Coles has told C&I Week it “does not comment on petrol prices” amid allegations the company is charging two to three cents higher than average market prices at its Coles Express outlets.
In a report published by Fairfax Media earlier this week it is alleged that the additional profit margins are being used to bolster earnings as the company reduces prices in other areas of its business such as Coles food and liquor.
However ACCC chairman, Rod Sims, said the ACCC – while it will keep a “close eye” on such matters – needs to establish whether Coles’ above market pricing was a short term or long term strategy and analyse the response from competitors.
In a market characterised by falling petrol prices, Mr Sims said: “There’s some sense that rather than reducing petrol prices they are, if anything, doing the reverse at the moment”.
According to a recent Deutsche Bank report while retail fuel prices had fallen seven per cent (year on year) in the March quarter, Coles’ sales results implied its prices had fallen only 2.6 per cent, Fairfax reported.
Should Coles maintain this suggested petrol price gap, Deutsche Bank analyst, Michael Simotas, suggested that Coles’ premium prices could assist the company to counter the impact of its increased investment in grocery prices.
“We believe this tailwind, combined with operating leverage from strong like for like sales growth in supermarkets, should provide Coles with the firepower it needs to continue to invest heavily in prices while maintaining or continuing to grow food and liquor and petrol margins [and keeping the pressure on Woolworths],” Mr Simotas told Fairfax.
Mr Sims said while Coles Express petrol prices appear to be anecdotally consistent with the Deutsche Bank report, “it’s too early to tell”.