12 April 2002

The Associate Minister of Energy, Hon Paul Swain, today released a report on the role of independent retailers in the petrol market.

Following concerns raised by the Motor Trade Association over the viability of independent retailers, the New Zealand Institute of Economic Research (NZIER) was commissioned to investigate the competitive and regulatory environment in which petrol retailers operate.

The report concludes that, although low volume independent sites contracted to a petrol major (who owns the petrol tanks and pumps at that independent site) are under threat as retail margins shrink, high volume independent sites continue to be viable.

This rationalisation of low volume sites has been occurring for the last 20 years.

The report notes that new entrants such as Challenge! and Gull both focussed primarily on newly constructed high volume sites. Low volume independent sites would not appear crucial to future entry prospects, nor competitive retail prices.

The NZIER report concludes that the rationalisation of petroleum retailing (predominantly the exit of low volume independent sites) is not reducing overall competition or causing market inefficiency. It would appear therefore that regulatory intervention on these grounds is not warranted.

The Government is keen to receive comments on the report, and is calling on interested parties to make submissions by Friday 7 June 2002.

The full report is available at http://www.med.govt.nz/ers/oil_pet/independent/index.html.

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