WELLINGTON, March 17 — New Zealand’s Commerce Commission has identified a range of potential competition concerns in the proposed merger between fuel retailers NPD and Gull, warning it is not yet satisfied the deal would avoid harming competition.
In a detailed statement of issues published on Tuesday, the regulator said its preliminary investigation indicates the merger could substantially lessen competition in several fuel markets, particularly at the retail level.
The Commission is focusing on both local retail fuel markets and potential national dynamics, as well as the wholesale supply of fuel from Gull’s Mount Maunganui terminal.
Local competition concerns
A key concern is that the merger could reduce competition in local markets where NPD and Gull currently compete closely, potentially leading to higher prices or reduced service quality.
The Commission said it has identified a number of areas where the two companies appear to be close competitors and where there may be insufficient alternatives to constrain the merged entity.
It also warned that the deal could eliminate future competition, as both companies have been expanding their networks and increasingly entering each other’s regions.
Loss of a price-aggressive competitor
At a broader level, the regulator is examining whether the merger would remove an important competitive dynamic between the two firms.
NPD is often seen as a price-aggressive operator, particularly through its unstaffed sites, while Gull has historically been a key discount player. The Commission said losing this rivalry could weaken price competition across the market.
The authority is also assessing whether national strategies, such as discount schemes and brand-level pricing approaches, could be affected by the merger.
Risk of coordinated behaviour
The Commission raised concerns that the merger could make coordinated behaviour between fuel retailers more likely, particularly given the characteristics of fuel markets.
It noted that fuel is a largely homogeneous product, prices are highly transparent and frequently adjusted, and demand is relatively stable — all factors that can facilitate coordination.
Reducing the number of independent competitors, particularly low-cost or disruptive players, could increase the risk of prices being sustained at higher levels.
Vertical supply concerns
Beyond retail competition, the regulator is also examining vertical effects linked to Gull’s fuel import terminal.
It said the merged entity could have the ability and incentive to restrict or disadvantage rival fuel retailers by raising wholesale prices or limiting access to supply from the terminal.
Next steps
The Commission has not reached a final decision and said its views may change as the investigation continues.
It has invited submissions from interested parties by April 2 and expects to issue a final decision by May 28, subject to further extensions.
Under New Zealand law, the merger can only be approved if the Commission is satisfied it is unlikely to substantially lessen competition in any market.
