On 12 September, the ACCC announced that it would not oppose AGL Energy Limited’s (AGL) proposed acquisition of Australian Power and Gas Company Ltd (APG).
The ACCC assessed the proposed acquisition primarily on the basis of its potential effects on the retail markets for the supply of electricity and gas in Victoria, New South Wales and Queensland.
The ACCC found that the proposed acquisition was not likely to substantially lessen competition in the state-based retail markets because:
- in Victoria, first tier and second tier retailers would continue to provide effective competitive constraints on the merged entity;
- the removal of APG as an independent retailer was not likely to reduce the overall competitiveness of retail markets in New South Wales and Queensland; and
- the proposed acquisition was not likely to have a material impact in markets for the wholesale acquisition of electricity or gas because there would be minimal increase to the level of vertical integration.
Importantly, the ACCC recognised that second tier retailers are the primary drivers of competition in energy retail markets, including with respect to price, discounting activity and innovation in energy offerings.