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 is expected to come 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
requiring retail fuel outlets to display certain pricing information (for example, premium fuel prices) on price boards to help consumers compare prices (Note: the exact information required to be displayed will be determined by the Minister of Energy via regulations expected to be made later in 2021)
information disclosure requirements for fuel companies to improve transparency and enable monitoring of the competitive performance of fuel markets.
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.
The detailed requirements will be specified in regulations currently being prepared by the Ministry of Business, Innovation and Employment.
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.
