The Commerce Commission is under fire for allowing Z Energy to buy Caltex service stations.

Labour's consumer affairs spokesman David Shearer said it will undermine competition in the fuel industry.

He said it's not the first industry - the Commission has allowed just two supermarket companies to dominate New Zealand’s grocery industry, while just two major construction supply companies have cornered the market for building materials.

Mr Shearer said Z Energy will now own 50 per cent of petrol station outlets in the country.

"I don't think that's going to help drive down prices. We've already seen when oil prices have gone down internationally, it's slow to go down in New Zealand and Z Energy has been one of the first to raise their prices.

"And now in our important petrol industry, we've limited the amount of competition there too. This is going the wrong way in terms of making sure we've got competition and therefore the best possible price for the consumer."

SEE ALSO: Z Energy cleared to buy Caltex and Challenge! petrol stations

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