Australian Regulator Seeks Law to Pursue Gasoline Retailers on Fuel Price

The Australian government must close a legal loophole that allows gasoline retailers to share price information with impunity from competition laws, said the head of the country’s competition regulator.

Caltex Australia Ltd., BP Plc and Exxon Mobil Corp. can share information, allowing gasoline prices to rise and fall in tandem, and yet they can’t be prosecuted because the law requires them make a commitment to match their prices, Graeme Samuel said in an interview today at his office at the Australian Competition and Consumer Commission in Sydney.

“We’ve said to government, we think there is a loophole in the law and it needs to be dealt with,” Samuel said. “It has been dealt with in the EU. It has been dealt with by the courts in the United States, and we think Australia is lagging in this area and needs to deal with it.”

The regulator is unable to prosecute the retailers without proof they entered into a commitment to set prices, Samuel said. The companies can meet, share information on pricing, and as long as they don’t formally agree to follow each other on pricing, they aren’t breaking the law, according to Samuel.

Availability of price information to competitors helps drive discounting of gasoline prices, benefiting the consumer, Sam Collyer, a Caltex spokesman based in Sydney, said in an e- mailed statement.

“We do not believe there is any ‘loophole’ in the law, or need for new laws,” Collyer said.

Jamie Jardine, a spokesman for BP in Melbourne, declined to comment on the company’s gasoline pricing policy. Exxon’s media representatives couldn’t immediately comment.

‘Strong Competition’

Caltex supports giving the pricing information to consumers at the same time as retailers, as long as the government pays for the service and all retailers participate in providing the data, according to Collyer.

A preliminary draft of a study in March by Professors Nicolas de Roos and Hajime Katayama of Sydney University on retail gasoline price cycles in Western Australia concluded that major companies led the price cycle, with independent retailers following, and participating.

“There is little point in being a maverick, little point in trying to rebel, because you get punished, because the others know exactly what you’re doing within seconds, within minutes,” Samuel said.

Retailers “play a war of attrition” until it becomes unprofitable to maintain a price level, at which point one of them increases the price and others follow, according to Collyer.

“There are no anti-competitive elements in this process,” he said. “On the contrary, the process is driven by strong competition.”

To contact the reporters on this story: Joe Schneider in Sydney at jschneider5@bloomberg.net; Angus Whitley in Sydney at awhitley1@bloomberg.net

To contact the editors responsible for this story: Iain Wilson at iwilson2@bloomberg.net; Douglas Wong at dwong19@bloomberg.net.

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