Rivals: Force Z to sell stations
The competition watchdog is being lobbied to force Z Energy to shed petrol stations and truckstops as a condition of its purchase of Caltex owner Chevron New Zealand.
The regulator is currently taking submissions on the $785 million deal, which would create a combined entity which sells around half of New Zealand’s transport fuels.
Z Energy, which is part owned by the NZ Superannuation Fund, is confident the deal will be approved, spending $40m before the Commerce Commission announces whether it will allow it.
However chief executive Mike Bennetts said the company had considered the possibility it would be asked to sell assets and the agreement with Chevron had mechanisms which reflect this. Public submissions from industry groups and fuel companies raised concerns about the retail power the merged company would have, in particular in smaller centres.
Australian-owned Gull claims that in 10 areas across the North Island, from Kaikohe to Hawera, it believed there was ‘‘significant’’ scope for the deal to lead to reduced retail competition. Across the rest of the North Island there were large areas where it would be possible competition would be reduced.
‘‘There’s going to be markets where you’re going to have reduced competition,’’ Gull managing director Dave Bodger said, adding that in similar markets, competition regulators had taken measures to protect consumers.
‘‘If you look at what’s happened in Australia where similar acquisitions have taken place’’ competition authorities had required ‘‘sales of sites and sales of terminal assets’’.
Z argues that there are only five areas where consumers would see the options reduce from two companies into one within a five kilometre radius.
BP, Z’s largest competitor, argues that ‘‘competition issues’’ would arise in more areas than was being claimed. ‘‘If the commission has concerns that competition would be substantially lessened in these local areas, then Z should be required to divest stations in these locations,’’ BP’s commercial integration manager Charlie Duke said.
Automobile Association (AA) principal adviser Mark Stockdale said the organisation had observed areas where otherwise similar towns had substantially different fuel prices, which it put down to a lack of competition. The risk of ‘‘disparate fuel pricing’’ would increase if Z and Caltex had the same owners. ‘‘In some cases the higher prices that we see can be 10-12 cents more expensive [a litre] than in neighbouring towns, and that just makes no sense,’’ Stockdale said.
Retail competition is one of string of areas where rivals and the industry warn a combined Z/Caltex would have a dominant position, with concerns raised about the control of fuel terminals at ports, sales of bitumen and a large number of truck stops.
The AA warns Caltex and Z will dominate 95 octane sales in North Island towns and to counter the risk of market dominance it should display the prices on station fuel boards. Mobil says the deal would give Z a hand in three of the four main loyalty schemes.
Z played down the risk of market dominance. Bennetts said the company faced natural checks and balances which applied across the various parts of the industry, with rivals having the option of establishing assets in areas where they believed competition was limited.
‘‘ If we were to be overbearing in one location, we do not hold the superior position everywhere.’’
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