Australian Competition and Consumer Commission (ACCC) chair Rod Sims has warned petrol companies to cut their prices to well below $1.20 a litre, passing on lower world oil prices to consumers battling the COVID-19 crisis.
In a speech to an online financial conference, Mr Sims said the ACCC would be pressuring petrol retailers which were charging above $1.20 a litre to cut their prices.
He said the average price of petrol in Adelaide last week was only 97c per litre, while prices were much higher in other capital cities.
He cited high petrol prices of $1.34 cents a litre in Brisbane, $1.30 a litre in Melbourne, $1.26 a litre in Sydney, $1.37 a litre in Canberra and $1.44 a litre in Hobart last week as being too high in the current crisis as world oil prices were falling.
“World oil prices have plummeted with prices just over $US20 a barrel,” he said.
“As an oil importer this is good news for the Australian economy. Motorists need any price relief they can get at this time and petrol stations have, almost in all cases, been restocked with lower priced petrol.”
Mr Sims said prices above $1.30 a litre at the moment were “inappropriate, to put it mildly. This is not what Australians expect at this time of crisis.”
He said prices should, at the worst, be below $1.20 a litre and “heading considerably lower.”
“The ACCC will continue to apply pressure to achieve this pricing,” he said.
Mr Sims said the ACCC was also working to prevent price gouging and scams during the current crisis.
He said the ACCC had established a COVID-19 task force to quickly intervene in emerging consumer issues and help consumers with their rights when dealing with cancelled events or services, warning about scams and dealing with “poor behaviour including price gouging.”
Gouging on essentials
He said the ACCC had contacted major online platforms to encourage them to take down ad for “ridiculously priced” hand sanitiser, toilet rolls and other essential products.
He said the platforms had been willing to take down these ads.
Mr Sims said price gouging was not illegal as long as the seller did not make false claims about the product in trying to justify a much higher price.
But he said the ACCC would still be investigating consumer complaints about price gouging to see that “players in the value chain” had not unduly raised their margins to take advantage of the crisis.
Mr Sims said that while the ACCC was taking a much easier attitude towards co-operation agreements between major players such as the banks and supermarkets during the current crisis, it would be returning to its original more restrictive view of competition once the crisis was over.
Quick recovery
He said there was reason to hope that once the crisis was over, economic recovery could end up being “fairly quick”.
Mr Sims said more measures will be needed in future to “avoid a savage destruction of businesses, and of human and other capital.”
“We must look after the economy’s long term health,” he said.
But he said the ACCC was determine to ensure that the level of competition in the Australian economy was not diminished in the long term when the crisis was over.
“We must protect the economic structure we had going into this crisis and continue to work on reforms that can set us up for success post crisis,” he said.
“Australia wants to emerge from this crisis with competitive structures as close as possible to those we had going in,” he said.
He said “tough calls” would need to be made in terms of helping companies in trouble. But any decisions to help troubled companies needed to be made “within clear rules”.
Companies which might be assisted through the crisis needed to have been viable before the crisis and there needed to be an immediate exit plan once the crisis was over.
Mr Sims said there were “no right answers” about which businesses might be worth getting additional assistance. “Tough calls are going to have to be made,” he said.
“Those not assisted will complain, especially the competitors to those firms receiving assistance.”
He said the ACCC would also be involved in looking at any merger proposals which could involve companies hard hit by the crisis.
Extracted from The Australian