The Commerce Commission has cleared Z Energy to buy Chevron; the owner of the Caltex and Challenge! brands in New Zealand.

Z Energy will now hold 50 percent of the wholesale market.

LISTEN ABOVE: Mark Stockdale from AA petrol-watch talks about the merger with Larry Williams 

The Commission had to weigh up the competitive impact of the proposed merger.

Because of this, the deal is subject to Z Energy divesting 19 petrol stations and one truck stop in locations where the Commission considers competition will be substantially reduced.

The impact on aviation and marine fuel markets was also analysed. The investigation did not assess whether fuel prices in New Zealand are too high.

Z Energy said it doesn't have a monopoly on any market and there should be no concern about hiked petrol prices.

CEO Mike Bennetts said the company has a dynamic pricing system that's transparent and allows for change.

"Z leads price increases either way frequently, so we're just as quick to move it up as we are just as quick to move it down, so there's real symmetry to what we do."

Mr Bennetts said Chevron employees will be taken on under the Z Energy umbrella for the foreseeable future.

He said employees will be kept on for a minimum of 12 months:

"At the start of these discussions with Chevron, we made it very clear that we commit to continuing to employ all of the Chevron staff. There's a lot that we can learn from them, and we think making that commitment was a sign that we were very committed to their success and the merged company."

Challenge! Group Chairman Simon Bratton said the brand will continue to operate as per normal, independent of the Z Energy brand, because they only use Chevron's fuel terminals.

He said they buy their fuel from Farmlands Fuel, a subsidiary of Farmlands Cooperative, owned by around 60 thousand farmer shareholders.

But the AA said there are lingering concerns for motorists over the merger.

The AA's Mark Stockdale said while the merger takes care of the issue of competition in small towns, it ignores complications in the bigger market - Z Energy will now hold 50 percent of the wholesale market.

"From a motorists point of view it could be business as usual, but the issue is not so much at the retail end, where there's actually quite a lot of competition, the issue is actually at the wholesale end where actually there's going to be one less wholesaler, which is Caltex."