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Commission files proceedings against First Gas

Media Release

Issued 10 January 2019
Release No. 102

Commission files proceedings against First Gas for anti-competitive conduct

The Commerce Commission has filed proceedings in the Wellington High Court against gas network operator First Gas Limited for anti-competitive conduct in acquiring the Bay of Plenty assets of GasNet Limited.

The Commission alleges that First Gas, a significantly larger gas distribution business, engaged in anti-competitive conduct by:
• Having unsuccessfully offered to buy GasNet’s assets, taking steps to retrofit gas pipelines in areas where GasNet had already laid its own pipelines;
• Acquiring the GasNet assets in December 2016 without clearance or authorisation from the Commission; and
• Contractually restraining GasNet from re-entering the Bay of Plenty region for five years from the time of acquisition.
First Gas has filed admissions to the alleged conduct. As the matter is before the Court for a penalty hearing, the Commission cannot comment further at this time.

Background

North Island transmission and distribution networks
Reticulated natural gas is distributed to residential dwellings and commercial premises in the North Island through a combination of high pressure gas transmission pipelines (transmission network) and lower pressure distribution pipelines (distribution networks). Distribution networks transport and distribute natural gas from the end points on the transmission network to meters at the premises of consumers.

In the North Island, First Gas owns and controls the only transmission network, having taken ownership of Vector Gas Limited’s transmission network on 20 April 2016 and Maui Development Limited’s transmission network on 15 June 2016. It also purchased Vector’s distribution networks in Northland, Waikato, Bay of Plenty, Taupo, Gisborne and Kapiti Coast.

GasNet is owned by Whanganui District Council Holdings Limited, a council-controlled organisation of the Whanganui District Council. GasNet operates the distribution network in Whanganui.

An infographic detailing New Zealand’s gas transmission and distribution networks can be found here.

In general, retrofitting involves a gas network operator digging trenches and laying pipes after the roads in a new development have been completed and vested in the Council.

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