"The ACCC has conducted an extensive review of the tying of petrol discounts to grocery sales by both Coles Myer and Woolworths," said ACCC Chairman, Graeme Samuel. "It found that the introduction of the shopper docket schemes has encouraged competition and lower prices in the fuel market.

"The ACCC considers there are substantial benefits for consumers from shopper docket discounts. These offers are pro-competitive because they drive competition between supermarkets and petrol retailers. In addition to the effect on price, retailers must become more innovative in non-price factors, such as additional services, to gain or maintain market share.

Samuel also sought to refute claims by the Service Station Association that up to 1,500 independent operators would disappear in the next five years because of Coles and Woolworths aggressive move into petrol retailing.

"In its investigations, the ACCC heard claims that the discount schemes would reduce the number of independents operating," said Samuel.

"Some concerns were raised that, with fewer independents, the shopper docket discounts would entrench the dominance of the majors with long term effects on competition and prices.

"The ACCC considers that, in view of other developments affecting competitiveness in petrol and grocery retailing, the shopper docket discounts will be only a marginal determinant of whether independent retailers remain in these sectors. The ACCC also noted the United Kingdom experience where major supermarkets have been involved in petrol retailing for more than ten years and the discounting of petrol prices is still occurring".

Already the Independent Grocers of Australia (IGA) have launched a counter proposal in its Queensland stores. Although similar to the offers from Coles and Woolworths the IGA promotion has the distinct advantage of allowing the consumer to buy their fuel at any chain of service stations, simply requiring them to display their receipt within 14 days after purchasing petrol and spending just $30 minimum at an IGA store.

The other major change to the system is that IGA will reimburse customers at the retail stores instead of the bowser. In order to claim on the refund customers will need to fill up with fuel at the outlet of their choice; bring the fuel receipt to an IGA store on a Friday; spend $30 on groceries and then collect a reimbursement of 4c per litre.

Customers are therefore able to claim an over all 8 cent reduction by receiving the 4 cent reduction from Coles and Woolworth incentives and then take their fuel receipt to IGA to double the saving.

Additionally WA's independent retailers are planning to join together in an IGA style bid to take on the retail giants in a city-wide discount scheme which is due to be launched before Shell and Coles Myer launch their scheme in mid-March.

Not to be outdone, WA-based food retailer Foodland Associated, which owns Action stores and supplies Dewsons supermarkets, has reportedly launched a bid for 18 Mobil sites in Perth.

The move would allow Foodland to take on the retail giants while eliminating the need for a partnership with one of the major fuel companies, which would mean relinquishing some control of the operation.