The Australian Competition and Consumer Commission has decided not to appeal the decision of the Federal Court to grant AGL a declaration which would allow it to proceed to buy a minority interest in Loy Yang power station, ACCC Chairman, Mr Graeme Samuel, said today.
"The ACCC considered carefully whether or not to appeal the decision, given the proposed transaction and aspects of the decision by Justice French raise significant competition and policy issues in respect of the development and operations of the National Electricity Market (NEM).
"Justice French found that there was a single market for electricity and electricity derivatives; that the geographic dimension of that market was national; and that Loy Yang Power did not have market power, in part based on the potential for increased government regulation of the NEM to act as a countervailing measure against the exercise of market power.
"In its submission to the court, the ACCC argued that electricity and electricity derivatives constituted separate product markets, that such markets were regional in scope, that Loy Yang Power possessed substantial market power and that the acquisition would increase the ability and incentives to exercise that market power. On the basis of expert advice the ACCC also argued that the acquisition would be likely to lead to a significant increase in electricity prices in Victoria.
"The ACCC still believes these remain significant issues with important implications for the development of the NEM. However, taking into account the advice of its legal advisers, the ACCC has decided that appeal of the above decision is not the appropriate way for judicial clarification of these issues to be sought".
In reaching its view on this matter, the ACCC took into account the terms of the undertaking imposed by Justice French as a condition of the grant of declaration. In particular, the Federal Court undertaking provided measures that were not part of any proposed undertaking to the ACCC. Any proposed change to the undertaking, including any change in AGL's ownership share of the GEAC consortium, would require approval by the Federal Court in separate proceedings.
As well as the court-imposed undertaking, AGL and GEAC have offered a section 87B undertaking to the ACCC, which the ACCC has agreed to accept. This undertaking is in addition to the undertaking imposed by the court, and is to provide the ACCC with information so as to help ensure compliance with the court undertaking.
The ACCC will look closely at any future proposed acquisitions involving assets operating in the Australian electricity supply industry and re-examine the issues in light of all information available at that time.
Further information
Mr Graeme Samuel, Chairman, (02) 6243 1129 or mobile/pager 0408 335 555
Mr Ed Willett, Commissioner, (02) 9230 9106 or mobile 0414 559 999
Ms Lin Enright, Director, Public Relations, (02) 6243 1108 or 0414 613 520