Ardern has said petrol companies were fleecing consumers and questioned their high margins.
She said today New Zealanders "deserve peace of mind that the price they're paying at the pump is fair."
"At the moment, we can't definitively say whether that is, in fact, the case across New Zealand so this is a market that most certainly warrants a full investigation."
She said the Government is committed "to easing financial pressure on families".
Under the legislation, the Minister of Commerce must officially nominate an industry for the Commerce Commission to probe.
The terms and reference of the market study said the commission would look into the structure of the industry, as well as "any factors that may hinder competition between industry participants".
It would also look at the conditions for entry for any potential entrant into the petrol market.
The commission would have the power to compel petrol companies to provide financial information.
BP New Zealand Managing Director Debi Boffa welcomed the study.
"The Commerce Commission are the right people to do this work because they have the level of independence required to confirm New Zealand has a fair and competitive retail fuel market."
She said BP would work "openly and constructively" with the regulator to support the process.
Although there were several possible markets mooted for consideration, the retail fuel market "clearly met the test for investigations", Faafoi said.
"Simply, it's in the public interest to ensure people and businesses aren't paying too much for fuel.
"There are existing indications of competition problems in the retail fuel market that are of concern to me, such as the more than doubling of petrol and diesel importer margins over the past decade."
The market study process is expected to take a year to complete, Faafoi has said.
But Ardern suggested she would have liked to see the study complete in a shorter amount of time.
"Do I want things to happen more quickly? Absolutely."
She said she asked relevant ministers to be prepared for any recommendations the Commerce Commission make.
"There is a suggestion that a draft report may be available potentially within nine months – but I want to make sure we are ready to roll when the Commerce Commission makes its recommendations known."
In a press conference in October, Ardern had said she wanted the probe to be completed in early 2019.
She today said her expectation of the timeline of the study was that it would have been able to be done quicker.
"I have to take heed of the advice that we were receiving from the Commerce Commission on that – they want to do it properly and I have to let them do their job."
Ardern did not directly answer questions as to whether the Government would freeze the 3.5c excise tax.
But Commerce Commission Chairman Mark Berry told the Science and Innovation select committee last week that completing a study within 12 months would put the regulator under "considerable pressure".
"I do appreciate that people have a wish to know the results of these sorts of inquiries within much shorter time frames.
"But the experience is that if you put those kinds of time pressures on, the result is you don't get the kind of detailed study that you would have wanted to get."
Berry said the Commerce Commission would endeavour to do the study within 12 months but, in doing so, "the pressure is simply on our staff working very long hours and commissioners working long hours to turn that work around".
But Faafoi said the Government is not likely to extend the investigation period.
He said today the fuel market is hugely important to consumers and to the economy.
He said roughly six billion litres of petrol and diesel is consumed for land transport use annually.
The terms and reference of the market study will be released on Wednesday when the Commerce Commission will start the study.
The Commission will provide further information about the process and updates and will be required to publish a final report by December 5, 2019.
