THE NEWS WRAP: Competition watchdog secures deal limiting fuel discounts

Competition watchdog the ACCC has secured a deal with supermarket giants Coles and Woolworths capping petrol discounts at 4¢ a litre.

 

The deal will see large cross-subsidies for fuel, estimated at between $350 million to $509 million in 2013, reallocated to deeper discounts on grocery items.

 

“I’m quite pleased with them giving discounts off groceries and discounts off petrol – it was the linkage we objected to,” ACCC chairman Rod Sims says.

 

“[The major supermarket chains were] using their position and profits in one market to subsidise prices in another market – that was what was causing the problems.

 

“Our evidence was it appeared when shopper dockets went above 4¢ a litre that petrol prices went up. People who didn’t have shopper dockets were paying more for petrol when shopper dockets went above 4¢ a litre.”

 

Jetstar Asia records a profit as Qantas nosedives

 

Jetstar Asia, a joint venture partly owned by troubled airline Qantas, has reported a small full-year profit for the year to June.

 

The airline, owned 49% by Qantas with the remainder held by Singaporean businessman Dennis Choo, posted a bottom-line profit of $S2.5 million ($A2.2 million) for the year to June, compared with $S2.1 million a year earlier.

 

However, the carrier faces intensifying competition from other low-cost carriers in south-east Asia, including Malaysia’s AirAsia and Singapore Airlines-backed Tiger Airways.

 

Chinese shadow banking warnings

 

Experts are warning China’s economy could be derailed by excessive borrowing through the shadow banking system, with the sector now accounting for the equivalent of 40% of China’s gross domestic product (GDP).

 

The growth of the sector has been caused by strict lending requirements to non-government entities, forcing many businesses to look elsewhere for finance.

 

“Shadow banking is the financial activity that exists outside the formal banking sector,” says Peking University finance professor Michael Pettis.

 

“So it includes things like wealth-management products, it includes pawn shops, it includes a wide variety of things – but basically it’s the non-regulated part of the banking sector.”

 

“There’s been an increasing sense that a lot of [that] borrowing is simply going to protect existing borrowers from going bankrupt.”

 

Overnight

 

The Dow Jones Industrial Average closed up to 15882.2. The Aussie dollar is at US87.53 cents.

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