The Australian Competition Tribunal (the Tribunal) has decided to grant conditional authorisation to AGL Energy Limited’s (AGL) proposed acquisition of Macquarie Generation. 

The Tribunal concluded that the proposed acquisition would result in such public benefit that it should be allowed to occur. The Tribunal also decided to impose conditions of authorisation. The conditions of authorisation place an obligation on AGL to offer not less than 500 MW of electricity hedge contracts to smaller retailers in NSW per year for a period of seven years.

The ACCC had previously opposed the proposed acquisition by AGL because the ACCC considered that it was likely to have the effect of substantially lessening competition in the NSW retail electricity market. 

The Tribunal is required to apply a different test, in which it must be satisfied that the proposed acquisition would be likely to result in such benefit to the public that it should be allowed to occur. 

“The ACCC acknowledges and respects this decision by the Tribunal.  However, the ACCC is disappointed that the Tribunal has authorised the proposed acquisition given that, if it proceeds, the ACCC considers it would have significant implications for the future of competition in, and performance of, the retail and wholesale electricity markets,” ACCC Chairman Rod Sims said. 

“This is because if the acquisition of Macquarie Generation by AGL proceeds, the three largest generators in NSW will have been sold to the three largest retailers resulting in a permanent structural change in the NSW electricity market.  These vertically integrated retailers will dominate electricity supply.”

“The ACCC remains of the view that privatisation of these assets to an alternative bidder would achieve a more competitive outcome which in turn will benefit NSW consumers. The ACCC also remains concerned about whether the conditions of authorisation are able to be effectively enforced.”

The ACCC has yet to consider the detail of the conditions imposed by the Tribunal or the detailed reasons given by the Tribunal for its decision to authorise the proposed acquisition. 

The ACCC notes there is no merits appeal available from the Tribunal’s decision, although there are limited grounds of appeal based on error of law.


On 4 March 2014, the ACCC opposed the proposed acquisition under section 50 of the CCA, which prohibits acquisitions which would have the likely effect of substantially lessening competition. The ACCC considered the proposed acquisition was likely to result in a substantial lessening of competition in the market for the retail supply of electricity in NSW. The ACCC was also concerned about the likely competitive impact of the proposed acquisition in one or more of the wholesale electricity markets in NSW, Victoria and South Australia.

On 24 March 2014, AGL made an application to the Tribunal under section 95AT, seeking authorisation for the proposed acquisition, subject to behavioural conditions.

Pursuant to section 95AT, the Tribunal must be satisfied in all the circumstances that the proposed acquisition would result, or be likely to result, in such a benefit to the public that the acquisition should be allowed to occur. This requires the Tribunal to conduct a balancing exercise to weigh the public benefits that are likely to result from the proposed acquisition against the detriment arising from any lessening of competition.

The role of the ACCC was to assist the Tribunal.  This included making inquiries, calling and examining witnesses, making submissions to the Tribunal, and preparing a report for the Tribunal. In this report, the ACCC expressed its view that the proposed acquisition is likely to mean that consumers will ultimately pay more for electricity, receive lower quality service and be offered less choice.

AGL’s application was heard by the Tribunal in Sydney for eight days between 2 to 13 June 2014.