Waving the white flag
Last week, the ACCC announced it had commenced enquiries on a proposed undertaking offered by AGL in relation to its proposed acquisition of Macquarie Generation.
As we blogged about here, the ACCC issued a Statement of Issues (“SoI”) in relation to the proposed acquisition on 6 February 2014. In the SoI, the ACCC identified red light competition concerns in the supply of retail electricity in NSW and amber light concerns in the supply of wholesale electricity in NSW, Victoria and South Australia.
The proposed undertaking, which was offered by AGL on 17 February 2014 – the day responses to the SOI were due – attempts to address the ACCC’s red light concern by requiring AGL to provide liquidity in the supply of hedge contracts to electricity retailers in NSW. The proposed undertaking does not seek to address the ACCC’s amber light concern.
The ACCC’s indicative decision date is currently set at 4 March 2014, to take account of the AGL’s and the State of NSW’s commercial timing. Given the tight turnaround, the ACCC has decided to consult on the proposed undertaking, including whether concept of the undertaking is capable of addressing the ACCC’s concerns, prior to completing its internal review of the arrangements.
This is unusual, as generally, the ACCC would not go to market on a proposed undertaking until it is satisfied that it is in a form capable of consultation. Given the proposed undertaking is a behavioural undertaking (and the ACCC generally prefers structural remedies), it will be interesting to see whether the ACCC can get itself comfortable in time or whether the decision date will need to be pushed out to allow further negotiation between the parties.