The Australian Competition and Consumer Commission will not oppose a number of potential acquisitions by Origin Energy Limited and AGL Energy Limited of assets being sold as part of the New South Wales Energy Privatisation.
The ACCC's decisions relate to requests for merger clearance it received from Origin and AGL for the potential acquisition of a number of asset combinations.
The ACCC today announced that it would not oppose the acquisition by Origin of the following retail businesses:
- EnergyAustralia, or
- Country Energy, or
- Integral Energy, or
- Country Energy and Integral Energy
together with one of the Eraring, Delta Coastal or Delta Western gentrader bundles and one of the generator development sites.
The ACCC also announced that it would not oppose the acquisitions by AGL of:
- Country Energy, or
- Integral Energy
together with one of the Eraring, Delta Coastal or Delta Western Gentrader bundles and one or more of the generator development sites.
After extensive inquiries, the ACCC concluded that these potential acquisitions were unlikely to result in a substantial lessening of competition in any of the relevant markets.
"The ACCC recognised that the acquirers would have high market shares in the retail electricity markets in New South Wales and Queensland if any of these acquisitions were to occur, particularly if Origin acquires Country Energy and Integral Energy," ACCC chairman Graeme Samuel said.
"A key consideration was the level of competitive tension that would be likely to occur in the future with these acquisitions compared to the level of competition in the counterfactual where the three retailers were sold to separate acquirers," Mr Samuel said.
In analysing the competition effects if Origin were to acquire Country Energy and Integral Energy, the ACCC took into account the fact that EnergyAustralia would be acquired by a third party not including AGL. The ACCC therefore concluded that Origin would face competition in electricity retailing from the separate acquirer of Energy Australia, smaller players, as well as AGL, which has a large gas customer base and expanding electricity customer base.
The ACCC concluded that new entry, together with continued vigorous competition from existing players, would be likely to preserve competitive tension in the retail markets.
The ACCC found that the aggregation of Origin's Uranquinty generator with one of the Gentrader bundles would not be likely to provide it with the ability to exercise market power in the wholesale electricity market in New South Wales due to the presence of several competing generators in the market.
The ACCC also concluded that the acquisition of one or more development sites is unlikely to provide Origin or AGL with a material advantage in the development of new generation capacity relative to other generation project developers. Moreover, the aggregation of these with the Gentrader contracts is unlikely to provide the acquirers with increased ability to exercise market power, given the presence of other competitors in the market including other acquirers of generation development sites.
Finally, the ACCC concluded that the vertical integration of generators and retailers arising from the potential acquisitions would not be likely to change incentives for generator bidding or retailer conduct in New South Wales, nor raise barriers to entry in these markets.
A Public Competition Assessment outlining the ACCC's reasons for its decision will be available on the ACCC's website, www.accc.gov.au, in due course.