Retail fuel market to be investigated by Commerce Commission after importer margins double

December 3, 2018

The Prime Minister said it was the first market study of its kind in New Zealand, as petrol prices remain high.

The retail fuel market will be the first market to be studied by the Commerce Commission, which will investigate competition in the industry after importer margins more than doubled over the past decade, the Government has announced.

Prime Minister Jacinda Ardern says the Government is committed to easing financial pressure on families and she has previously voiced her concern about the high cost of fuel, because it is a core expense for consumers and businesses.

“New Zealanders deserve peace of mind that the price they’re paying at the pump is fair,” Ms Ardern said. 

“At the moment we can’t definitively say whether that is in fact the case across New Zealand so this is a market that most certainly warrants a full investigation.”

Commerce and Consumer Affairs Minister Kris Faafoi says while several possible markets were mooted for consideration, the retail fuel market clearly met the test for investigations. 

“Simply, it’s in the public interest to ensure people and business aren’t paying too much for fuel," he said. 

Petrol is now more important of a concern than poverty and healthcare, Ipsos managing director Carin Hercock tells Breakfast.

"There are existing indications of competition problems in the retail fuel market that are of concern to me, such as the more than doubling of petrol and diesel importer margins over the past decade."

Mr Faafoi said it's also a market that is hugely important to consumers and our economy, given the extent to which we rely on fuel and the size of the market, with around six billion litres of petrol and diesel consumed for land transport use annually.

The Commerce Commission will be undertaking a full and thorough analysis into competition in the retail fuel market, he said. 

New Zealanders are paying more for petrol – and the PM feels their pain - she told media in Wellington today.

"This will enable us to better understand the market conditions and determine whether consumers’ interests are being protected at present, and if not, what action needs to be taken.”

The terms of reference for the study are expected be published in the Gazette on Wednesday, when the Commerce Commission will start the study.

The commission will provide further information about the process and updates and will be required to publish a final report by December 2019.

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