honour of corporate honesty, liberty and our inner child we can institute a Bart Simpsonesque, I do what I feel like, festival. Where all of us conglomerates and all can do what we feel like. Important things like stealing, cheating, and lying all in the name of liberty, of course; and not properly bolting up grandstands. Made me laugh.
Brad Goodman
22 Feb 13 at 1:56 pm
In Australia cheap fuel, cheap milk and cheap power have been deemed illegal.
Am I freaking alien or this country completely off its tits?
Infidel Tiger
22 Feb 13 at 2:28 pm
Enjoyed a 30C per litre from Woolworths in the last few weeks!
Mike of Marion
22 Feb 13 at 2:32 pm
Vietnamese immigrants can’t easily start up an airline either. But if existing airlines overcharge excessively for long enough, a new airline will pop up and take market share.
Essentially your argument is that, because it ties petrol and grocery retailing together, and it’s annoying you, then it is uncompetitive and should be banned.
As pointed out by face ache – petrol stations are grocery retailers with some petrol pumps out the front to bring in the punters.
Where does this type of thinking end? I get miffed that business class passenger gets to board earlier than me on an airline, and that should be banned?
Ultimately petrol dockets are returning benefits of some kind to the retailers and consumers alike. It might be hurting some because they don’t like it or can’t start up a competing petrol station easily – all that means is that the margins are slim, prices are as low as they can be and only large companies can make a buck. That generally means that consumers are doing well out of the deal.
brc
22 Feb 13 at 2:53 pm
My overall point here is that, if it gets to the point where you’re clearly being disadvantaged by turning up without a shopping docket, competing retailers will start offering docket-less petrol stations. As long as they aren’t blocked in doing so by illegal means, then that’s just the way it is.
Those advocating interference have to first prove they aren’t going to make things worse for everyone by banning this or that.
brc
22 Feb 13 at 2:55 pm
When did the ACCC go bad?
Under Fels and Samuel, I had the impression that they were doing a good job. Labor stuck them with a Green consumer activist as Dep Chair and I have the sense that was the start of the rot.
Anyone have thoughts?
johno
22 Feb 13 at 3:10 pm
They were always pretty dodgy, Johno, but they so seem to have gotten worse over the last few years. From the article:
So, in 2007, they concluded that the 4c discount was good for competition and good for consumers… but now they’re even more competitive, they think it might be bad.
Fleeced
22 Feb 13 at 3:39 pm
@Harold
FFS….. do you work for the ACCC?
Its a fucking promotion!
What about on the back of your Coles/Woolworths dockets.
Should shopadockets be outlawed?
The fuel business is a separate ferkin business unit!
Whats next for the ACCC? make Wesfarmers get rid of Bunnings? Woolworths get rid Masters Home Improvements.
Get rid of the ferkin useless ACCC.
NoFixedAddress
22 Feb 13 at 3:48 pm
You’re a pussy Sinclair – here’s a list of lots of things that should be abolished. The ACCC is only number 9 out of 75.
MACK1
22 Feb 13 at 4:15 pm
I sometimes wonder if Gough Whitlam read Ayn Rand’s novel of economic madness “Atlas Shrugged” and said to himself, “What brilliant ideas some of these storybook characters have, I shall create an ACCC.”
I realized what the ACCC was all about when it recently tried to (in effect) nationalize the privately built iron-ore freight railways in the Pilbara because these monumental investments in productive infrastructure were a bit to good at justifying the reason for building them, by giving their owners a competitive advantage. So of course they have to be shared with competitors, in other words effectively nationalized.
The political pathway to abolish it is first to rename it the Australian Cutting Off Winners at the Knees Commission. Then give the public a few years to see how well the name fits, then abolish it. It’s like an umpire stopping a race every few minutes to let the losers catch up and keep all the punters guessing.
Maxwell's demon
22 Feb 13 at 4:40 pm
Maxwell, that IPA list has removing the ban on parallell importation of books, but not removing the ban on parallell importation of cars.
One is easily circumvented through the internet. The other costs Australian car buyers $3.5 billion a year.
