The ACCC has a terrible record of allowing M&A to worsen the east coast gas cartel. Yesterday, it did it again:
The Australian Competition and Consumer Commission (ACCC) on Tuesday approved Origin Energy’s $18.7 billion takeover by Canada’s Brookfield and its US-based partner, EIG, opening a debate about shareholder value in the megadeal.
The ACCC said it can only clear a deal if it is satisfied the proposed acquisition would not likely substantially lessen competition, or that the likely public benefits would outweigh the detriments.
“On the first limb of the test, we are not satisfied that the proposed acquisition would not be likely to substantially lessen competition,” ACCC chairwoman Gina Cass-Gottlieb said. “However, after a detailed review, we are satisfied that the proposed acquisition is likely to result in public benefits that would outweigh the likely public detriments.”
Origin said the decision marks “an important milestone” in progress towards a deal.
Surely, this is a rolled gold opportunity to force some restructuring on the gas export cartel.
There is not much the ACCC can do to force more competition into local gas supply. Splitting ORG’s energy markets business from the LNG refrigerator is part of the deal and might actually help a little.
But the ACCC could at least have forced the divestiture of the Eraring coal power station. Leaving Eraring in the hands of any former ORG business is a toxic outcome for public policy.
The gas cartel derailed the energy transition by siphoning local reserves to China. This retarded gas-turbine investment, leading directly to the need to sustain coal in the inappropriate role of firming power as renewables rise.
The NSW government could have picked up Eraring pennies and prevented any further rorting by the destroyer of the energy transition.
In better news, gas prices remain lowish:
Therefore, so are power prices:
However, futures are still double owing to the uncertainty surrounding coal power station retirements:
And the warnings for summer are mounting:
Matthew Warren, principal of energy advisory service Boardroom Energy, said that going all-out for the 2030 target was “crazy” and that it was more important to keep power reliable and affordable through the transition, to maintain public support.
Hence, the ACCC could have added more certainty to future power prices had it forced the divestiture of Eraring to a public operator.
