The Australian Competition and Consumer Commission does not intend to intervene in the proposal by the NSW Government to merge three of its electricity distribution/retail businesses to form Country Energy, ACCC Chairman, Professor Allan Fels, announced today.
"Each of the three entities has two separate business units", Professor Fels said. "One business unit runs the 'poles and wires' electricity distribution network and the other provides retail electricity and other forms of energy to businesses and households.
"The operations of the distribution networks are regulated by the Independent Pricing and Regulatory Tribunal of NSW, in part because some of the services they provide are not contestable. In those areas where services are contestable, the merger is not likely to lessen competition as there are other suppliers capable of undertaking this work, including the other NSW distribution businesses.
"The merging parties' retail businesses currently compete strongly against other firms, including Energy Australia, Integral Energy and numerous electricity retailers based interstate, to supply electricity to contestable customers in NSW. These customers are predominantly mid-large sized businesses and organisations. Inquiries indicate that it is unlikely that competition to continue to supply these customers will be significantly affected by the merger.
"Each of the retail businesses also has a large number of franchise customers, who are scheduled to become contestable according to the time-frame adopted by the NSW Government. On the evidence available, it does not appear likely that the proposed merger will lessen the development of competition in this sector of the retail market.
"The ACCC therefore concluded that the proposed merger is not likely to result in a substantial lessening of competition in any market, and therefore is unlikely to result in a breach of section 50 of the Trade Practices Act, 1974.
"Nevertheless, the ACCC intends to monitor closely the introduction of full retail contestability in NSW, including any arrangements that may impede the development of strong competition between the remaining NSW state-owned electricity retailers and other electricity retailers".