Fuel

Following a market study by the Commission, which found a number of shortcomings in the competitiveness of fuel markets in New Zealand, the Government introduced the Fuel Industry Act 2020 (the Act).

The Act sets up a regulatory regime for fuel with the purpose of promoting competition in engine fuel markets for the long-term benefit of consumers. It comes into force in stages from August 2021.

The key features of the Act include:

• a wholesale pricing regime, known as “terminal gate pricing”, which aims to promote competition by requiring wholesale fuel suppliers to offer a spot price at which they will sell fuel to wholesale customers at storage terminals
• rules governing contracts between wholesale fuel suppliers and their wholesale customers to allow greater contractual freedom for resellers to compare offers and switch suppliers
• a requirement on retail fuel outlets to display on their price boards the standard retail price of all fuels for sale at the retail site
• information disclosure requirements for fuel companies to enable monitoring of the competitive performance of fuel markets.

You can view the Fuel Industry Act on the NZ legislation website. The Fuel Industry Regulations 2021 were published on 8 July 2021 and provide further detail about the requirements of the Fuel Industry Act. The Regulations are also available on the NZ legislation website.

The Commission has two main roles under the Fuel Industry Act:

• enforcing the requirements of the Act. Companies can face penalties of up to $5 million if they do not comply
• analysing information disclosed under the Act in order to monitor the competitive performance of fuel markets. The Commission may also publish its analysis.

Competition and consumer protection laws

In addition to the Fuel Industry Act, the Commission enforces other legislation that applies to the fuel sector. This includes the Commerce Act which prohibits anti-competitive behaviour and acquisitions that substantially lessen competition, and the Fair Trading Act, which prohibits false and misleading conduct and other unfair business practices.

What the Commission can and can’t do

Under existing competition and consumer laws, the Commission can:

• look into concerns a fuel retailer has misled or deceived you

• look into concerns two or more fuel businesses are coordinating on the prices they charge for fuel.

When the Fuel Industry Act comes into force, the Commission will be able to:

• take enforcement action in relation to any contravention of the Fuel Industry Act, including the consumer information requirements

• analyse information submitted by fuel businesses under the information disclosure requirements and publish reports that shine a light on the competitive performance of fuel markets.

What we cannot do:

• tell fuel businesses what they can charge their customers

• get involved in a dispute between fuel retailers and their customers

• take action on your behalf. While your complaint may result in an investigation, we will not be acting on your behalf. We are not a dispute resolution service and generally cannot assist you to get a refund or personal remedy.

Dispute resolution

The Fuel Industry Act provides for a dispute resolution scheme for disputes between wholesale fuel suppliers and their wholesale customers that relate to the terminal gate pricing regime or the wholesale contract rules. This dispute resolution process is not available to consumers.

Open letter to fuel industry stakeholders

In the lead up to the first substantive parts of the Fuel Industry Act taking effect on 11 August 2021, on 9 July 2021, we published an open letter to fuel industry stakeholders. The open letter summarises the requirements of the Act and when they come into effect, explains the Commission’s roles under the Act, and explains how and when we expect to engage with the sector.

Alongside the open letter, we also published a media release and an infographic that provides a high-level overview of the new fuel regulatory regime and our role within it. Click on the thumbnail to enlarge the infographic and download.