SummaryA public company takeover bid was announced on 19 April 2005, advising that IFM proposed to acquire all of the issued shares in Pacific Hydro. On 26 April 2005, IFM filed a submission and request for informal clearance with the ACCC in respect of this proposed acquisition. IFM currently has a 31.6% interest in Pacific Hydro and interests in other renewable energy providers. Pacific Hydro is an Australian publicly listed company which develops and generates renewable energy through wind farms and hydro power plants in Australia and overseas.
Market definitionThe relevant markets are: the market for the generation and supply of electricity in Victoria, and the national market for the sale of Renewable Energy Certificates (RECs). The Commission considered that the market for the supply of electricity was a state based market, consistent with previous decisions. The Commission considered the market for the supply of RECs to be national, as these certificates are traded across state borders.
Competition analysisIn the market for the supply of RECs, the following factors were considered to be relevant: there are many accredited power stations which sell RECs, the market is a national market, and there are significant penalties for retailers who do not meet their targets. In light of these factors, the Commission decided that the proposed acquisition would not result in a substantial lessening of competition in this market.
In the market for the supply of electricity in Victoria, Pacific Hydro currently has less than 1% of electricity generation capacity. Taking into account IFM's interest in other energy providers, the proposed acquisition would result in a marginal increase in IFM's market share of less than 1%. Post-acquisition IFM would have less than 12% of generation capacity in Victoria, and less than 4% of generated output.
While Pacific Hydro is a significant player in the renewable energy sector, it faces competitive pressure from all of the existing generators in Australia, including those which produce electricity from non-renewable sources.
Given that the ACCC's market concentration thresholds are not crossed, the existence of a number of other competitors in both the market for the supply of RECs and the market for the generation and supply of electricity in Victoria, the Commission decided that the proposed acquisition was unlikely to raise competition concerns.