As previously noted (see here), on 19 February 2014, the ACCC commenced market consultation on a proposed s87B Undertaking offered by AGL Energy Limited (AGL) in relation to its proposed acquisition of Macquarie Generation, including two power stations which account for 27% of NSW generation capacity.
The undertaking sought to address the ACCC’s concerns in relation to the retail supply of electricity in NSW, and provided that AGL would:
- provide liquidity to the NSW hedge contract markets, by offering to sell a certain quantity of electricity futures and options either directly to retailers, or by placing orders on an electricity futures exchange; and
- appoint an ACCC-approved independent auditor to conduct compliance auditing and provide reports directly to the ACCC in relation to AGL’s compliance with the undertaking.
On 4 March 2014, the ACCC announced that it will oppose the proposed acquisition on the basis that:
- the largest source of generation capacity in NSW would be owned by AGL, one of the three largest electricity retailers in NSW, which is likely to raise barriers to entry and expansion for other electricity retailers in NSW and therefore reduce competition; and
- the ACCC considered the proposed acquisition would be likely to result in a significant reduction both in hedge market liquidity and the supply of competitively priced and appropriately customised hedge contracts to second tier retailers competing in NSW.
The ACCC was also concerned about the likely impact of the proposed acquisition on the wholesale electricity markets in NSW, Victoria and South Australia, as AGL would have become the largest generator in each of these states.
The ACCC has indicated it will publish a public competition assessment in due course.
ACCC to not oppose iSentia’s proposed acquisition of AAP’s media monitoring business
On 20 February 2014, the ACCC announced that it will not oppose iSentia Pty Limited’s (iSentia) proposed acquisition of Australian Associated Press Ltd’s (AAP) media monitoring business.
iSentia is a privately owned media intelligence company with operations in Australia, New Zealand and Asia. AAP is Australia’s national news agency. iSentia and AAP are the only national providers of media monitoring services capable of providing a full suite of print, online and broadcast monitoring.
After consideration, the ACCC concluded that it was highly unlikely that AAP would continue to operate its media monitoring business if the proposed acquisition did not proceed. Therefore, the ACCC was of the view that with or without the proposed acquisition, AAP would exit the market and the effect on competition would be the same.