The Australian Competition and Consumer Commission (ACCC) will be releasing eight reports monitoring petrol prices and the movements of the overall fuel market in 2015.
The studies will come as a result of a new direction issued under section 95ZE of the Competition and Consumer Act 2010 by Minister for Small Business Bruce Billson in December 2014.
In a statement released last week, Mr Billson expressed his belief that “competitive pressures alone” were not enough “to ensure efficient pricing and the protection of consumers.”
“Monitoring reports will now be produced quarterly to be more informative, responsive and able to identify areas of market concern or heightened interest for the community,” Mr Billson said.
“In addition, the new direction also empowers the Commission to undertake a ‘deep dive’ into specific markets or aspects of the fuel industry requiring closer and more specific examination. These reviews will target perceived irregularities in the fuel market or market dysfunction with potential detriment to motorists.”
ACCC Chairman Rod Sims has today provided details on the ACCC’s key areas of study, revealing the eight reports will include quarterly “macro” reports and at least four market studies focusing on “micro” issues.
“The first quarterly report will be released in February,” Mr Sims said.
“These quarterly reports could, for example, focus on the lags between international refined petrol price movements and changes in retail petrol prices in both the larger capital cities and in regional locations.”
Mr Sims said those living in regional locations have not seen the benefit of lower international prices. July 2014 saw the average price of petrol in regional Australia become 5.7 cents per litre (cpl) higher than prices in the country’s five largest cities. By December 2014, the difference had increased to 17.6 cpl.
The ACCC said their “micro” reports will look at what drives petrol prices in certain regional markets, as well as the costs of fuel in near ports, costs of transport and storage, and the costs associated with wholesale, distribution and retail.
“We acknowledge that complying with these notices can be a burden for businesses but this is the only way to uncover what is going on with petrol prices in specific regional locations,” Mr Sims said.
“We will only name the regional locations to be studied in this way once the compulsory notices have been issued. Otherwise we run the risk that market behaviours change before our study begins.”
Mr Sims said the ACCC was currently analysing their data on retail, wholesale and benchmark prices in order to identify which regional locations will be included in the market studies during 2015.
“We are looking at factors such as price differentials between regional markets and larger cities, differentials between towns of similar size and the variability of prices in regional markets over the past three years to assist us in determining the first target markets,” Mr Sims said.
“We expect to identify the three regional locations to be studied in the coming months, with the first to be announced in March. The reports will be delivered progressively throughout the year.”
The ACCC said the outcomes of these studies could find “anti-competitive activity” in breach of the Act, but notes no evidence “that can be put before a court” has been found in previous investigations.
“Even if no breaches are found, the ACCC believes such studies can play an important role as they can shine a light on specific markets where prices are relatively high. Such exposure can influence behaviour as consumers can see where the money is being made and seek appropriate change,” Mr Sims said.
“After the three market studies into particular regional regions we will be able to draw lessons of wider relevance to other regional markets. We may find consumers and local authorities in all regional areas will have a better ability to understand what drives their fuel price.”