Forget books, the real savings are in allowing parallell car imports.
brc
22 Feb 13 at 5:04 pm
brc it probably is covered under these items:
30 Cease subsidising the car industry
60 Remove all remaining tariff and non-tariff barriers to international trade
64 End all hidden protectionist measures, such as preferences for local manufacturers in government tendering
Infidel Tiger
22 Feb 13 at 5:09 pm
yeah but if books can be called out, so can cars. Everyone thinks its the subsidies and the tariffs, but the really big money is made by the manufacturers who don’t have to worry about a dealership in Auckland or Hong Kong undercutting them by 50%
brc
22 Feb 13 at 5:11 pm
…and further on that point- why doesn’t the ACCC criticise government protectionist policies? They do far more harm to consumers than shop-a-dockets
brc
22 Feb 13 at 5:12 pm
Recall a second Coasean maxim: Virtually anything you do gets you into trouble. Raise prices and you are part of a cartel. Lower prices and you are guilty of predation. Keep them constant and you are engaging in monopoly maintenance.
Jim Rose
22 Feb 13 at 5:19 pm
The ACCC are the Washington Generals of prosecution so we shouldn’t worry too much.
Infidel Tiger
22 Feb 13 at 5:27 pm
For a compromise, why not let the socialists keep their beloved ACCC but strip it of all enforcement power.
After all, if the consumer is not sovereign and has no power to choose other than that which the government confers on us, then competition is just an abstraction and a wasteful duplication of resources.
But if competition is meaningful and the consumer is sovereign, then all [s]he needs is the means to make an informed choice. ACCC could just issue warnings and leave it at that.
Maxwell's demon
22 Feb 13 at 5:46 pm
Infidel Tiger, You may be alienated by the sight of so many countrymen not weaned from the supposed benefit of cheap fuel, milk or power offered by a sly market sow “off its tits”.
Leo G
22 Feb 13 at 6:05 pm
Do we all agree that capitalism needs a enforced laws to keep a level playing field?
Yes or No.
If yes, then lets stop crap*ing about abolishing the ACCC. and talk instead how best to define and maintain healthy competition with minimum intrusion, and how to get good commissioners like Fells.
If no, then please explain the concept of monopoly power, predatory pricing, third line forcing etc and why they don’t matter.
MichaelC58
22 Feb 13 at 6:13 pm
MichaelC58, is it Capitalism or Mercantilism that needs enforced laws? What regime is improved by laws that are not enforceable? A level playing field might be desired by onlookers but but isn’t it intended at any time to be used by a duopoly? And was Fells really such a good commish fella?
Leo G
22 Feb 13 at 7:08 pm
You’re as clever as a kid who has found out about the joy of onanism. You are only impressing yourself and the equally naive yet self assuredly all knowing.
The ACCC is openly opposing competition and going against the general principle of their founding, and the ACC, which has been fairly useless, is NOT “the police”.
Idiot.
Yep lol the ACCC and ACC are stopping Australia from turning into a disastrous, free-wheeling anarchy.
What a small minded and pettifogging alarmist.
.
22 Feb 13 at 7:08 pm
No.
The law engendering the existence of the ACCC and its powers furthermore promotes a static model of competition and does not consider the role of profit in signalling.
.
22 Feb 13 at 7:09 pm
Let’s get real. Shopper dockets do not lead to lower fuel costs and/or lower grocery costs. It is a con.
Andrew
22 Feb 13 at 8:18 pm
Not fair. That’s like saying advertising, branding and creating brand loyalty does not lead to lower prices. It’s an essential part of capitalism and, as such, indirectly it does.
Certainly trying to control what businesses do to promote their products, so long as they’re not lying or being fraudulent, is a foolish thing to do.
John Mc
22 Feb 13 at 8:24 pm
Indirectly those things create lower prices, but the shopper dockets simply give the people who use the dockets the price it should be at and the people who don’t get an overinflated price.
Andrew
22 Feb 13 at 8:29 pm
My goodness, I never thought I’d see the day when the ACCC would complain about cheaper fuel. The ACCC is already looking into suppliers Complaints against retailers. Goodness, consumers must be getting lower prices for their food – gotta stop that. Bizarre. Someone at the ACCC must have worked behind the iron curtain in the 60s – fond memories of state controlled empty supermarket shelves perhaps.
Jack
22 Feb 13 at 8:37 pm
How is “the price is should be at” determined?
Toxic
22 Feb 13 at 8:39 pm
and the people who don’t get an overinflated price
Then they’ll go elsewhere in time. Perhaps Woolworths is making a bad decision with this one. Time will tell, and CEOs and executives will rise or fall as a consequence.
Not to mention, if they have got it wrong, they’ve just created an entry point for a new competitor. Good, we need some more competition in the grocery sector.
John Mc
22 Feb 13 at 8:41 pm
I understand the market determines the price but that does not mean that the dockets aren’t ripping people off and the price is not inflated. The price shown displays a price that has 8c added on.
