Australian regulator blocks AGL Energy - Macquarie Generation $1.36 bn merger
04 Mar 2014
The Australian regulator has blocked the merger between gas and electricity retailer AGL Energy Ltd and state-owned power company Macquarie Generation.
The Australian Competition and Consumer Commission (ACCC) yesterday said that the deal would stifle competition in the country's most populous state of New South Wales.
Early last month, AGL Energy, Australia's largest gas and electricity retailer, offered to buy New South Wales state-owned power company Macquarie Generation for A$1.505 billion ($1.36 billion). (See: Australia's AGL Energy to buy Macquarie Generation for A$1.505)
AGL had then said that the acquisition is conditional to approval by the ACCC, which had previously indicated that it would make a final decision on the proposed acquisition by 4 March 2014.
The New South Wales government said the sale "will not proceed in its current form". "We are not involved in a desperate fire-sale."
Established in 1996, Macquarie Generation owns and operates Liddell Power Station and Bayswater Power Station between Singleton and Muswellbrook in the Upper Hunter Valley of NSW and produces approximately 13 per cent of the electricity needed by people in eastern Australia from South Australia to Northern Queensland.
This is equivalent to 40 per cent of the electricity needed by the people of New South Wales, making Macquarie Generation one of Australia's largest electricity generators.
These power stations would give AGL ownership of the lowest cost, large-scale base load generators in New South Wales and would increase AGL's registered generation capacity by approximately 79 percent to more than 10,600 MW.
''The proposed acquisition would result in the largest source of generation capacity in NSW being owned by one of the three largest retailers in NSW. Indeed, with this acquisition, the three largest retailers in NSW would own a combined share of 70 to 80 per cent of electricity generation capacity or output. This is likely to raise barriers to entry and expansion for other electricity retailers in NSW and therefore reduce competition compared to the situation if the proposed acquisition does not proceed,'' ACCC chairman Rod Sims said in a release.
