In Brief
- Under new laws, fuel retailers found to be unfairly increasing prices swill face hefty penalties.
- Treasurer Jim Chalmers said the crackdown will include lying about the reason for price increases, price fixing and colluding.
Fuel retailers found to be unfairly increasing prices while the war in the Middle East strains supplies will face hefty penalties under new laws.
On Wednesday, Treasurer Jim Chalmers introduced a bill aimed at tackling "price gouging at the source" by enabling the Australian Competition and Consumer Commission (ACCC) to impose higher penalties.
The changes will see maximum fines increased from $50 million to $100 million per offence.
"Since the start of the war, we have seen much higher prices for petrol and diesel across the country," Chalmers said on Wednesday in the House of Representatives.
"It's put more pressure on motorists and families who are already doing it tough.
"Our message to petrol retailers has been very clear: 'You are on notice. Do not use this conflict to take advantage of Australians.'"
Chalmers said the crackdown will include "lying about the reason for price increases, price fixing, colluding on prices and other cartel behaviour".
It comes a week after the ACCC launched a probe into petrol and diesel prices, after rises that outstripped international increases and more than 500 reports of potential price gouging.
The consumer watchdog will investigate allegations of price gouging by major fuel suppliers Ampol, BP, Mobil Oil and Viva Energy.
The announcement of that investigation came on the same day as the establishment of the fuel supply task force, led by Anthea Harris, who will drive coordination between states and the Commonwealth governments and provide updates on fuel supply outlook.
The Strait of Hormuz — the narrow, strategic waterway carrying about a fifth of the world's oil and gas — has been effectively shut down since fighting broke out on 28 February.
Since then, the widely used international benchmark for oil prices, Brent Crude, has risen from around US$72 ($103) a barrel to a high of $US112 a barrel on 20 March, according to Trading Economics.
The price per barrel has since dropped to around US$98.
Shaun Temby, commercial dispute lawyer and partner at Maddocks law firm, said it may take years for consumers to see the impact of the changes.
"ACCC investigations can take years in themselves and then fully contested court trials could be 18 months from commencement until hearing and then you have to wait for a Judgement," he told SBS News.
"In short, these new penalties wont kick in any meaningful way for several years. However, no doubt the government is hoping that the increased penalties will be a strong deterrent to businesses now from engaging in conduct that breaches the Australian consumer law."
Will penalties deter price gouging?
It is not the first time penalties have been increased, with the Albanese government raising them five-fold to $50 million in 2022.
Morgan Campbell, head of policy at consumer advocate group CHOICE, said the new penalties will have a "deterrent effect".
"If there's a company out there which is colluding with another company to keep prices high, there were going to be bigger penalties for that. So there's a deterrent effect in all of that," he told SBS News.
However, he expressed concern that there still isn't a ban on price gouging, questioning whether the absence of such a ban was fair and reasonable.
The Greens agreed, stating Chalmers was "misleading the Australian people" about the "crackdown", arguing it doesn't go far enough.
"The government's law doesn't make price gouging illegal, it just punishes companies that lie about doing it," Greens senator Nick McKim said.
Campbell suggested examining existing powers around the misuse of market power or looking at how other countries assess price shifts during supply disruptions.
"We've got a law that says it's illegal to use your market power to keep prices artificially low, but we have no law that says it's illegal to use your market power to keep prices artificially high," he said.
"Other countries have things in place specifically to address market disruptions and supply shortages, which say that, when there's a disruption or shortage, it's illegal to charge unreasonable prices."
Last year, Labor passed a price gouging ban on supermarkets, which will come into effect on 1 July.
Under the law, large retailers found to have charged prices that are excessive when compared to the cost of the supply, plus a reasonable margin, will face fines up to $10 million.
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