Competition watchdog probed by MPs over $2.5m cost of petrol study

Friday, 13 December 2019

Some petrol market changes could be implemented voluntarily without legislation, commission believed. (Video first published in January, 2020)

The country's competition watchdog estimates it spent about $2.5 million on its market study into the fuel industry, which was about $1m more than the average such studies were expected to cost.

The Commerce Commission has received $6m over four years to pay for market studies into industries where competition is believed to be a problem.

But the cost of the study into the $10 billion retail fuel industry means it may need a top-up if it is to achieve a goal of undertaking about one market study a year.

The market studies have been made possible by new powers that allow the commission to compel private companies to provide it with information, though chairwoman Anna Rawlings said it had not needed to invoke that power during the fuel study.

The Commerce Commission says it has no particular view on which industry should be next up for scrutiny.

* Petrol could fall 18c a litre if fuel retailers forced to show price

* Independent petrol retailers afraid to 'stick neck out' during fuel study, says MTA**

Commerce Commission chief executive Adrienne Meikle told Parliament's Economic Development, Science and Innovation select committee that as the fuel study was its first, it had 'learnt a lot about what resources it does take'.

But Rawlings said each study could be different from the next.

The commission had not attempted to find out how much fuel companies had spent participating in the study, she said.

BP won't say whether it might agree to display the price of its premium fuels on its roadside board voluntarily, or would wait for legislation.

Rawlings agreed the study had reached similar conclusions to one produced by the Ministry of Business, Innovation and Employment in 2017, but said it went 'significantly further'.

The 589-page report recommended petrol companies be required to display the price of all their fuels on their roadside boards, and wholesale market reforms which would require BP, Mobil and Z to set and advertise a daily spot price at which they would sell fuel from their terminals.

BP, which expressed most reservations about the former recommendation during submissions, would not comment on Wednesday on whether it might implement those changes voluntarily.

'BP's focus is on engagement with MBIE and the Government following the release of the final report, spokesman Gordon Gillan said.

'We are considering the recommendations in the report including the display of premium fuel prices on roadside signs.'

Rawlings expected the subject of the next market study would be decided early next year.

There is speculation the building products industry and the supermarket industry might be likely future targets.

Rawlings said the topic of the next study would be a matter for Commerce Minister Kris Faafoi and the commission did not have a particular view on what it should be.