This op-ed by Frontier Economics Managing Director, Danny Price, was originally published in the Australian Financial Review on 2 September, 2025.
To understand more about our work on Brookfield and EIG's failed takeover bid of Origin Energy in 2023, view our analysis 'Share price now at $13+? The economics behind Brookfield and EIG's failed Origin Energy takeover'.
The regulator overriding competition principles in the rush to get to net zero is an example of the groupthink gripping institutions.
Two years ago, Origin Energy shareholders faced a big decision: should they accept Brookfield’s $18.7 billion takeover bid? The board said yes. Its paid experts said yes. Many investors nodded along. But enough shareholders said no.
With hindsight, that rejection did not just protect their wallets. It exposed a deeper problem in how Australia’s institutions are thinking – and failing to think – about competition, governance and accountability.
That problem was on full display at the Australian Competition and Consumer Commission’s recent annual conference. One key session carried the astonishing title: “Getting to net zero – does speed trump competition?”
The fact that our competition watchdog even posed the question says it all.
A decade ago, the idea that the ACCC might subordinate competition – the very thing it exists to defend – to a political agenda would have been unthinkable. Now it is mainstream.
This mindset goes a long way to explaining why the regulator waved through Brookfield’s bid in 2023. The ACCC’s own analysis found the deal would “substantially lessen competition”. In plain English, it would mean higher prices, less choice and slower innovation.
Normally, that finding alone would be enough to kill a deal stone dead. But not nowadays.
Instead, the ACCC argued that Brookfield’s vague commitment to spend money on renewables outweighed the damage to competition and harm to consumers. In other words, forget the consumers and, instead, appear to support green goals.
That ACCC decision looks even more reckless when you consider Brookfield’s track record with respect to Healthscope, which is a case study in how to destroy value. What if it had run Origin the same way – stripping out value, walking away from unprofitable renewables, leaving customers stranded?
The prevailing orthodoxy is that every other objective can and should be sacrificed on the altar of the energy transition.
The regulator bet the farm on a hollow pledge to spend money on renewables. And as we argued at the time, taxpayers are underpinning most of these investments anyway, so Brookfield’s involvement added little, if anything, to promoting the development of renewables. Moreover, AustralianSuper said that it stood ready to support Origin in its renewable investments, and now Treasurer Chalmers has said that he would consider changes in constraints on super companies investing in green energy.
That is, there was never a need to sacrifice competition and even less reason in the future.
This was not just a regulatory misstep. It was an example of a wider malaise. Too many of our institutions – regulators, boards, universities, governments – are gripped by groupthink. The prevailing orthodoxy is that every other objective – affordability, reliability, competition – can and should be sacrificed on the altar of the energy transition.
Brookfield’s bid showed how dangerous that thinking can be. The headline number looked tempting: $9.50 a share, a 50 per cent premium. To back it, the Origin board hired corporate advisory firm Grant Samuel to produce a near 300-page report labelling the offer “reasonable”. But when AustralianSuper commissioned Frontier Economics to review it, the flaws leapt off the page. The valuation was far too low.
AustralianSuper did not buy the expert report. Instead, it went public with its concerns and backed itself by increasing its stake in Origin. At the time, it was speculated that AustralianSuper’s value for Origin was to be between $12 and $14. Plenty of commentators scoffed and accused AustralianSuper of derailing the energy transition.
Two years later, Origin’s share price has trended up to sit right in the reported share price range. AustralianSuper’s diligence was vindicated, and every shareholder that backed them is now about 45 per cent better off. That’s billions of dollars in the pockets of superannuants and other shareholders rather than in a foreign company’s bank account.
Even more importantly, consumers have not suffered the loss of competition from the merger.
Stark lessons
What is most troubling about this episode is how many others simply went along with the board and its expert. Most proxy advisers and institutional investors – the people meant to be the first line of defence for shareholders – took the expert report at face value. Few bothered to interrogate its assumptions.
Without AustralianSuper’s intervention, the deal would almost certainly have gone through. Shareholders would have been short-changed, and one of the country’s most important energy companies would be foreign-controlled.
The lesson is stark. Institutions fail when people stop asking hard questions. The ACCC failed by ignoring its own competition findings in preference for a green appearance. The board failed to recognise the value of its business. The independent expert failed to understand energy sector value drivers. Investors failed to make the board accountable.
At every step, accountability gave way to laziness and groupthink.
The only reason shareholders avoided disaster was that one large investor was willing to do the work, take the heat and challenge the consensus. Everyone else got lucky.
But the deeper issues remain. Too many of our institutions are too ready to follow fashionable orthodoxies, too quick to assume that promises are as good as outcomes, too reluctant to challenge one another, and too quick to attack alternate views.
Competition, accountability and rigorous analysis are not nice-to-haves. They are the foundations of a fair and prosperous economy. If governments, regulators and boards forget that, it falls to investors, citizens, and shareholders to remind them.
This takeover battle was a warning about what happens when groupthink infects our institutions – and a reminder that independent thinking matters more than ever.
