ComCom issues fuel warning
The Commerce Commission is increasing its monitoring and scrutiny of petrol-pump prices in response to higher and more volatile global wholesale prices.
The regulator warns its will not hesitate to call out unjustified increases with commissioner Bryan Chapple saying more frequent reporting will be used to call out any pricing behaviours that create cause for concern – publicly and directly with fuel companies.
“Public scrutiny is a powerful tool and we will use it,” he adds. “Nobody wants to see companies using the Middle East as an excuse to unjustifiably increase prices. Any should be aligned with actual increases in the cost of sourcing fuel.”
The commission does not set fuel prices and has no powers to control them. Its role is to monitor, report and hold companies to account through transparency and scrutiny. It is also the watchdog’s job to ensure the sector remains competitive and representations around pricing, including reasons behind any changes, are fair and accurate.
Reports, available on its website, will provide updates on fuel price movements and compare them with changes in import costs.
“We want consumers to feel confident price increases are justified and decreases in global costs are passed through to retail prices as quickly as the increases have been,” says Chapple, pictured.
He encourages Kiwis to shop around. The Gaspy app, for example, lets motorists check the lowest fuel prices in their area without having to drive around to find a better deal.
Chapple says the initial aggregate analysis raises no concerns. “The gap between rising international costs and slower retail movements aligns with patterns seen during previous global shocks, but it’s not a licence for fuel companies to increase prices excessively.”
The commission will be looking at variations in regional pricing and will continue to monitor movements, identifying and calling out any behaviour that appears unjustified. It is also reminding businesses to be transparent and honest about reasons behind any price changes.
Chapple says placing a fuel surcharge on a product or a service is legal if the business is transparent and upfront about the surcharge and what it’s for.
“We expect businesses to do the right thing. They must be honest about reasons for any price increase. We encourage anyone who believes a business has been misleading about a price increase to report it via the ‘raise a concern’ function on our website.”
The Commerce Commission has previously used its monitoring role effectively in regions such as Thames and Waiheke where transparency and scrutiny contributed to greater competition on pump prices.
The Fuel Industry Act sets up a regulatory regime for fuel with the purpose of promoting competition in engine-fuel markets for the long-term benefit of consumers.
High prices and price increases are not illegal under the Fair Trading Act. However, the law bans misleading and deceptive conduct, and false representations. When the regulator has concerns about potential non-compliance, it may investigate.
If it considers a breach has likely occurred, it will apply its enforcement criteria to select from a range of responses. One possible response is to seek fines against industry participants in the courts.
