Commission engages with fuel industry ahead of new regulatory requirements

The Commerce Commission has today released an open letter to the fuel industry outlining the Commission’s role and expectations of fuel businesses ahead of a new regulatory regime taking effect on 11 August 2021.

The letter comes after the Ministry of Business, Innovation and Employment (MBIE) published regulations yesterday further detailing the requirements on fuel businesses under the Fuel Industry Act 2020.

Commission Chair Anna Rawlings said the Commission is reaching out to businesses in the fuel sector to discuss its enforcement and monitoring role under the Act and to help them understand how the new rules apply to them.

“We expect that fuel businesses will comply with the requirements of the Act from the time those requirements come into force on 11 August,” she said. “We encourage parties that may be affected to seek legal advice to ensure they understand the rights and obligations that apply to them.”

The features of the Act that affect businesses in the fuel industry from 11 August 2021 are:

  • Terminal gate pricing – Wholesale fuel suppliers must publish a spot price for their fuel at storage terminals and are generally required to sell fuel to any wholesale customers that want it at that price, even if they’re competitors.
  • Wholesale contract rules – These will limit the use of restrictive terms in wholesale contracts, freeing up wholesale customers like distributors and petrol stations to shop around for a better deal.
  • Dispute resolution – The Act provides a process for wholesale fuel suppliers and their wholesale customers to resolve disputes about wholesale contracts and terminal gate price rules.

The Commission can seek court-imposed penalties of up to $5 million if fuel businesses do not comply with these new rules.

Additional rules that are scheduled to take effect from February 2022 will make fuel pricing more transparent for motorists and help the Commission monitor and report on how competition in fuel markets is evolving. These are:

  • Retail fuel price boards – Petrol stations will have to display the standard prices of all fuels they sell on price boards to inform motorists before they pull in to the forecourt and help them compare prices.
  • Information disclosure requirements – Fuel businesses will need to disclose key information to the Commission to help it monitor and report on the competitive performance of fuel markets.

The Government introduced the Fuel Industry Act following the Commission’s 2019 fuel market study, which found a number of shortcomings in the competitiveness of fuel markets in New Zealand.

Ms Rawlings said the new regulatory regime is focussed on promoting greater competition in fuel markets – in particular, the wholesale market – for the long-term benefit of fuel consumers.

The requirements on industry participants are set out in the Fuel Industry Act 2020 and further detailed in the Fuel Industry Regulations 2021, which were developed by MBIE and gazetted yesterday.

An infographic explaining the new regulatory regime is on the Commission’s website.

/Public Release. This material comes from the originating organization/author(s)and may be of a point-in-time nature, edited for clarity, style and length. The views and opinions expressed are those of the author(s).View in full here.