The Commerce Commission has cleared Vector's $63 million acquisition of Contact Energy's natural gas metering business, but said it was concerned about the lack of competition in the sector.
The merger of the two businesses paves the way for the creation of the single-biggest metering supplier on the North Island reticulated natural gas distribution network
The competition watchdog approved the merger on the grounds that there was only limited competition in the market, and the merger was unlikely to alter the market landscape to any noticeable degree.
"The commission is satisfied that the proposed acquisition would be unlikely to substantially lessen competition in any of the relevant markets," commission chairman Mark Berry said.
However he said the regulator was "concerned" about the limited level of competition in the gas-metering sector, and the watchdog was considering whether it should take a closer look at the market with a view to putting it under regulatory control.
Under Part 4 of the Commerce Act, the commission can recommend specific goods or services become regulated after conducting an inquiry on the merits and costs of the regulation.
Vector shares last traded at $2.81 and have gained 6.4 per cent over the past 12-months.