A decision by the liquor regulator to ban shopper docket deals for alcohol was quashed after "intimidation" – including complaints to ministers and legal threats – by Woolworths, according to internal documents.
On July 26 (2013), the NSW Office of Liquor Gaming and Racing's director of compliance, Paul Newson, decided an investigation showed the docket deals encouraged the abuse of alcohol, and recommended a ban on Coles Liquor shopper dockets, despite the potential for legal action from Coles or Woolworths.
Amid the investigation, which was conducted into both supermarkets and involved an undercover officer being sold six bottles of wine and receiving 18 free ciders using one Woolworths docket, Woolworths had threatened to take Federal Court action against OLGR, and sought the intervention of then hospitality minister George Souris and Deputy Premier Andrew Stoner.
A NSW Trade and Investment internal brief on June 24 describes Woolworths attempted to "intimidate and disrupt OLGR’s regulatory intervention and interfere".
When first told by OLGR to respond, Woolworths' lawyer said his client was thinking about "ignoring" the investigation because it "attacked the fundamental concept of discount liquor", regulator notes show.
Woolworths became irate when OLGR confirmed its investigation to media in April.
"Woolworths' correspondence appears to be a calculated attempt to undermine ongoing regulatory inquiries and quash OLGR’s capacity to ventilate regulatory activities of public interest," NSW Trade and Investment spokesman Mark Nolan wrote in a June internal brief. The brief was endorsed by Mr Newson and Trade and Investment's acting director-general Jeannine Biviano.
In deciding a ban should be applied, Mr Newson wrote in his July report: "Attempts to portray alcohol as an ordinary commodity comparable to household grocery items should be rejected as spurious. Alcohol is unequivocally a regulated substance."
Documents released under the freedom of information law show the decision, and a draft letter to be sent to Coles, was endorsed by OLGR’s executive director Elizabeth Tydd.
But the decision was overturned on July 29 by Trade and Investment director-general Mark Paterson, a former head of the NSW Retail Traders Association, tasked by Mr Souris with responding to Woolworths complaints.
Hand-written notes by Mr Paterson on the report strike out the recommendation, and he added: "Not satisfied that case made out".
A separate report on Woolworths on August 28 states any action must be consistent with Mr Paterson’s verdict on Coles.
The Foundation for Alcohol Research and Education (FARE), which obtained the documents, has written to Attorney General Brad Hazzard complaining about the process.
FARE chief executive Michael Thorn said the correspondence shows clear industry interference, and the decision by Mr Paterson to reverse OLGRs decision was "disturbing". FARE wants the liquor regulator removed from the trade department.
Greens NSW MP John Kaye said: "Woolworths successfully mounted a ruthless lobbying assault on the regulator. Trashing the evidence and threatening legal action effectively pushed the director-general to reject his department’s advice."
Mr Kaye has called for an independent review of Mr Paterson’s decision, saying it suggested "political pressure" had been applied.
Mr Paterson responded on Saturday saying he had "no instructions from the former hospitality minister about the conclusions I should reach".
"I am required to exercise my judgment based on all the material before me including recommendations of staff, as I did on this occasion. I am not bound by recommendations," Mr Paterson said.
Mr Souris said: "The director-general came to his independent statutory position on determining the matter without reference to me, other than advising me of the outcome after he had determined."
A Woolworths Liquor spokeswoman said: "OLGR’s investigation ultimately found that retailers could continue to offer these promotions".
"We corresponded with government about our concerns that the details of an ongoing investigation were canvassed in the media and reject any suggestion that we placed undue pressure on the regulator or the department."
Mr Newson was appointed executive director of OLGR in February.