The ACCC review of grocery prices came in for mixed reviews. In fact Frank Zumbo gave it a bollocking in a piece he wrote and as quotes in another.
I have only just got around to getting a copy of the report and the skim reading disappoints me. There are so many ways. But most importantly it is the complete failure to deal with industry structure in a meaningful way. Two small examples:
The report disparages the idea of greater transparency in pricing in the supply chain as it creates the opportunity for implicit collusion or explicit cartelisation. This ignores the power of information assymetry to entrench market power and ignores the fact that the best remedy against collusion is industry structure without a small number of large players.
The second is the extent to which the report treats speciality stores as competitors to supermarkets, as if the authors have never read about so called "imperfect competition" or monopolistic competition built around no-price differentiation.
But by far the worst is that the ACCC has now concluded a grocery and a petrol enquiry and hasn't discussed the "shop a docket" fuel voucher system. So let me explain how that works to increase prices.
Assume I need to buy $100 worth of groceries and $100 worth of petrol a week. ($100 worth means that much assuming the goods are priced at cost - i.e. competitively). When I go to buy my groceries I know they will give me a voucher for a 4% petrol discount. So I'm prepared to pay $103 for my groceries because I'll still be a dollar in front.
Having bought my groceries I'm prepared to pay $103 for the petrol because I'm a dollar in front on my purchase over buying petrol at cost elsewhere. Therefore the "discount" entices me to pay $206 less my $4 discount thus spending $2 more than if I'd purchased at cost.
Each decision of the consumer is rational. Unfortunately most cases of product bundling result in this kind of outcome. Bundling does not benefit the consumer, it benefits the firm with sufficient market power in one or ideally both firms to induce customers to pay too much.
By the way - ending shopper dockets is entirely within the power of the ACCC.