Fuel company Z Energy has been cleared to buy the Caltex and Challenge service station chains in New Zealand.
But it will have to sell some of its stations for the deal to go ahead.
The deal to buy Chevron New Zealand - giving Z Energy 49 percent of New Zealand's petrol retail market - had been cleared by the Overseas Investment Office, but had been awaiting clearance from the competition watchdog.
The Commerce Commission on Friday gave the $785 million buyout the go-ahead subject to Z Energy divesting 19 specific service stations and one truck stop to avoid reducing competition in some areas.
Competitors had lodged their opposition to the deal over fears it would significantly reduce competition between petrol companies in New Zealand.
They were particularly concerned that it would give the company too much of an advantage in fuel discounts loyalty programmes.
Looking at all the markets affected by the sale - Commerce Commission chair Mark Berry said the only one concern was the retail sector.
But the sale of certain service stations across the country would avoid any problems, he said.
"We consider, by a majority, that subject to Z Energy divesting 19 retail sites, Chevron's absence would not make a material difference to the competitive dynamics we currently see, where retail price movements are dominated by Z, BP, Mobil and Gull."
Those service stations include three in Northland, one in Auckland, three in the Waikato, one in each of Wellington, Otago and the Bay of Plenty, along with three in Christchurch and four in the rest of Canterbury.
"In all other local areas, we concluded that the merged entity would face sufficient competition," said the commission.
Caltex and Challenge service stations won't be rebranded.
Z Energy said more than 100 staff from both companies have worked on the deal, which is expected to be settled on June 1.
"Bringing two large companies with different technology, systems, processes and business models together is a complex and challenging undertaking," said Z Energy chief executive Mike Bennetts.
The merger is expected to save between $25 million and $30 million annually, by improving the efficiency of the supply chain and reduced back-office and IT costs.
"The expanded company will create value through leveraging the scale and scope of both companies' operations, including the diversity of business models and people expertise," said Bennetts.
Staff members at Chevron have been given a commitment of at least 12 months employment from June 1.
"[Chevron] already runs a lean and highly efficient operation and we expect to learn a lot from their people over the coming months," said Bennetts.
Z Energy currently owns more than 200 service stations across the country and Chevron currently supplies to about 150.
The commission says it will give details of the specific sales required when it issues its full written decision, expected within two to three weeks.
Source: NZ Newswire
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