Shopper docket deep discounting

News today of a one day pricing experiment by both Coles and Woolworths offering 40 cent per litre vouchers for big spends (> $300) on groceries. I assume that that means that there will be some big grocery shopping days with the petrol vouchers used over the next week (if not you had better have an empty tank to get mileage out of this offer).

There are competition concerns although if this truly is temporary this is just a promotion. Moreover, the Coles/Woolies impact might just be against each other. I guess we will find out just how ‘sticky’ people’s shopping preferences really are. However, if this was a regular occurrence (i.e., monthly or more frequent) then this looks like the nightmare competition scenario that Stephen King and I identified in our papers on this subject (e.g., here). That scenario involved deep bundled discounts basically, with the main impacts potentially increased concentration but also mismatches in consumer choices of grocery and petrol retail outlets (i.e., they drive more than they want to those amenities). It will be interesting to see whether the ACCC considers persistent discounts predatory or not.