Australia: Woolies Chief Critical of FuelWatch

The Woolworths and Caltex alliance is the joint number-one seller of petrol in the country alongside Shell.  Woolworths chief executive Michael Luscombe said the government's plan to replicate the West Australian model across the country will hurt consumers.

"The system actually stifles competition," Mr Luscombe said. "A much better variation on the theme would allow people to go down with their prices but not back up again. "If the ability to go down in price to match competitors was added it would be a much better mechanism for the market place."

But Mr Luscombe said there was not a lot of room for movement as the profit margin was only 1.5 per litre of petrol. The competition watchdog estimates the FuelWatch system will cut fuel prices by nearly 2 a litre.

But Mr Luscombe said that under the West Australian system petrol station owners had to be really good "guessers" to compete. "Our analysis shows FuelWatch hasn't delivered what it claims in Western Australia."

The Rudd Government's FuelWatch system will force retailers to declare a fixed 24-hour price of petrol at 2pm the previous day. Mr Luscombe said the vast bulk of its sales in the major metropolitan centres came during its discount days in the middle of the week.

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