New Zealand Law Society - Government responds to Commerce Commission Fuel Market Study

Government responds to Commerce Commission Fuel Market Study

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The Government has released a response to the Commerce Commission's Fuel Market Study, released in December 2019.

The response agrees with the recommendation to institute a terminal gate pricing regime. It says the Government considers that this will increase wholesale price transparency and create the potential for a liquid wholesale spot market to develop.

"The Government will introduce legislation to enable such a regime. The Government supports introducing backstop regulatory powers. This will be added to the legislation at a future point," it says.

The response also agrees with the recommendation to change wholesale supply agreements. It says the Government considers that greater contractual freedom and fair contract terms will facilitate wholesale competition, and in turn facilitate competition in the retail market.

"The Government will introduce legislation to enable a regime which requires certain pro-competitive contractual terms to be included and certain anti-competitive terms to be excluded."

The response also agrees that the Government should make regulations to require retail sites to display premium petrol prices on price boards to better enable consumers to compare available prices.

It says the Government has written to participants in the retail fuel industry to encourage them to put premium prices on price boards at their sites now, ahead of regulations.

Monitoring display of discount pricing information on price boards and improving information and record keeping are also agreed to.

Energy and Resources Minister Megan Woods says she has written to fuel companies asking them to consider the Commission’s recommendations around shared infrastructure and report back by 30 March.

She says regulatory changes in the Fuel Market Bill currently being drafted include:

  • a more transparent wholesale pricing regime requiring fuel suppliers to publicly post the prices they sell to wholesale customers at storage terminals;
  • rules to ensure contracts between wholesale fuel suppliers and their customers are fair and support competition
  • providing a dispute resolution scheme for the new regime;
  • improvements to the monitoring of the fuel market by requiring fuel companies to collect and disclose certain information;
  • requiring retail fuel sites to display premium fuel prices on forecourt price boards.