Mobil says Z purchase of Caltex chain concentrates loyalty schemes

Mobil Oil New Zealand says Z Energy's [NZX: ZEL] acquisition of the rival Caltex and Challenge! service station chains would concentrate fuel discount arrangements within a single market player and undermine competition in the market.

If the deal goes ahead, Z would have agreements with three of the four loyalty programmes – Countdown fuel discounts, Flybuys and AA smartfuel – giving the merged entity an unfair advantage over its rivals, Mobil said in a submission to the Commerce Commission, which is considering whether to approve the transaction. Mobil has a loyalty scheme with Foodstuffs' New World and Pak'n Save supermarkets.

Z Energy's "involvement with multiple independent programs gives them an undue competitive advantage over others in the industry, which may deliver such an advantage that they could unilaterally influence the market," Mobil lead country manager Andrew McNaught said. The increased bargaining power of Z meant the petrol retailer would "potentially be able to exclude other market players from existing programmes."

The antitrust regulator is reviewing whether Z's $785 million acquisition of the former Chevron New Zealand network, giving it 49% of the retail market, would substantially lessen competition in the market.

In its statement of preliminary issues, the commission said it is "generally concerned with the ability of the merged entity to raise prices" right across the New Zealand fuel distribution and retail system, starting at the Marsden Point oil refinery and including aviation, shipping, trucking and retail petrol and diesel fuel sales.

In a separate submission, discount retailer Gull New Zealand said it was concerned over the long-term commercial supply contracts Z would be able to command, which "may capture a customer for an unfair and disadvantageous period of time and thus are anti-competitive."

Gull said the current situation where Z and other market participants, Mobil and BP New Zealand share a refinery was "inequitable to new entrants to the market."

The commission's review is expected to be finalised on December 18.

(BusinessDesk)