Supermarket giant Woolworths breached an agreement it had with the competition watchdog over its fuel discount scheme, the Federal Court has found.
Woolworths and its rival Coles agreed to limit their fuel discounts for shoppers to four cents per litre in a deal struck with the Australian Competition and Consumer Commission (ACCC) in December last year.
But only months after the undertaking was forged, the ACCC took the retailers to court alleging they were in breach of this agreement by offering larger discounts to shoppers who also spend money on groceries in their service stations.
In the case of Woolworths, the ACCC argued this breach occurred over two periods.
The first was from January 1 to March 9 this year, while the second dated from March 10.
Today, the Federal Court found that Woolworths was in breach of the agreement in the first instance but not in the second.
The court also dismissed the ACCC's claim against Coles.
In the instance where Woolworths was found to be in breach, the ACCC had argued that customers were able to obtain an eight cent per litre discount on fuel if they spent at least $30 in a Woolworths supermarket as well as $5 or more at a petrol station.
The ACCC said this fell squarely within the terms of the undertaking as "neither component of the total discount could be obtained unless the customer had spent the requisite sum in a supermarket".
Woolworths, though, made a number of arguments as to why it did not breach the agreement, including that the discount offers should be regarded as "separate".
But Justice Alan Robertson disagreed with the supermarket giant, saying it was in breach.
This was because the total discount was not only double the four cents agreed to with the ACCC but that it was also contingent on customers spending money on non-fuel goods.
Likewise, in relation to the Coles case, Justice Robertson said although the total discount that customers were potentially able to get at the fuel pump was well above the four cents - at 14 cents per litre - the full offer was not linked to supermarket purchases.
"In my opinion, four cents per litre of the offer only was contingent on supermarket purchases and 10 cents per litre of the offer only was contingent on an acquisition of goods or services from Coles Express."
Therefore, he found they were not in breach.