Z Energy, the listed service station chain, said its planned $785 million purchase of rival Chevron New Zealand's Caltex-branded network won't drive up prices at the pump because the target doesn't have retail price-setting power and the market will remain highly competitive.
Z Energy makes the argument in its application to the Commerce Commission for clearance to buy the rival, a public version of which was published yesterday. Parts of the application have been redacted, including details of commercial sales of aviation fuel, where it notes that Z Energy and Chevron overlap only at Auckland International Airport, marine fuel oils, where it says Chevron isn't a significant player, and bitumen, where it notes that imports help constrain prices.
It says there would be no reduction in competition in commercial sales of petrol and diesel because independent distributors and retailers will retain a choice of two alternatives to their existing wholesale supplier in BP and Mobil, and potentially in the North Island, a third in Gull. Z sees no increased market power in truck stops, which it says are in "abundance".
The petrol station chain joined the NZX in 2013, when Infratil and the NZ Superannuation Fund sold down their stakes in an initial public offering that raised $840 million.
The company has said it is committed to running a multi-brand strategy following the acquisition of the Caltex and Challenge brands from Chevron - a deal that would give it some 49 per cent of the retail petrol station market. It cites analysis of retail pricing data by Jerry Hausman, professor of economics at the Massachusetts Institute of Technology, to argue that the removal of Caltex as an independent brand "is unlikely to result in a statistically significant price rise in a given geographic area (based on local markets with a radius of 5km and even 2km)."