Andrew
22 Feb 13 at 8:44 pm
Discounts such as on petrol matter more to those further away from the supermarket who are on tighter budgets for petrol and a more likely to not shop far from home.
The petrol discount reduces the full price for more price sensitive buyer: full price is cash prices plus search and commuting costs plus shopping time. time spent consuming a product is part of its full price too.
Pizza huts are known to distribute discount vouchers in further away suburbs because these consumers are less likely to but unless there is a targeted price cut.
Coupons keep the posted price paid by price-insensitive buyers while using coupon discounts to maintain the price for price-sensitive buyers. Sensitively to petrol prices can correlate greater price sensitivity generally.
The ACCC spends its time protecting consumers from the scourge of lower prices.
HT: McKenzie, Richard B. Why Popcorn Costs So Much at the Movies: And Other Pricing Puzzles
Jim Rose
22 Feb 13 at 9:04 pm
“The price shown displays a price that has 8c added on.”
This is not the case. You can dependably find petrol stations (7-Eleven, etc.) which charge 1-2c less for petrol. They can charge as they please for petrol, yet do not charge substantially less. If Woolworths and Coles weren’t eating that ~6c difference, other petrol stations could charge a fair bit less than that.
Woolies and Coles eat the difference because it gets people into their supermarkets, and changes their purchasing behaviour. It would be cheaper than half-price promotions etc. If they were to disappear, the undiscounted price of fuel wouldn’t go anywhere.
Toxic
22 Feb 13 at 9:09 pm
The ACCC has repeatedly tried to prove that, under intense political pressure to prove that, and has repeatedly failed. There is zero evidence. Zero. There is more evidence of psychic powers and flying saucers.
wreckage
22 Feb 13 at 9:18 pm
There is an infallible test as to whether the product bundling is pro-consumer!
Do the competitors to the supermarkets oppose the bundling? If they do, the bundling must be lowering prices and putting their profits under pressure.
When was the last time a competitor complained about their rivals putting their prices up? Either you hold your prices and take their business or follow their pricing lead: can’t lose.
If the supermarkets concerned do indeed have market power, the competitive fringe and fellow oligopolists will follow the bundling supermarkets’ price leadership and the tacit collusion will be even more profitable.
firms that do not profit maximise do not survive in market competition with those that do, as the late Armen Alchian pointed out 62 years ago.
Aaron Director got his start by demonstrating the feeble economic basis of competition law’s opposition to tie-ins and bundling.
Microsoft was accused of the predatory bundling of explorer for free with windows 95. Still waiting for this predation to clear the field and microsoft to extract long-run monopoly profits from explorer.
Jim Rose
22 Feb 13 at 9:47 pm
There will either be the 8 cents on the fuel or they will jack up their prices on other goods.
Andrew
22 Feb 13 at 9:52 pm
on jacking up prices elsewhere, do you have any evidence that the firm concerned is not already charging the profit-maximising price in these other markets?
Jim Rose
22 Feb 13 at 10:33 pm
How certain can we be about the price of petrol?
Before the late 1990s the composition of petrol was reasonably well-defined. However petrol is now a variable blend of hydrocarbon components each of which differs in energy-content per unit volume and it has a lower density (and energy density) than the earlier naptha-based fuel.
Those regulatory changes allowed producers to more than double the amount of fuel from the same quantity of petroleum feedstock (using modern catalytic cracking and lower-cost input energy sources).
Moreover, the permissible variation of the energy per litre of any petrol type is up to 15%, though averaged over a long-period the permitted variation is less.
Consequently petrol suppliers can vary the price of the petrol (by energy content) more by cyclical variation of its composition than can a retailer with cyclical discounting.
Leo G
22 Feb 13 at 11:23 pm
it is common to claim the petrol prices changes and an absence of petrol prices changes are each evidence of collusive pricing.
Jim Rose
22 Feb 13 at 11:41 pm
In WA, the state restricted the ability to change petrol prices too often in a day.
The result was if the station pitched their last price change too high, they had few more customers for the rest of the day.
Jim Rose
22 Feb 13 at 11:44 pm
I am with Sinc and co on this one but I don’t think it is a sufficient reason to abolish ACCC.
I know extreme catalaxians are against anti-trust laws but I think the jury is still out.
Boris
23 Feb 13 at 12:45 am
Put me in charge of Woolies in an absolutely free market and everyone would be wanting the ACCC back pretty quick. First buy that pesky little Aldi, then energy retailers of gas and electricity and any fuel retailers left (or just crush them whatever is the cheapest way) then the power generators and guess what I would charge, whatever I want(maximum I can charge without a serious risk of competition) Everyone uses energy in some form or another.
