Undertaking date

Undertaking type

s.87B undertaking

Reference number

MER12/8418

Section

s. 50

Company or individual details

  • Name

    APT Pipelines Ltd

    ACN

    009 666 700
  • Name

    Australian Pipeline Ltd

    ACN

    091 344 704

Undertaking

Undertaking acceptance

On 19 July 2012, the ACCC accepted a court enforceable undertaking (Undertaking) pursuant to section 87B of the Competition and Consumer Act 2010 (Act) from the APA Group (APA) in relation to APA’s proposed acquisition of Hastings Diversified Utilities Fund (HDF) (Proposed Acquisition). APA offered the Undertaking to divest the MAPS (Divestiture Business), which it would acquire as a result of the Proposed Acquisition, to a purchaser to be approved by the ACCC.

The ACCC concluded that, in the absence of the Undertaking, the Proposed Acquisition would have the effect, or be likely to have the effect, of substantially lessening competition in integrated markets for the:

  • transportation of gas along one or more pipelines in eastern Australia;
  • supply of ancillary services in relation to the transportation of gas along one or more pipelines in eastern Australia.

The ACCC concluded that the Proposed Acquisition would, in the absence of the Undertaking, result in APA owning the majority of the gas transmission pipelines in eastern Australia, being:

  • all of the pipelines servicing the Moomba Basin (the MSP, MAPS, SWQP and QSN Link); and
  • have an interest in all the pipelines servicing Adelaide (MAPS and SEA Gas).

The ACCC was concerned that, in the absence of the Undertaking, the Proposed Acquisition would have left parties with relatively limited alternatives to dealing with APA for the transport of gas out of the Moomba Basin and into Adelaide and the provision of ancillary services and APA would accordingly have an increased incentive and/or ability to increase:

  • transportation tariffs on the MSP and/or the MAPS; and
  • the price of ancillary services on the MSP, the MAPS and/or the SWQP.

In addition, the ACCC was concerned that, in the absence of the Undertaking, the Proposed Acquisition would result in APA having an increased incentive and ability to standardise its pricing and service offering. Specifically, the ACCC considered that, prior to the Proposed Acquisition, the separate ownership of pipelines in the eastern Australian network provided APA with an incentive to provide customised service solutions which would be diminished as a result of the Proposed Acquisition.

The objective of the Undertaking is to address these competition concerns by:

  • creating a viable, effective, stand-alone, independent and long term competitor in the relevant markets;
  • ensuring the purchaser of the Divestiture Business (to be approved by the ACCC) has the necessary assets, rights and agreements to compete effectively with APA;
  • maintaining the economic viability, marketability, competitiveness and goodwill of the Divestiture Business prior to divestiture, including ensuring effective ring fencing measures are implemented to protect the confidential information of the Divestiture Business;
  • requiring APA to hold its interest in the Divestiture Business separate from APA’s other assets and businesses pending divestiture of the Divestiture Business;
  • requiring APA to appoint an Approved Independent Manager to manage the Divestiture Business until the completion of the divestiture of the Divestiture Business; and
  • providing for the effective oversight of APA’s compliance with the Undertaking.

Undertaking withdrawal

On 1 May 2013, APA Group divested Epic and MAPS to QIC Global Infrastructure.

On 1 February 2016, APA Group sought the ACCC’s consent to the withdrawal of the Undertaking pursuant to s 87B(2) of the Act. In accordance with s 87B(2) of the Act, the ACCC gave consent to the withdrawal of the Undertaking in its entirety with effect from 1 April 2016. The ACCC’s reasons for consenting to the withdrawal of the Undertaking are set out in the attached document titled ‘Consent To Withdrawal Of Section 87B Undertaking’.