‘Concerns’ drive fuel probe

Petrol prices will come under the microscope in a groundbreaking new study by the competition watchdog.

Prime Minister Jacinda Ardern and Commerce and Consumer Affairs Minister Kris Faafoi have announced the retail fuel market will be the first market study to be undertaken by the Commerce Commission, under new powers granted to it weeks ago.

The move is far from a surprise. While Faafoi had earlier pledged to ‘‘take the politics out’’ of market-study powers, Ardern signalled that retail fuel was likely to be the first study of its kind back in early October.

‘‘New Zealanders deserve peace of mind that the price they’re paying at the pump is fair,’’Ardern said in a statement.

‘‘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.’’

Concerns about the fuel industry rose this year as petrol prices increased to record levels, nearly hitting $2.50 a litre in many areas.

Prices have since dropped sharply, with some predicting prices could drop below $2 a litre almost everywhere in the coming weeks.

Faafoi said several possible markets were suggested for the first study, but the retail fuel market ‘‘clearly met the test for investigations’’.

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

‘‘It’s also a market that is hugely important to consumers and to our economy, given the extent to which we rely on fuel and the size of the market, with around 6 billion litres of petrol and diesel consumed for land transport use annually.’’

Faafoi said the commission would undertake ‘‘a full and thorough analysis’’ of competition in the sector.

‘‘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.’’

Ardern has indicated that consumers could see some action on fuel prices early next year. However, in a select committee appearance on November 29, the commission warned the study could take more than a year.

The prime minister’s statement said the terms of reference for the study would be published in the New Zealand Gazette tomorrow.

The commission would be required to publish a final report by December 5, 2019.

‘‘This is a market that most certainly warrants a full investigation.’’ PM Jacinda Ardern