It is fair enough to question the ACCC on a particular decision but not it’s existance.
kelly liddle
23 Feb 13 at 6:38 am
“Extreme catallaxians”
My God this is some hysterical, Boris. Do you realise anti trust in the long run hurts consumers in absolute terms? The relative amounts that consumers and producers can gouge each other for is of little concern.
The net result of such laws is to curtail the entry to the market of large foreign participants and to stop firms finding their most efficient form of organisation, and draw newer companies in with a profit signal – all at more efficient scales.
Anti trust isn’t really an example of unintended consequences, it is just not thought through very well – anti trust laws reduce consumer welfare in a dynamic sense.
.
23 Feb 13 at 8:34 am
I agree this is (another) stupid ACCC decision, but, like Boris, I don’t think you should throw out anti-trust completely.
It’s easy to say competition always wins out in the long run. That’s probably quite true. But it still leaves a lot of opportunity for building monopolies in the short run, and then pricing accordingly.
I’ve just read a great article about health prices in the US. One of the points it makes is how hospitals are merging with nearby hospitals and with ancillary services like lab testing and ambulance companies, to create giant, vertically integrated, local monopolies that can charge whatever they want. Which is how a few days in hospital can get you six-figure bills (and then you find out your insurance had a $50k upper limit).
http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-killing-us/print/
It’s not an apologia for ObamaCare, by the way — it says that will make the problem even worse. But it does demonstrate where unchecked monopoly power can lead.
Piett
23 Feb 13 at 8:58 am
“When the Coles/Woolworths stations up the price mid-morning by 15c a litre (for no reason other than they want to)”
Andre, that’s exactly as it should be.
“all the so called competition of non-aligned petrol stations do the same.”
Why on earth do they do that? They should up the price by a bit less, and take customers from C/W.
Jarrah
23 Feb 13 at 10:52 am
They are seriously charging $16000 a day for a hospital stay?
There are regional centres in Australia where a hospital stay for a week with surgery doesn’t cost quite that much.
.
23 Feb 13 at 10:58 am
Dot,
As entrepreneurial people, why aren’t we jetting over to the US right now to set up low-cost health centres? The price signals are certainly there. I’ll just see my bank manager on Monday for a $100 mil overdraft, and we’ll be good to go!
Piett
23 Feb 13 at 1:09 pm
You and I both know it is run by Government backed cartels.
PS
Dr Geoffrey Edelsten was a hero, not a villian.
.
23 Feb 13 at 3:39 pm
The Woolies/Coles petrol docket 4c/litre discount is rubbish.
Locally I have a Coles and a Woolies but need to travel 40k in one direction and 60k in the other to buy from an affiliated servo. 4c/litre for me filling the car is about $1.50.
When I commuted into the city I regularly filled up at service stations who were, if ever, only 1c dearer than the ones with the docket discount of 4c/L.
I saw no point.
The local IGA will give you the same discount if you take your petrol docket to them, they will take 4c/L off your shopping if you spend $30. Not worth the effort, either.
Petrol dockets from supermarkets are a marketing/loyalty con.
kae
23 Feb 13 at 6:38 pm
Hey Kae, I was down deep in the hills past Thornton today on a friends property. This must be the only place in the world where floods makes things more beautiful. I saw the ’2nd Australia Day’ celebrations in Laidley on the way through.
John Mc
23 Feb 13 at 6:45 pm
Hi John Mc
We should have a gathering to ‘woomba soon? Before the nights get too freezy!
Spotted Cow, never been there.
Mulgowie had the Bull Ride last Saturday at the refurbished pub (got cleaned up by a drunk backpacker driver a year or so ago, was rebuilt just in time for the floods a month ago!).
kae
23 Feb 13 at 6:49 pm
Hope the parade didn’t hold you up!
kae
23 Feb 13 at 6:50 pm
We had to detour around it. We had al look, it was good.
John Mc
23 Feb 13 at 6:58 pm
That Mulgowie Steak House looks good. The problem with Mulgowie is you’re never passing through, you actually have to be going there.
Yes a Toowoomba gathering should be on the cards. The Brisbane crowd should make the effort to get up here and see what civilisation looks like; it’s just jungle and snakes east of the Lockyer Valley y’know.
John Mc
23 Feb 13 at 7:03 pm
The shops in town have done a great job to be up and running in a short time.
The IGA was open within a few days!
kae
23 Feb 13 at 8:25 pm