The Commerce Commission has granted permission for Z Energy to acquire 100 percent of Chevron’s shares as long as Z divests 19 retail sites and one truck stop, which are located in areas which the Commission believes would see substantially reduced competition following the merger.
Following the merger, Z Energy will still see competition from BP, Mobil, Gull and independent providers. Commerce Commission chair Dr Mark Berry says that after analysing each market likely to be affected by the merger, the Commission is satisfied that competition will not be substantially lessened.
“Chevron, as supplier to the Caltex and Challenge brands, has been a passive competitor in New Zealand and followed the lead of its rivals rather than taking an aggressive approach in its pricing,” Berry says. “We consider, by majority, that subject to Z Energy divesting 19 retail sites Chevron’s absence would not make a material difference to the competitive dynamics we currently see, where retail price movements are dominated by Z, BP, Mobil and Gull.”
One commissioner, Dr Jill Walker, disagreed on this point.
“Commissioner Walker’s dissenting view is that there is evidence to suggest that coordination of retail prices is occurring in some local markets, which would become more firmly entrenched with the merger,” Berry says. “Moreover, the permanent removal of a competing supply chain means the potential for Chevron’s assets to disrupt coordination in the future is gone.”